Donald

We must decide whether private individuals are entitled to share in the proceeds from a settlement with the federal government of a qui tarn action brought against a state-run hospital system under the False Claims Act.

I

Debra Krahel and Pamela Medley filed a qui tarn suit (“Krahel”) under the False Claims Act, 31 U.S.C. §§ 3729-3733 , (“FCA”) in the Northern District of California in May, 1996, against the Regents of the University of California (“Regents”). In them complaint, Krahel and Medley alleged that University of California teaching hospitals were fraudulently billing federal and state health insurance programs for services rendered by interns and residents as if they had been provided by faculty physicians. Grace Donald and Dawn Cooper brought a similar cause of action (“Donald”) against the Regents in the Eastern District of California in December, 1999.

Upon reviewing the complaint and disclosure statement of the Krahel relators, 2 the federal government successfully negotiated with the Regents for an audit of its five teaching hospitals, which took two years to perform. The Krahel and Donald relators claim that during this period, they diligently assisted…