All's Not Fair in FCA Wars

In U.S. ex rel. Hartpence v. Kinetic Concepts, Inc. (C.D. Cal. May 20, 2013), the district court disqualified relators' counsel for using privileged materials taken by the relators when they left the employ of the defendant to craft their claims and pleadings. The court found that (1) the relators' counsel were put on notice by the government of the potentially privileged nature of the documents and had an obligation to take reasonable remedial actions before using the materials; (2) the use of the privileged materials to craft claims was alone sufficient to show a risk of prejudice; (3) no showing of bad faith is required for disqualification, but the fact that relators' counsel decided to quote the documents in pleadings without seeking guidance from the court was "tantamount to bad faith;" and (4) even if defendant provided final copies of the materials that were almost identical to the privileged draft versions, as relators' counsel claimed, that did not excuse their obligation to take reasonable remedial actions regarding the privileged versions.