Who pays attorneys' fees in a False Claims Act qui tam case?

A relator who wins a qui tam case recovers reasonable expenses, attorneys' fees, and costs from the defendant under 31 U.S.C. Section 3730(d)(1) when the government intervened, or under Section 3730(d)(2) when the relator pursued the case alone. The fee award is separate from the relator's share of the proceeds and is set by the court rather than negotiated directly with the relator's counsel.

Can a defendant recover attorneys' fees after winning a False Claims Act case?

Only in a narrow circumstance. Under 31 U.S.C. Section 3730(d)(4), a prevailing defendant may recover fees and expenses from the relator only when the government did not intervene and the court specifically finds the relator's claim was clearly frivolous, clearly vexatious, or brought primarily to harass. Winning on the merits alone fails that standard.

Does False Claims Act fee-shifting apply to cases the government brings directly?

31 U.S.C. Section 3730(d) governs fee-shifting only in qui tam actions brought by a private relator. A government-only case, pursued without a relator, falls outside this fee-shifting mechanism entirely. The relator-side fee award under Section 3730(d)(1) still applies whenever the government intervenes in a relator's case, and the court sets that award, so a compliance officer tracking a declined or intervened matter should expect the fee question to be litigated separately from the underlying damages figure.

Attorneys' Fees and Costs Under the False Claims Act

The civil False Claims Act carries its own fee-shifting rule, and the rule does not run the same way for both sides. Under 31 U.S.C. Section 3730(d), a relator who wins a qui tam case recovers reasonable expenses, attorneys' fees, and costs from the defendant. A defendant that wins the same case can recover fees from the relator only on a narrow showing that the claim was clearly frivolous, clearly vexatious, or brought primarily to harass. That asymmetry belongs in every settlement conversation.

Fee-Shifting When the Government Intervenes

When the government intervenes in a qui tam action, the relator's recovery under the resulting judgment or settlement is not limited to a share of the proceeds. Section 3730(d)(1) requires that the relator "also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs," and specifies that "all such expenses, fees, and costs shall be awarded against the defendant." The award runs through the court rather than through direct negotiation with the relator's counsel, and it sits on top of whatever the government and the defendant agree to on the underlying claim. A separate explainer, Government Intervention: What the Decision Signals, covers how that decision itself gets made.

Fee-Shifting When the Relator Proceeds Alone

If the government declines to intervene and the relator pursues the case independently, Section 3730(d)(2) applies instead. A relator who obtains a judgment or settlement "shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs," again "awarded against the defendant." Declination leaves the defendant's fee exposure intact if the relator ultimately succeeds. What changes is who controls the litigation: the relator's own counsel, rather than a government trial attorney, drives discovery and motion practice, and that counsel's hours and billing rates become part of the record the court reviews when it sets the fee award.

When a Prevailing Defendant Can Recover Fees

Fee-shifting in the defendant's favor is narrower and applies in one specific posture only. Section 3730(d)(4) allows a court to award a defendant its reasonable attorneys' fees and expenses when the government did not proceed with the action, the relator conducted it alone, the defendant prevails, and the court finds that the relator's claim was "clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment." Three features limit the provision. It is permissive rather than automatic, turning on the word "may." It requires a specific finding about the relator's claim. And it is scoped exclusively to relator-driven litigation where the government stayed out, with no counterpart for a case the government pursued directly.

Section 3730(d)(4) sets a separate bar for a defendant's own fees: a court finding that the relator's claim was clearly frivolous, clearly vexatious, or brought primarily to harass. Prevailing on the merits and clearing that finding are two different things.

The Asymmetry That Shapes Settlement Posture

The practical effect of these three provisions sits outside the courtroom. A defendant that keeps litigating a qui tam case, including merits defenses such as those addressed in Implied Certification After Escobar, is building a bigger relator fee claim with every motion, while its own path to recovering its own defense costs runs through a standard that is deliberately hard to meet. Going to Trial in a False Claims Act Case lays out the separate exposure a defendant carries at verdict. The fee-shifting rule adds a cost that accrues against the defendant throughout the litigation, without a mirroring accrual in the defendant's favor. A negotiated resolution also carries terms fee-shifting does not reach: a possible corporate integrity agreement, and the separate question of OIG exclusion.

Why early legal counsel is critical: it is critical that healthcare providers and compliance officers retain experienced healthcare defense counsel promptly after learning of a qui tam complaint, a civil investigative demand, or any other sign of a False Claims Act inquiry. Early legal intervention can protect the provider's rights, inform how the intervention decision gets handled, preserve defenses before litigation positions harden, and allow counsel to communicate with investigators on the provider's behalf. Delaying representation narrows the defenses available later and can affect how a fee dispute under Section 3730(d) resolves.

How Health Law Alliance can help: Health Law Alliance defends healthcare providers and compliance teams through every stage of a False Claims Act matter, from the sealed investigation period through the intervention decision, settlement negotiation, and any dispute over fees under Section 3730(d).

Health Law Alliance has represented 2,500+ clients nationwide.

If your organization is facing a qui tam complaint, a civil investigative demand, or a government intervention decision, contact Health Law Alliance for a free, confidential consultation to review the matter and the fee exposure it carries.