United States ex rel. Ling v. City of Los Angeles, No. 25-249, ___ F.4th ___, 2026 WL 2871734 (9th Cir. Sept. 24, 2026) | United States ex rel. Novak v. Walgreens Boots Alliance, Inc., No. 18 C 5452, 2026 WL 2920869 (N.D. Ill. Sept. 29, 2026)

False Claims Act · Qui Tam Settlement Approval · Relator Share · Alternate Remedy

Introduction

When the government intervenes in a False Claims Act (FCA) case and settles it, the relator gets 15 to 25 percent of the “proceeds.” The relator will be concerned with both what counts as the “proceeds” and whether the amount is big enough. The relator can object on both grounds: that the settlement is not “fair, adequate, and reasonable under all the circumstances,” 31 U.S.C. § 3730(c)(2)(B), and that a separate deal between the government and the defendant was an “alternate remedy” in which she should share, id. § 3730(c)(5).

In United States ex rel. Ling v. City of Los Angeles, the relator did both. While the FCA litigation was pending (it concerned whether the City of Los Angeles had misrepresented its compliance with accessible-housing requirements tied to funds from the U.S. Department of Housing and Urban Development (HUD)), the City agreed with HUD to spend at least $200 million on accessible housing. It later settled the FCA claims for $38,266,989. On September 24, 2026, the Ninth Circuit rejected the relator’s objections and affirmed the district court’s approval of the settlement. First, it held that the HUD agreement, which redressed a different wrong and expressly carved out the FCA claims, was not an alternate remedy because it didn’t take the place of the FCA case. Second, it held that the district court didn’t abuse its discretion in approving a settlement the government built on a benefit-of-the-bargain damages model. Five days later, a federal court in Chicago faced the same basic question under state law (when a government recovery outside the qui tam case entitles the relator to a share) and declined to decide it, leaving it to the state courts.

Executive Summary

Mei Ling and the Fair Housing Council of the San Fernando Valley (FHC) filed a qui tam action in February 2011 alleging that the City had repeatedly misrepresented that it complied with Section 504 of the Rehabilitation Act, the Fair Housing Act and Title II of the Americans with Disabilities Act, and had received federal housing funds based on those misrepresentations. The United States intervened in July 2017. HUD investigated the same accessibility deficiencies on its own track, and in August 2019 the City entered into a Voluntary Compliance Agreement (VCA) committing it to spend at least $200 million over ten years to remediate or build accessible housing. The VCA expressly excluded the FCA claims. The FCA case went on for five more years, and in June 2024 the government, FHC and the City settled it for $38,266,989.

Ling objected to the settlement. She argued that the VCA was an alternate remedy she was entitled to share in, and that the FCA settlement was too low as measured against the government’s earlier damages calculation of more than $500 million and a $100 million offer she said the City made in 2016. The district court approved the settlement after a fairness hearing.

The Ninth Circuit affirmed. It held that a separate agreement is an alternate remedy only if it takes the place of the FCA suit, and that the VCA didn’t, chiefly because it redressed a different wrong: the City’s underlying civil rights violations, not its alleged false certifications of compliance. On the FCA settlement amount, it held that the government’s damages methodology, the litigation risk the City’s summary judgment motion exposed, and the deference owed to the government under United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023), supported approval.

In United States ex rel. Novak v. Walgreens Boots Alliance, Inc., decided five days later, a relator who had sued Walgreens on behalf of the United States and 29 States sought a share of a separate multistate opioid settlement that, according to the States, resolved some of his state Medicaid claims. He argued that the States’ settlement was an alternate remedy or, alternatively, a settlement of his own action. The district court didn’t decide either question. Because the federal claims had settled, and because his share claims arise under each State’s own false claims statute on questions no State’s courts have answered, the court declined to exercise supplemental jurisdiction and left the claims to the courts of each of the settling States.

Background

Why the HUD agreement matters: two tracks, one set of deficiencies

Ling’s alternate-remedy argument depended on how the HUD agreement related to her FCA case. The two proceedings grew out of the same accessibility deficiencies, and for a time the City tried to resolve them together.

HUD opened its own investigation into the City’s compliance with federal accessibility requirements in 2011, the same year Ling filed suit, and issued a Letter of Findings of non-compliance in January 2012. Ling, 2026 WL 2871734, at *2. By 2016, the City was trying to resolve both matters in a single deal. In a September 2016 letter to the HUD Secretary, City officials wrote that “[t]o enter into a VCA, the City must also settle the related False Claims Act” action, and that they had thought the City was “on the verge of a settlement agreement, under which DOJ, through HUD, would allow $92 million of DOJ’s calculated actual damages for the FCA claims to be used to carry out the remediation of thousands of the City’s housing units.” Id. at *3. That global deal never happened.

By then DOJ was already litigating the FCA case; it had intervened in July 2017. Two months later, in September 2017, HUD referred its separate civil rights compliance matter to DOJ “for potential further enforcement.” Id. The City asked to restart settlement negotiations with HUD, and DOJ “deferred jurisdiction,” leaving the civil rights matter with HUD. Id. In July 2019, HUD told the City it intended to withhold approximately $80 million in federal housing funds, and the VCA followed the next month. The agreement the City actually signed was not a global settlement, unlike the 2016 proposal: it resolved only the City’s civil rights violations, committing the City to a program “with a value that averages a minimum of $20 million per year” for ten years, and specifically carved out the FCA litigation, stating that it “does not, and shall not be construed to, resolve any claims that have been or could be asserted in” the qui tam action. Id.

The FCA settlement

The government and the City conducted what the court called “voluminous fact discovery” through November 2023. The City moved for summary judgment on March 1, 2024, and made a settlement offer at a mediation four days later. Multiple levels of DOJ and City officials approved the written terms, and the parties signed in June 2024. The district court approved the settlement after a fairness hearing in August 2024 and, in October 2024, dismissed the claims, recognizing that Ling and FHC would “receive at least 15 percent but not more than 25 percent” of the proceeds. Id. Ling’s entitlement to a share of the $38.3 million was not in dispute. Id. at *2. The court resolved her challenges to the denial of an evidentiary hearing and limited discovery and to the denial of her motion to alter or amend the judgment, as well as her request for sanctions, in a memorandum disposition filed the same day. Id. at *2 n.1.

The same alternate-remedy question under state law: Novak

Novak asked the same question as Ling (when does a government recovery outside the qui tam case entitle the relator to a share?), but the court ultimately left it to the state courts. A pharmacist sued Walgreens on behalf of the United States and 29 States over controlled-substance prescriptions billed to Medicare and Medicaid. While his complaint was under seal, Walgreens signed a separate opioid agreement with 46 States requiring it to pay more than $4.7 billion over fifteen years for abatement and treatment programs, none of it allocated to the States’ Medicaid programs. Novak, 2026 WL 2920869, at *1. In December 2023, the States intervened to dismiss his state Medicaid claims, telling the court that the multistate agreement “resolved certain of the claims that Relator brings in this case.” Id. at *2. With Novak’s agreement, they postponed the question of whether he was entitled to a share “pursuant to the alternate remedy provisions of each state’s respective false claims act, or other applicable law.” Id. at *2, *6. The United States later settled for $300 million, split evenly between $150 million in Controlled Substances Act penalties, in which relators do not share, and $150 million in FCA damages, of which the relator received 17.25 percent. Id. at *2; Settlement Agreement ¶¶ 1.D, 2, Novak, No. 18 C 5452 (N.D. Ill. Apr. 18, 2025), ECF No. 69.

Novak then sought a share of the multistate settlement from 28 States. He argued that the States had in substance settled his action; the States answered that the multistate agreement resolved consumer-protection and public-nuisance claims he could not have brought, in proceedings to which he was not a party. Novak, 2026 WL 2920869, at *7. Several also argued that it was not an alternate remedy: that settlements funding prospective opioid abatement are not the type of claim a false claims statute reaches, that Novak contributed nothing to a deal signed while his complaint was still sealed, and, for some States, that their statutes have no alternate-remedy provision or a narrower one than the federal statute. Id. at *8–10. Novak replied that the agreement released his claims and conditioned payment on their dismissal. Id. at *8. The court did not decide who was right. It held that whether a State “proceeds with” a relator’s action when it settles related claims outside the action, and whether such a settlement is an alternate remedy, are questions of each State’s statute that no State’s courts have answered, that the federal decisions point in different directions, and that the answers may differ from State to State. Id. at *7–8. With the federal claims gone, it declined supplemental jurisdiction and left those questions to the States’ courts. It rejected Novak’s argument that the States’ agreement to defer the question committed them to the federal forum: “An agreement to defer a question,” the court wrote, “is not an agreement on its answer, and it is not an agreement to the forum.” Id. at *6.

Legal Analysis

The Ninth Circuit decided two questions in response to the relator’s challenge to the settlement: whether the VCA was an alternate remedy in which Ling could share, and whether the $38.3 million the government accepted for the FCA claims was fair, adequate and reasonable.

1. Was the VCA an alternate remedy?

• To share in another proceeding, the relator must show that the alternate remedy took the place of the FCA remedy. Section 3730(c)(5) lets the government “pursue its claim through any alternate remedy,” and gives the relator “the same rights in such proceeding as such person would have had if the action had continued.” The court read that language, as the Fourth and Fifth Circuits have, to assume the other proceeding replaces the qui tam action. Ling, 2026 WL 2871734, at *4 (citing United States ex rel. LaCorte v. Wagner, 185 F.3d 188, 191–92 (4th Cir. 1999), and United States ex rel. Babalola v. Sharma, 746 F.3d 157, 161–62 (5th Cir. 2014)). A relator therefore shares in an outside recovery only if it substitutes for the FCA remedy. The court added that this can happen even while the FCA suit is still pending, that the question “involves a fact-intensive evaluation,” and that “collusion or bad faith” can bear on it. Id. at *5.
• The key point: the VCA and the FCA settlement redressed different wrongs. “Significantly,” the court said, “the purposes of the VCA and FCA settlement were different.” Id. at *6. The VCA addressed the City’s “failure to comply with accessible housing requirements.” The FCA settlement resolved allegations that the City “falsely certified that it had complied with those obligations.” Id. Because the “claim” in § 3730(c)(5) is the false claim, the court followed United States ex rel. Kennedy v. Novo A/S, 5 F.4th 47 (D.C. Cir. 2021), in treating the VCA as resolving “a different legal claim altogether.” Ling, 2026 WL 2871734, at *6 (quoting Kennedy, 5 F.4th at 56).
• For the same reason, the VCA’s nonmonetary value wasn’t enough. The court agreed that an alternate remedy can carry nonmonetary value under United States ex rel. Barajas v. United States, 258 F.3d 1004, 1013 (9th Cir. 2001). Ling, 2026 WL 2871734, at *6. But the VCA “redresses the City’s present violations and prevents future violations,” while the FCA settlement “redresses the City’s past fraud.” Id. at *7. The court rejected Ling’s argument that the government couldn’t recover FCA damages for a loss the VCA made good, because the City’s remedial work did “not nullify the Government’s losses due to misrepresentations, unjust enrichment, and payment by mistake.” Id.
• The court distinguished Barajas. In Barajas, an Air Force agreement with Northrop was held to be an alternate remedy. The Ling court identified two differences. Id. at *5–6.
  • Preclusion. Claim preclusion barred the Barajas relator’s second suit, and the government got its relief through the Air Force agreement instead. Here nothing in the VCA stopped the case, which went forward to “a $38 million settlement.” Id. at *5.
  • Carve-out versus credit. The Barajas agreement let Northrop use it in “any civil proceeding” to “obtain appropriate credit” for what it paid. The VCA carved the FCA claims out. Id. at *6.
• The record showed no collusion. The FCA litigation continued for five years after the VCA. The court reasoned that colluding parties would have settled “shortly after entering the VCA and for much less,” and that “[t]he active participation of an experienced mediator during the settlement process further undermines any allegation of collusion.” Id.

2. Was the $38.3 million settlement fair, adequate and reasonable?

Having held that Ling had no claim to a share of the VCA, the court turned to her second objection: that the amount the government accepted for the FCA claims was too low.

• Review was for abuse of discretion. Because § 3730(c)(2)(B)’s “fair, adequate, and reasonable” test mirrors Federal Rule of Civil Procedure 23(e)(2), the court applied the class-action standard of review, as the Seventh Circuit did in United States ex rel. Robinson v. HealthNet Inc., 124 F.4th 511, 519 (7th Cir. 2024). The parties agreed on that standard. Ling, 2026 WL 2871734, at *4 & n.3.
• Deference to the government frames the review. Because “the injury [relators] assert is exclusively to the Government,” the government is afforded deference when it settles a qui tam case. Id. at *7 (quoting Polansky, 599 U.S. at 425).
• The settlement amount was measured against the government’s method, not the offer history. Ling’s 2016 benchmark was a $100 million offer she said the City made that year. The parties disputed whether that offer was ever made, and the court found the evidence of it “limited.” The court called the question “irrelevant” because the government explained how the settlement amount was derived at the fairness hearing. Id. at *8.
  • Benefit of the bargain. The government compared the value of the City’s existing affordable housing with the value of the affordable and accessible housing the City would have built had it complied. Because most of the defects concerned mobility, it focused on the requirement that at least five percent of multifamily housing be accessible for mobility impairment. That produced $26,800,000 in damages plus “a multiplier sum of $11,466,989,” which together equal the settlement. The government “reserv[ed] its right to reconsider the calculation of damages.” Id.
  • Public policy. The City “repeatedly told the United States that each dollar it paid in settlement is a dollar that it must find in its budget.” The court held the government could weigh that, because its interests “are not confined to maximizing recovery against the defendant.” Id. (quoting United States v. Everglades College, Inc., 855 F.3d 1279, 1288 (11th Cir. 2017), abrogated on other grounds by United States v. Republic of Honduras, 75 F.4th 1288 (11th Cir. 2023)).
• The litigation risk analysis had evolved since 2016. Ling argued that the government’s position had improved since 2016, when it defeated the City’s motion to dismiss. The Ninth Circuit pointed to the arguments in the City’s March 2024 summary judgment motion, which the case settled before the court decided: that its certifications were not material to HUD and that the government could not prove scienter or causation. It also cited the district court’s assessment, in approving the settlement, that even if the government’s claims survived summary judgment, “the Government faces an onerous task to establish the FCA claims at trial.” Id. at *8. Those arguments, the court said, were not “known at the time the City made its [alleged] $100 million offer in 2016,” because the City didn’t move for summary judgment until 2024. Id. The district court also found that the number was reached “after extensive investigation and negotiation over the course of nine years and two mediations.” Id. With that, and the principle that “the very essence of a settlement is compromise, a yielding of absolutes and an abandoning of highest hopes,” Officers for Justice v. Civil Service Commission of the City and County of San Francisco, 688 F.2d 615, 624 (9th Cir. 1982), the court found no abuse of discretion. Ling, 2026 WL 2871734, at *8.

Holding

Affirmed. Under these circumstances, the HUD VCA did not take the place of the FCA suit or the FCA settlement and was not an alternate remedy under 31 U.S.C. § 3730(c)(5). The district court did not abuse its discretion in approving the $38,266,989 settlement as fair, adequate and reasonable under § 3730(c)(2)(B). In Novak, the district court declined supplemental jurisdiction under 28 U.S.C. § 1367(c)(1) and (c)(3) and dismissed the relator’s share claims without prejudice to their assertion in the courts of the respective States, without deciding whether the multistate agreement was an alternate remedy or a settlement of his action.

What to Watch

• Further review in Ling. Absent a rehearing petition, a petition for certiorari would be due 90 days after judgment, on or about December 23, 2026.
• When a parallel agreement could count as an alternate remedy. Ling lost on facts the court listed: the VCA addressed a different wrong, carved out the FCA claims, gave the City no credit against FCA liability, and was followed by five more years of FCA litigation. But the court also said a parallel agreement can take the place of the FCA remedy even while the qui tam case is still pending, and that collusion or bad faith bears on the question. A relator facing a parallel agreement that releases or credits the FCA claims, or that is followed quickly by a small FCA settlement, would have a stronger argument. Expect relators’ counsel to focus on those features.
• The fairness-hearing record. Because approval is reviewed for abuse of discretion, the government’s explanation of its damages method at the fairness hearing is likely to carry most of the weight on appeal.
• State-court share litigation after Novak. The share claims now go to state courts, under statutes that, the court noted, differ on whether they have an alternate-remedy provision at all. The first decisions will show whether federal cases like Kennedy carry over.

What This Means for Resolving False Claims Act Disputes

Ling shows how an FCA settlement number gets built and defended. The government didn’t defend $38.3 million by pointing to the history of offers. It defended it with a damages theory it could explain at a hearing (single damages plus a stated multiplier), a reservation of other methodologies, the cost of a larger number to a public defendant, and litigation risk that surfaced only in the City’s summary judgment motion. The earlier offers, the district court found, “were made in an entirely different context.” For relator’s counsel, that means an objection built on a superseded damages estimate or an old offer runs into deference to the government; the methodology itself is the better target. For defense counsel, the City’s summary judgment motion and its budget argument (a variant of the ability-to-pay argument defendants often raise) both ended up in the record that sustained the number. For the government, the lesson is to put the method, not just the figure, on the record.

The alternate-remedy holding speaks to parallel administrative resolutions. A compliance agreement that redresses the underlying regulatory violation rather than the false claim, carves out the FCA claims and gives no credit against FCA exposure stays separate from the relator’s recovery. The five-year gap between the two resolutions reinforced the point. Novak shows what happens when the relator’s share in a parallel resolution is left for later: the agreement to defer didn’t keep the question in federal court. Resolving the relator’s share at the same time as the number gives everyone a shared reference point. Leaving it open sends it to another forum, or in Novak, to many of them.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.