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though in a bankruptcy proceeding initiated by petitioner the
reward was determined to be subject to the claim of a creditor.
Background
Some of the facts have been stipulated and are so found.
At the time the petition was filed petitioner resided in
California.
On September 24, 1991, petitioner sued her former employer,
Family Practice Associates of San Diego (FPASD), for Medicare
fraud in what is commonly referred to as a qui tam action, filed
under the False Claims Act, 31 U.S.C. sec. 3729 (2000), in the
U.S. District Court for the Southern District of California (the
whistle-blower case). The whistle-blower case was settled
pursuant to an agreement between the United States and FPASD in
which FPASD agreed to pay $2 million to the United States in four
annual installments, beginning in 1996. Under the statutory
scheme, petitioner was entitled to a reward of 29 percent of the
$2 million settlement, or $580,000, also payable over a 4-year
period beginning in 1996.
Petitioner received the first three installment payments in
due course. In 1998, petitioner was sued in a California court
(the lawsuit) by Bradley Proulx (Proulx), a private investigator
who petitioner had hired to assist her in connection with the
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