Qui tam is a provision of the False Claims Act – it is a type of lawsuit that protects and rewards whistleblowers who report fraud to the U.S. Government so that they may try and recover funds lost as a result of fraud.
United States citizens and foreigners of other countries may file a claim, however must do so with an attorney.
A False Claims Act whistleblower can receive between 15 and 30 percent of the total recovery the U.S. gets from the defendant.
False Claims Act cases in which the government intervenes successfully obtain a recovery around 95% of the time, while that number drops dramatically in non-intervened cases.
Whistleblowers can still continue their case if the government chooses not to prosecute.
What is a qui tam lawsuit?
Qui tam lawsuits are lawsuits brought under the False Claims Act, a law originally enacted during the Civil War and signed by President Abraham Lincoln, and it has been referred to as “Lincoln’s Law.” The False Claims Act protects whistleblowers who report fraud on the government and pays rewards to those who are successful in assisting the government in recovering funds lost to fraud. Additionally, a majority of the states have their own False Claims Act laws, which prohibit fraud against state government agencies. Thus, qui tam lawsuits can be filed separately in accordance with both federal and state law.
Qui tam lawsuits are one of the strongest method for whistleblowers to assist the government in preventing fraud. They are an effective tool to help the U.S. Treasury and hardworking American taxpayers recover monies from contractors that engage in fraudulent activities. This may include contracting fraud, procurement fraud, Medicare or Medicaid fraud, among other types of fraud involving federal or state funding.
Approximately $2.1 billion dollars came from False Claims Act lawsuits brought by qui tam whistleblowers in 2020. The DOJ recently announced it has collected more than $2 billion in settlements and judgements from the False Claims Act in 2019. Recoveries since 1986, when Congress substantially strengthened the FCA, now total more than $62 billion.
Individuals with information about fraud against the U.S. government may become a whistleblower and file a qui tam lawsuit under the False Claims Act; including those living in foreign countries. Often times the whistleblower is an insider, such as an employee of the company, a contractor, or someone with intimate knowledge of the fraud, and can produce substantial direct evidence.
When a whistleblower, also known as a “relator,” files a lawsuit against the fraudster, they must do so with the help of a whistleblower attorney who specializes in filing qui tam lawsuit claims. Supporting documents with detailed information about the fraud are also included in the filing.
Whistleblowers must be the first to file their qui tam lawsuit. If another qui tam relator files a qui tam complaint based on the same fraud a whistleblower is alleging, before submitting their qui tam suit, this disqualifies them from the qui tam process.
A qui tam lawsuit under the False Claims Act can occur when an individual or entity:
Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.
Knowingly makes, uses or causes to be made or used, a false record or statement important to a false or fraudulent claim for payment or to an obligation to pay or transmit money or property to the government.
Knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government.
The False Claims Act is codified as 31 U.S.C. §§ 3729-33. Section 3729 sets forth anti-fraud requirements of the Act, and Section 3730 includes the provisions related to filing a qui tam lawsuit by a whistleblower.
How can whistleblowers safely report fraud and file a qui tam case?
Federal and state False Claims Act require a qui tam attorney to file a qui tam case. Given the complexity of the law, an attorney will first evaluate whether or not the whistleblower has a case. If the evidence is clear, an attorney will draft a complaint describing how the law was violated and provide additional supporting documentation.
The qui tam lawsuit is filed in federal district court under “seal.” This means it is filed in secret and not open to public scrutiny. The complaint is strictly confidential when first submitted to the court under seal. This gives the government time to investigate the fraud and determine whether or not it will “intervene” on the case. Only then will the details of the case become public. Until the court orders the “seal” removed, whistleblowers must keep the fact that they filed a False Claims Act case strictly confidential.
The False Claims Act has strict rules and technical procedures for filing a qui tam lawsuit or a request for a whistleblower reward. Failure to file in a timely fashion or following specific procedures outlined in the False Claims Act law can result in a whistleblower losing his or her claim to a reward.
What happens after filing a qui tam lawsuit?
Once a qui tam case is filed under seal, the government will investigate the claim and decide whether they will “intervene” in the qui tam case.
The U.S. government has 60 days to notify the court of its decision, but usuallythe 60 day period is not enough and the government may ask for additional time. This will require additional proof of serious inquiry and a legit need for more time to investigate the complaint and make a decision whether or not to intervene.
When the government intervenes they will have control over the case and continue to work with the whistleblower and the attorney who filed the qui tam lawsuit.
Whistleblowers can still continue their case if the government chooses not to prosecute or intervene. However, False Claims Act cases in which the government intervenes successfully obtain a recovery around 95% of the time, while that number drops dramatically in non-intervened cases.
Fraudsters who are found liable under the False Claims Act may be required to pay up to three times the amount of the loss, plus civil penalties for each fraudulent false claim. The law also provides for an award of expenses, attorney’s fees and costs to whistleblowers and their attorneys in bringing a successful qui tam complaint.
What are the rewards for qui tam whistleblowers?
The False Claims Act qui tam provisions incentivize whistleblowers with awards for their cooperation in working directly with government investigators.
A False Claims Act whistleblower can receive between 15 and 30 percent of the total recovery the U.S. gets from the defendant. If the government intervenes in the case and the case is successful through a settlement or a trial, the whistleblower is entitled to between 15 percent to 25 percent of the amounts collected by the government.
Also, each state has its own rules and regulations regarding filing a state qui tam relator reward case, so whistleblowers may be able to receive more. The final amounts depend on several factors, including the quality of the information and how the lawsuit is filed.
Keep in mind, most successful qui tam cases are resolved through settlement rather than a court trial – although trials do occur on occasion.
How are whistleblowers protected?
Whistleblowers filing qui tam lawsuits under the provisions of the False Claims Act are protected against retaliation. The law prohibits employer retaliation against a whistleblower who files a qui tam action or for reporting violations of the False Claims Action.
Section 3730(h) of the False Claims Act states that any employee who is discharged, demoted, harassed, or otherwise retaliated against for taking actions to promote the purposes behind the FCA, can file an employment discrimination claim in federal court.
This action can be presented as part of a qui tam reward case or as a stand-alone cause of action. The law provides for a jury trial and full “make whole” relief, including reinstatement, double back pay, and compensation for any special damages, including litigation costs and reasonable attorneys’ fees.
On July 25, a bipartisan group of senators, led by Senator Chuck Grassley (R-IA), introduced the False Claims Amendments Act of 2023. The bill makes a number of technical fixes to the False Claims Act (FCA) in order to ensure it remains the government’s most effective anti-fraud tool. Most notably, the ...
On June 26, Connecticut Governor Ned Lamont signed into law a bill expanding the state’s False Claims Act. The bill, “An Act Concerning Liability for False and Fraudulent Claims,” expands the law to cover non-healthcare related fraud. Prior to the signing of the bill, Connecticut was one of several states ...
This post originally appeared in the NYU Law Compliance and Enforcement Blog. On June 1, 2023, the Supreme Court issued a unanimous decision in the consolidated case of U.S. ex rel. Schutte v. SuperValu, Inc. (“SuperValu”) and U.S. ex rel. Thomas Proctor v. Safeway, Inc. (“Safeway”), holding that subjective intent is relevant for determining whether a ...
Federal and state False Claims Acts require a qui tam attorney to file a qui tam lawsuit. This lawsuit is filed in federal courts under seal, which means it is not available to the public. The government will then decide whether it will intervene on the case. Successful whistleblowers may be eligible to receive between 15 and 30 percent of the total recovery.
Any individual with information about fraud against the U.S. government may become a whistleblower and file a qui tam lawsuit under the False Claims Act. This includes individuals living in foreign countries. Whistleblowers may be employees, contractors, or even someone involved in the fraud who can produce substantial evidence to convict.
Qui tam whistleblowers can receive between 15 and 30 percent of the total recovery the U.S. collects. If the government intervenes in the case and the case is successful through a settlement or a trial, the whistleblower is entitled to between 15 percent to 25 percent of the amounts collected.
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