The qui tam provision of the Federal False Claims Act (FCA), or “Lincoln Law,” empowers whistleblowers (also known as a qui tam relator) who have firsthand knowledge of frauds or violations against the government to report them to the appropriate officials.

The provisions also incentivize whistleblowers with awards for their cooperation in working directly with government investigators, often in the capacity of a confidential informant. The False Claims Act is the most effective whistleblower law ever passed to protect and reward whistleblowers who expose government contract fraud.

The FCA qui tam law sets mandatory minimum payments to whistleblowers to help convince “insiders” to take the risk of losing their jobs or suffering other harms. This mandatory minimum is enforceable in court. The guaranteed minimum payments, which are often in the millions of dollars, are essential for convincing potential whistleblowers to step forward.

Read the Law

The False Claims Act is codified as 31 U.S.C. §§ 3729-33.

Section 3729 sets forth anti-fraud requirements of the Act, and 31 U.S.C. 3731 includes the provisions related to filing a qui tam lawsuit.

Key Takeaways

  • A False Claims Act whistleblower can receive between 15 and 30 percent of the total recovery the U.S. gets from the defendant. Since 1986 approximately $7.3 billion has been paid in whistleblower rewards.
  • Under Section 3730(h) of the False Claims Act, 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.
  • The statute of limitations for a qui tam action is either six years after the date from when a fraud was committed; or three years beyond the date which the United States should be aware of the “material facts,” – but this should not exceed 10 years.
  • It is not unusual for qui tam cases to remain under seal for an extended period, even for multiple years. The government is typically required to file periodic reports with the district court explaining the reasons for extending the seal.

Qui Tam Definition and Pronunciation

What does qui tam mean? The word qui tam is pronounced “kee tam,” or often also pronounced as “kwee tam,” which means “in the name of the king.” Under the False Claims Act, qui tam allows persons and entities with evidence of fraud against federal programs or government contracts to file a qui tam lawsuit against the wrongdoer on behalf of the United States Government.

The History of the False Claims Act

The original False Claims Act was created and signed into law by President Abraham Lincoln on March 2, 1863, at the height of the U.S. Civil War.

During the Civil War, there were several contracting scandals in which the government was ripped off. Fraudsters did things like selling sawdust as gun power or selling contaminated foods for the Union army.

To prevent his from happening again, the government wanted to enlist “insiders” to provide information to stop the frauds. For their information, they would be rewarded 50% of the sanctions collected by the federal government as a result of their whistleblowing.

The False Claims Act was amended and significantly strengthened in 1986, 2009 and 2010.

Read Stephen Kohn’s testimony on qui tam rewards under the False Claims Act before the House Oversight Committee: “Restoring the Power of the Purse: Legislative Options”

Examples of Government Contracting Fraud

Government contracting fraud misuses taxpayer money and can put lives at risk. The most common types of government contracting fraud include illegal billing schemes and over-billing, the substitution of inferior equipment, and lack of quality control. Below is a short list of the most common types of fraud in which qui tam actions are filed:

  • Overbilling the government for more than was provided;
  • Kickbacks;
  • Fraud in obtaining a government contract;
  • Providing defective goods to the government;
  • False statements on customs forms;
  • False statements to get a government lease;
  • Failure to comply with government contracts or leases;
  • Failure to pay monies owed to the government;
  • Knowingly presenting (or causing to be presented) to the federal government a false or fraudulent claim for payment;
  • Conspiring with others to get a false or fraudulent claim paid by the federal government;
  • Knowingly using (or causing to be used) an invalid record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the federal government.

Under the qui tam provisions of the FCA, a private citizen can file a complaint in federal court alleging fraud against the government, which directly or indirectly implicates taxpayer dollars. In addition to government contracting fraud, the FCA whistleblower law also extends to other industries where government monies are involved and programs violated under the False Claims Act.

These types of fraud include:

  • Healthcare Fraud: Medicaid and Medicare Fraud committed by doctors, hospitals and other types of medical care facilities; Unnecessary medical procedures billed to Medicaid or Medicare, such as upcoding; Illegal marketing of drugs by pharmaceutical companies;
  • National Defense Fraud: Defense contract fraud, where funds are shifted from one contract to another to profit, or the intentional inflation of costs;
  • Education & Financial Aid Fraud: For-profit colleges and universities violate the rules of the student loan programs improperly recruiting students to generate income;
  • Bank & Mortgage Fraud: Bankers submitting fraudulent claims for government insurance based on wrongful foreclosures;
  • Underpayments to Government: A reverse false claims action can occur when defendants knowingly make a false statement in order to avoid having to pay the government when payment is otherwise due.

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. If you have knowledge of government contract fraud and need a whistleblower advocate to help you with your case, contact us for a free and confidential consultation.

Qui Tam Rewards

The False Claims Act qui tam provision incentivizes whistleblowers to give the government the best evidence, related to the biggest frauds.

A False Claims Act whistleblower can receive a whistleblower reward of between 15 and 30 percent of the total recovery the U.S. gets from the defendant. The other award programs offer between 10 and 30 percent, depending on the sanction amount. The Dodd-Frank Act, Securities Exchange Act, IRS Whistleblower Reward Program, Commodity Exchange Act and Foreign Corrupt Practices Act all have provisions for the mandatory payment of whistleblower rewards to qualified whistleblowers.

There are no “caps” on awards; the value of the information the whistleblower provides serves as the basis for the award’s amount: The better the information provided, the larger the sanction. The larger the sanction, the larger the reward. The government is required to make these payments. If the government refuses to pay the requisite reward, you can challenge that denial in court.

Protection for False Claims Act Qui Tam Whistleblowers

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.

Qui Tam Statute of Limitations

The statute of limitations for a qui tam action is either six years after the date from when a fraud was committed; or three years beyond the date which the United States should be aware of the “material facts,” – but this should not exceed 10 years. The statute of limitations for a False Claims Act whistleblower retaliation case is three years.

In Cochise Consultancy Inc. v. United States, ex rel. Hunt, Kohn, Kohn and Colapinto presented an amicus curiae in a case filed to the Supreme Court on behalf of a qui tam whistleblower. Justices unanimously ruled in favor of whistleblowers, finding that a ten-year statute of limitations is applicable to whistleblower-initiated claims when under specific conditions. This decision was a significant victory for whistleblowers under the False Claims Act.

Keep in mind, every law has its own rules and regulations governing the filing a qui tam lawsuit or a request for a reward. These procedures are very technical. Failure to file a timely claim following the specific procedures outlined in each law can result in an otherwise qualified whistleblower losing his or her right to a reward.

Filing Qui Tam Lawsuits (“Actions”)

The partners at Kohn, Kohn & Colapinto law firm have been using the False Claims Act law qui tam provisions to file qui tam lawsuits on behalf of whistleblower clients for over 30 years. We help clients safely and confidentially navigate the complex process of filing an action, while offering confidentiality and protection throughout the entire process.

The process of filing a qui tam lawsuit and process is as follows:

  1. A complaint, known as a qui tam action, is confidentially filed under seal in federal district court following the federal rules of Civil Procedure.
  2. At the same time, a copy of the action with written disclosure statement of substantially all material evidence must be confidentially served to the U.S. Attorney General.
  3. Qui tam relators filing a qui tam action must also comply with other requirements of the law, such as confidentially filing an action under seal, and being the first to file.
  4. Relators then wait until the United States decides to “intervene in the case. If so, the case is taken out of seal and filed on the public docket.
  5. Once the seal has been broken, a whistleblowers identity is no longer confidential. However, the whistleblower can ask the court to keep his or her identity confidential.
  6. If the United States intervenes, they will take over the litigation and proceed to prosecute the fraudster, with the whistleblower as a party in the case.
  7. If the intervention is declined, the whistleblower has the right to proceed with the lawsuit. However, the results are slim that he or she will win without the US.
  8. Those who submit claims may also run the risk for possible sanctions for misconduct if the claim is frivolous and unwarranted.

It is not unusual for qui tam cases to remain under seal for an extended period, even for multiple years. The government is typically required to file periodic reports with the district court explaining the reasons for extending the seal. Some cases resolve relatively quickly while other cases move to full litigation and may continue for several years before final decision or settlement.

Any whistleblower who believes they may have original information covered under a reward law should carefully read the following Rules for Whistleblowers from The New Whistleblower’s Handbookand seek professional legal advice.

Qui Tam Attorney Fees

Many whistleblower attorneys work for a “contingency” fee. In a contingency fee case the clients do not pay any attorney’s fees. If the whistleblower loses his or her case, they do not owe the attorney any money. If the whistleblower wins the case, the contingency payment for the attorney is generally between 30% and 40% of the award.

Deciding to “Blow The Whistle”

The firm’s qui tam cases have resulted in the U.S. government recovering hundreds of millions of dollars stolen each year from American taxpayers. If you believe you have knowledge of contracting fraud or violations against the government, you have the legal right to act by filing a qui tam lawsuit to stop the fraud. Through these actions, our team can help you obtain substantial whistleblower rewards and further transparency.

False Claims Act and Qui Tam Resources

In addition to these highly effective laws, Congress recently enacted an Auto Safety Whistleblower Reward law and is considering strengthening the wildlife/seafood/lumber-importation whistleblower reward laws. There is also a qui tam whistleblower reward law for seamen who report ocean pollution on the high seas.