What does "qui tam" stand for?

"Qui tam," short for "qui tam pro domino rege quam pro si ipso in hac parte sequitur," is a Latin phrase which translates to "he who brings an action for the king as well as for himself."

The qui tam mechanism allows a private person with evidence of fraud to bring a lawsuit on behalf of the Government (the private person is referred to as a "relator" or "whistleblower"). The whistleblower receives a portion-- which could be up to 30%-- of the Government's recovery from the lawsuit.

How is "qui tam" pronounced?

"Qui tam" is pronounced a variety of ways, including "key tam," "kwee tahm," or more formally, "kwày tæm."

What is the False Claims Act (FCA)?

The FCA, 31 U.S.C. §3729 et seq., is a federal statute designed to combat fraud against the federal Government. The original FCA dates back to 1863 and was enacted to combat fraud by private contractors during the Civil War. Congress amended the FCA substantially in 1986 in order to strengthen the public-private partnership between the qui tam relator and the Government.

The 1986 FCA amendments increase rewards for successful whistleblowers, protect whistleblowers from employment retaliation, allow whistleblowers to remain as parties even after the Government joins in the action, and eliminate the need for a qui tam relator (or the Government) to prove specific intent to defraud (i.e., defendants can be held liable under the FCA for acting in "deliberate ignorance" or in "reckless disregard" of the truth).

Today, FCA litigation has expanded far beyond the defense industry and in fact, spans the spectrum of fraudulent conduct.

What types of conduct does the FCA prohibit?

The FCA is violated where a person deceives the Government in order to obtain money or improperly be relieved from paying money to the Government.

The FCA's specific prohibitions include:

• Knowingly presenting (or causing to be presented) to the Federal Government a fraudulent claim for payment;
• Knowingly using (or causing to be used) a false record or statement to get a false record or statement to get a claim paid by the Federal Government;
• Conspiring with another to get a false or fraudulent claim paid by the Federal Government; and
• Knowingly using (or causing to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the Federal Government.

"Knowingly" is defined under the statute as any of the following: (1) actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required. 31 U.S.C. §3729(c).

Does the FCA address fraud committed against state-funded programs?

If the state program receives any portion of its funding from the federal Government (and many do), the FCA likely applies. In addition, twelve states have enacted whistleblower statutes that specifically address fraud against state-funded programs, most of which are closely modeled after the federal FCA.

New Mexico is the most recent state to enact a whistleblower statute, joining Arkansas, California, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, Tennessee, Texas, Utah and Virginia. Legislation is currently pending in several other states including Alaska, Connecticut, Kansas, Maryland, Mississippi, Missouri, New Jersey, New York, Oklahoma, Pennsylvania, and Washington.

How much money has the Government recovered as a result of the FCA and its qui tam provisions?

The United States has recovered more than $12 billion under the FCA. More than $7.8 billion of this resulted from the efforts of private persons who bring qui tam actions.

In recent years, health care fraud has become the largest source of FCA enforcement. In 2003 alone, the Government recovered $2.1 billion under the FCA.

Since 1986, Relators have received over $1 billion as their share of the government recoveries. Relators’ share of recoveries in 2003 was $319 million.

For more information on FCA and whistleblower recoveries, we recommend, Reducing Health Care Fraud: An Assessment of the Impact of the False Claims Act .

Do the FCA's prohibitions apply to everyone?

The FCA provides liability against "any person who knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval." 31 U.S.C. §3729(a)(1).

The United States Supreme Court in U.S. ex rel. Stevens v. Vermont Agency of Natural Resources, 529 U.S. 765 (2000), held that the FCA's definition of "person" does not include a state government. The Supreme Court, in a unanimous decision in U.S. ex rel. Chandler v. Cook Cty., Illinois, 538 U.S. 119 (2003), clarified that while states cannot be sued under the FCA, the exclusion does not extend to local governments, including counties and municipalities.

Individuals and corporations (or other business or non-profit entities) are also subject to FCA liability.

What are the penalties for violating the FCA?

A person who violates the FCA is liable to the Government for three times the actual damages suffered by the Government, mandatory civil penalties of $5,500 to $11,000 for each false claim submitted (the civil penalty is periodically adjusted for inflation), and costs. 31 U.S.C. § 3729(a).

A defendant must also pay the relator's reasonable expenses, costs and attorneys' fees incurred in bringing the qui tam action. 31 U.S.C. §3729(d).

Who can be a qui tam relator?

The FCA's qui tam provisions allow a private person to bring a lawsuit on behalf of the United States Government. 31 U.S.C. §3730(b). The private person must have non-public information of the fraud (unless they qualify as an "original source" of the information, in which case the percentage of recovery available is reduced). 31 U.S.C. §3730(e)(4)(A). This jurisdictional bar (referred to as the "public disclosure" provision) effectuates the FCA's purpose in encouraging only those qui tam suits that actually alert the Government to fraud.

Likewise, the private person must also be the first-to-file the lawsuit. 31 U.S.C. §3730(b)(5). This "first-to-file" rule of the FCA is heavily-litigated. Disputes commonly arise where two lawsuits allege the same fraud against different defendants (even related companies) or where the two lawsuits allege a slightly different fraud against the same defendant.

What are the benefits to bringing a qui tam suit?

The FCA and its qui tam provisions is one of the Government's most effective weapons against fraud. By taking the bold step to become a whistleblower, you are exposing the fraud that depletes federally funded programs every day.

And or course, successful whistleblowers are rewarded for their hard work and efforts in bringing the lawsuit. Whistleblowers may receive between 15 and 30 percentage of the money recovered by the Government as a result of their lawsuit, whether by judgment, settlement or otherwise. 31 U.S.C. § 3730(d).

In recent years, rewards to whistleblowers have collectively amounted to over $800 million dollars.

Are there disadvantages?

There are disadvantages or risks attached to any type of litigation. Many whistleblowers experience frustration at some point during the process. Whistleblowers may feel like the investigation is taking too long (the Government's investigation may take a year or more to complete). Whistleblowers may also wish they had more information concerning the status of the Government's investigation.

Whistleblowers may also feel nervous or apprehensive about others "finding out" that they filed a qui tam suit. While the efforts of whistleblowers are gaining in recognition and prestige, there are still many people who prefer to turn a blind eye towards fraud and dislike it when others "rock the boat."

Finally, whistleblowers may be disappointed in the result of the case. Despite the strength of the case at the beginning of the lawsuit, contingencies may occur which lead to a lesser recovery than the whistleblower (or their attorney) anticipated, or in some cases, no recovery at all.

Is there a time limit for filing a lawsuit?

Yes, a qui tam lawsuit must be filed within the later of the following: (1) six years from the date of the FCA violation; or (2) three years after the Government knows or should have known about the material facts concerning the FCA violation, but in no event longer than ten years. 31 U.S.C. §3731(b).

What if someone else has already filed a qui tam suit alleging the same fraud?

The FCA has a "first-to-file" provision intended to bar "copycat" lawsuits. 31 U.S.C. §3730(b)(5). As described above, the impact of this provision is difficult to gauge at the time the lawsuit is filed. It is often difficult, if not impossible, to know whether anyone else has filed the same lawsuit since FCA cases are filed under seal and often remain under seal for a significant length of time during the Government's investigation.

What happens after my qui tam suit is filed?

A qui tam complaint is filed under seal in federal court and served on the U.S. Attorneys' Office for the judicial district in which you file and also on the Department of Justice in Washington D.C. A disclosure statement describing all material evidence and information in the relator's possession is also served on the Government. The case will remain under seal while the Government investigates the allegations of your complaint.

The initial seal period lasts 60 days, but in practice, is often much longer (the Government will periodically ask the court for extensions of the seal period). 31 U.S.C. § 3730(b)(3). At the end of the seal period, the Government decides whether to intervene in all or a portion of your lawsuit.

If the Government intervenes, it has primary responsibility for prosecution of the case. The relator, however, has the right to continue as a party in the action and to participate in the litigation. 31 U.S.C. §3730(c)(1).

If the Government declines to intervene, the relator has the right to prosecute the case. The Government may intervene in the case at a later time upon a showing of good cause. 31 U.S.C. §3730(c)(3).

In either event, after the seal period ends, the qui tam complaint is served on the defendant(s). The lawsuit will then proceed in the same manner as most other federal litigation. As with the vast majority of lawsuits, qui tam cases generally result in a settlement between all the parties.

To view the Chronology of a Typical Qui Tam Case, click here.

How long will the lawsuit take?

It is impossible to predict how long a qui tam case will take. Most qui tam cases take several years from the date of filing to completion, whether by settlement, judgment or otherwise.

Will anyone find out if I file a qui tam suit?

At some point, yes. When a qui case is filed, the complaint and disclosure statement are filed under seal but are served on the Government attorneys who will know your identity. After filing, the case remains under seal for at least 60 days (in most cases, the seal period will last much longer, perhaps even a year or more).

During the seal period, no one else should have knowledge of the qui tam suit, though in practice, defendants sometimes figure it out. Of course, if you discuss the qui tam suit with anyone other than your attorney (which you should not do), you risk others finding out prematurely and may even compromise the lawsuit.

After the seal period expires and the Government decides whether it will intervene in your case, the qui tam complaint will be served upon the defendants and your identify will be revealed. If the Government decides not to intervene in the action and you wish not to proceed, you may have the option of voluntarily dismissing the case while it is still under seal.

Do I need documentation of the fraud?

It is highly preferable for a qui tam relator to have documentation of the fraud or otherwise be able to corroborate the allegations. However, the relator must not attempt to obtain the documentation illegally or violate the terms of their employment, as doing so may compromise their potential qui tam case and/or subject them to civil and/or criminal liability.

What if I participated in the fraud?

Participation in the fraudulent conduct does not automatically preclude you from filing a qui tam suit. Many whistleblowers are not aware that their superiors are committing fraud or that they are participating in it. Others are "forced" to participate by their superiors. However, you should be aware that being a whistleblower does not automatically protect you from prosecution.

Moreover, if a court finds that a whistleblower "planned or initiated" the fraudulent conduct, the court has discretion to reduce the whistleblower's recovery. If a whistleblower is convicted of a crime arising from the fraudulent conduct, he or she will be dismissed from the lawsuit and will not share in any portion of the government's recovery. 31 U.S.C. § 3730(d)(3).

What if my employer fires me for reporting the fraud?

The FCA contains an anti-retaliation provision for the protection of relators. 31 U.S.C. § 3730(h). Under 3730(h), any employee who is fired, demoted, harassed or otherwise discriminated against because of lawful acts "in furtherance of" a qui tam action is entitled to all relief necessary to make the employee whole. This may include reinstatement, twice the amount of back pay, and payment of litigation costs and attorneys' fees.

In addition to section 3730(h) of the FCA, many states have laws that may protect a qui am relator from employment retaliation for reporting or refusing to participate in fraud.

How much does it cost to file a qui tam suit?

Most attorneys who specialize in whistleblower representation take cases on a contingent basis (i.e., the attorney receives payment only when you do) and will also pay for all costs associated with litigating the case, including necessary court filing fees.

If you do decide to hire an attorney to represent you in a qui tam action, you should make sure to review the attorney's engagement agreement carefully (or have another attorney review it for you) so that you are aware of any contingencies that require you to pay some of the costs.

You should also be aware that under the FCA, if the Government declines to intervene in your case, you then decide to continue the action anyway and the defendant prevails, the court may require you to pay the defendant's reasonable attorneys' fees and expenses if the court finds the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment. 31 U.S.C. §3730(d)(4).

How do I know if I have a case?

If you think you may have a qui tam case, we recommend that you immediately contact an attorney who specializes in the representation of whistleblowers. Your attorney will be able to advise you as to whether you should go forward with a lawsuit.

What should I look for in selecting an attorney?

FCA litigation is a highly complex area of law and therefore, you should look for an attorney who specializes in representing whistleblowers. While other law firms may agree to take your case, unless qui tam litigation is a substantial part of their practice, these firms and lawyers likely do not have the expertise, inside knowledge and established relationships with Government attorneys that experienced FCA litigators do.

FCA litigation can also be very frustrating for relators -- it is important to select a lawyer who will provide you with prompt, individualized attention and who will take the time to thoroughly investigate your case before advising as to whether you should move forward.

How can I find out more information?

Please feel free to contact us for further information. We also recommend that you visit the Taxpayers Against Fraud (TAF) website at www.taf.org. TAF is a non-profit, public interest organization dedicated to combating fraud against the federal Government through the promotion and use of the federal False Claims Act and its qui tam provisions.

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