What is a qui tam lawsuit?
Qui tam allows a private individual to file a lawsuit in the name of the U.S. Government, charging fraud by government contractors and other entities who receive or use government funds, and share in the recovery of any monies received (as much as 30% of the total). Successful qui tam suits help stop dishonest conduct and prevent similar conduct from happening in the future.
Initially enacted during the Civil War, the False Claims Act is also known as the “Lincoln Act,” the Whistleblower’s Act, or (more recently) the qui tam statute. This is a simplified version of the original Latin phrase “qui tam pro domino rege quam pro seipse,” which translates to “he who sues for the king as for himself.” The law initially targeted dishonest suppliers during the war because the government could not investigate and prosecute the fraud. This extends into today, since our federal government is enormous and is unable to look at every small detail of taxpayer funds.
Since 1986, more than 4,000 qui tam suits have been filed after the federal false claims act was strengthened to make it easier and more rewarding for private citizens to sue. The government has recovered billions as a result of these suits, and hundreds of millions have been paid out to whistleblowers.
Filing A Qui Tam Lawsuit
A private citizen, often known as a relator or a whistleblower, can file qui tam claim by filing under the False Claims Act in the United States District Court and must be served on the government. The defendant must NOT be served until the courts orders this to be done. It must be filed under seal, and must be accompanied by a comprehensive memorandum, not filed in court, but served on the government, detailing the facts of the complaint, together with copies of all relevant documents.
It is not permissible for the attorney or the relator/whistleblower to discuss the case or to disclose its existence to anyone, including the defendant and the media. If they do so it could jeopardize the case and affect the government’s ability to investigate the allegations in secret. Failure to follow these unique statutory requirements can result in a dismissal of the action.
After the complaint is filed under seal, and the memo and documents are served on the government, it has 60 days to intervene or decline to intervene, move for an extension of time to determine whether to intervene, seek dismissal of the action, or settle the case. Usually, the government will request numerous extensions of the 60-day initial investigatory period, since, 60 days is an unrealistically short period of time for the government to complete an investigation.
Upon completion of its investigation, the government has the option to take over the case. Regardless of whether the government intervenes, the relator/whistleblower (if he or she followed the proper procedures and is not precluded from recovery) is still entitled to a share of the recovery, and may pursue the case himself or herself on behalf of the government.
The government allows a relator to receive a part of the proceeds if funds are recovered from the defendant. The relator/whistleblower is entitled to at least 15 percent, but no more than 25 percent, of what the government recovers if the government joins the case. If the relator/whistleblower proceeds with a lawsuit against a defendant after the government decides not to be involved in the lawsuit, the relator/whistleblower is entitled to at least 25 percent, but not more than 30 percent, of the money the government recovers which includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim. To recover this reward, the relator/whistleblower must follow the statutory requirements. Simply providing basic information to the government does not entitle a whistleblower to recover under the False Claims Act.
To state a cause of action under qui tam, a relator may allege that defendant either:
Knowingly presented or caused to be presented, to an officer or employee of the United States government a false or fraudulent claim for payment or approval.
Knowingly, made, used, or caused to be made or used, a false record or statement to get a false or fraudulent claim paid by the government.
Conspired to defraud the government by getting a false or fraudulent claim allowed or paid.
State False Claims Acts
Most of the state false claims acts are based on the federal False Claims Act, and allow qui tam whistleblowers to bring claims on behalf of the state. However, there are important differences between these state false claims acts, and potential whistleblowers must pay careful attention to the specific requirements of each statute.
The following 28 states have enacted their own False Claims Acts:
It is important that a whistleblower seek the assistance of an attorney that is experienced and knowledgeable on the federal and state statutes. In some instances a fraud scheme can impact the federal government and multi-state governments.
Many states enacted a False Claims Act after Congress gave financial incentives to states with false claims acts that are modeled after the federal False Claims Act. These financial incentives have helped states recover billions of dollars in new found revenue for their states. It is highly likely that more states will enact a False Claims Act to maximize the revenue for their state.
There are three municipalities with their own false claims acts: Chicago, New York, and the District of Columbia.
Do you have any questions about the False Claims Act, Tax Fraud or Qui Tam? Call us today for a free case evaluation. We are available 24 hours a day/7 days a week to discuss your personal matter at (561-655-1777 or toll-free at 866-522-6842
Qui Tam Legal Resources and References: