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What is a qui tam? The legal practice explained and its origin

Qui tam started here in the United States in the 1800s during the Civil War.  Originally it was named “the Lincoln Law” and was enacted in order to stop the corruption and fraud the government was suffering trying to buy supplies for the war.  The fraud was rampant at all levels, from the sale of food for the troops to supplying guns, bullets and boots.  Literally, nothing was purchased by the Union Army without some fraud and deceit hurting the government purchase.  The Union Army was suffering under the system of purchasing and wanted to find a way to stop companies and people from unscrupulous dealing with the government.  The solution came from an old English tradition that holds that “he who sues on our King’s behalf sues on his own behalf as well.” This was the first Qui tam law and was turned into a federal statute called the Federal False Claims Act.

Under this law, private citizens are empowered to sue, as if they are working for the US government, anyone who they know is ripping off the government.  The government must then award a percentage of the total recovery to that person.  The person who brings the action is called a “relator” but is better known in today’s language as a “whistleblower.”  The statute allows at relator to get between 15 and 30 percent of the total recovered funds.  Immediately those who were committing fraud were now in a precarious position.  Anyone who knew about their fraud could sue them and would be paid a good chunk of the money they recovered.  The incentive to rip off the government immediately fell, and the war effort got better.  Lincoln’s Law was a huge success.  By giving ordinary citizens the ability to make money by fighting fraud for the government it turned the tide on a war and left a lasting impression on the world of doing business in American with America!

How do large corporations handle whistleblowers?

Many companies are so large that they can’t control every division or regional manager.  Sometimes corporations have renegade employees who are risky and even underhanded when it is not the corporate culture to engage in this type of activity.  For those large companies, setting up a hotline for employees to self-report qui tam violations is a must.  Many corporations now are set up to handle their own incoming whistleblower calls.  They are learning to encourage whistleblowing for the long-term health and well-being of the company.  Setting up a division to ensure contractual compliance is also a well-established policy that creates an honest and profitable corporate culture.  Some larger corporations also hire active or retired state regulators or third parties to audit their records and to ensure they are living up to their end of the bargain.

By taking these affirmative steps the company starts to build a culture where whistleblowing is not a dirty word.  Unfortunately, the most difficult and serious obstacle to building a corporate culture that is compliant is the hatred and fear of whistleblowers.  In fact, almost all whistleblowers are retaliated against.  The most typical pattern of behavior is that an employee reports misconduct or fraud against their direct supervisor and that manager finds out.  Then that manager does whatever it takes to retaliate against the whistleblower.  Sometimes the retaliation is verbal threats; sometimes it is a demotion.  Other times the employee could be suspended or terminated. 

If a whistleblower is retaliated against is that a separate action of its own against the company? 

Yes, it is.  There are laws that protect whistleblowers from retaliation, but that does not stop it from occurring!  In fact, more than 90% of employees fear serious retaliation.  This is no way to run a company.  If your corporation has a culture that would create fear of retaliation due to a fraud complaint, you must re-evaluate the capacity of your business to sustain honest work.  Employees should not be scared to report fraud or misconduct.  Twenty percent of all whistleblowers are and subject to retaliation even though almost all states and the federal government have laws that prohibit this activity.  That is why it is important to have legal counsel from the moment you start down the reporting fraud path.  It may turn out wonderful for you and the company. They may say how happy they are you reported the fraud, but more likely than not, your company will fight back, and you will need legal counsel to protect you in the end.

At LaBovick Law Group, our Florida qui tam lawyer practice is exceptionally busy investigating qui tam violation cases throughout the United States.  Some are difficult to prove while others are so obvious it is hard to imagine they could not uncaught.  After you work in this industry for a while you never cease to be amazed at the complexity of the schemes to defraud the government.  If you have any questions or believe you know about significant fraud and abuse, please contact us; we are here to help.

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