Note: The following is not intended to be and should not be considered legal advice. Rather, it is only general information about the law. For legal advice, you should consult an attorney.
The following frequently asked questions about the False Claims Act and its qui tam provisions are answered below:
1. What does "qui tam" mean?
The term "qui tam" stands for a longer Latin phrase that is translated as "he who brings an action for the king as well as for himself." Qui tam is the technical legal term for the unique mechanism in the federal False Claims Act that allows persons and entities with evidence of fraud against federal programs or contracts to sue the wrongdoer on behalf of the Government.
A qui tam action is one brought under the False Claims Act by a private plaintiff on behalf of the Federal Government (rather than by the Government itself). These actions are sometimes referred to as "whistleblower lawsuits." With qui tam, the Government has the right to intervene and join the action. Or the Government may decline intervention, in which case the private plaintiff may proceed on his own.
There are a number of pronunciations of qui tam. The simplest, most pedestrian sounding, is key tam (rhymes with "ham"). Black's Law Dictionary suggests kweye (rhymes with "eye") tam. Others insist upon kweye tom (like the common name, but often said with an upper crust accent). And some say kwee (rhymes with "key") tam or kwee tom.
2. What is a "relator"?
A private plaintiff under the False Claims Act is known as a relator. That is, a relator is a qui tam plaintiff.
3. Where can the False Claims Act be found?
The False Claims Act can be found in the United States Code, Title 31,
Sections 3729through 3733 (31 U.S.C. §§ 3729-3733).
4. How old is the False Claims Act?
The False Claims Act, also known as the "Lincoln Law," dates back to the Civil War. Plagued by war profiteers selling the Union Army shoddy supplies at inflated prices, President Lincoln signed the False Claims Act into law in 1863. The original law included qui tam provisions that allowed private persons to sue those who defrauded the Government and receive 50 percent of any recovery from the defendant.
The qui tam provisions were greatly weakened as a result of congressional amendments in 1943, and thereafter qui tam litigation became virtually nonexistent. However, in 1986, as more and more fraud went undetected and unaddressed (especially in the burgeoning defense industry), Sen. Charles Grassley (R., Iowa) and Rep. Howard Berman (D., California) joined forces to amend the law and strengthen the incentives for citizens to uncover and fight fraud as qui tam relators. The 1986 False Claims Act Amendments received widespread bi-partisan support and were signed into law by President Reagan. Since their revitalization in 1986, the qui tam provisions have been increasingly used, with a record 278 cases filed in fiscal year 1995.
5. How much money has been returned to the U.S. Treasury as a result of qui tam lawsuits?
Since the 1986 False Claims Act Amendments, qui tam actions have returned over $1.8 billion to the U.S. Treasury. In fiscal year 1997 alone, over $600 million was recovered by qui tam cases.
6. What types of activities are covered by the False Claims Act?
The primary activities that constitute violations under the False Claims Act are:
(1) knowingly presenting (or causing to be presented) to the Federal Government a false or fraudulent claim for payment;
(2) knowingly using (or causing to be used) a false record or statement to get a claim paid by the Federal Government;
(3) conspiring with others to get a false or fraudulent claim paid by the Federal Government; and
(4) 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.
In general, the False Claims Act covers fraud involving any federally funded contract or program, with the exception of tax fraud. While the majority of qui tam actions to date have involved government contracts (most notably, Department of Defense contracts), health care fraud is now the biggest target of qui tam suits.
A broad array of scenarios can constitute False Claims Act violations. Some examples include the following: a contractor falsifies test results or other information regarding the quality or cost of products it sells to the Government; a health care provider bills Medicare and Medicaid for services that were not provided or were unnecessary; or a grant recipient charges the Government for costs not related to the grant.
7. Does the False Claims Act cover tax fraud?
No. The False Claims Act explicitly excludes tax fraud. Section 3729(e) states that the Act "does not apply to claims, records, or statements made under the Internal Revenue Code."
8. Does the False Claims Act cover waste and mismanagement?
No. While the Government undoubtedly loses millions of dollars each year through its own waste and mismanagement, as well as that of outsiders (e.g., government contractors), the False Claims Act does not provide a remedy for waste or mismanagement that does not rise to the level of fraud. The Act is aimed only at fraud committed against the Government.
9. What is the liability for violating the False Claims Act?
Violators of the False Claims Act are liable for three times the dollar amount that the Government is defrauded (i.e., treble damages) and civil penalties of $5,000 to $10,000 for each false claim.
10. How and when can a private plaintiff receive an award for blowing the whistle under the False Claims Act?
In short, it is only the filing of a qui tam lawsuit and a subsequent settlement or favorable judgment which enables a private party to receive a recovery under the False Claims Act.
First, in order to be eligible to recover money under the Act, you must file a qui tam lawsuit. Merely informing the Government about the False Claims Act violation is not enough.
Further, a relator (i.e., qui tam plaintiff) receives an award only if, and after, the Government recovers money from the defendant as a result of the lawsuit.
11. How much money can a private plaintiff receive for bringing a qui tam action?
A relator (i.e., qui tam plaintiff) can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or settlement.
If the Government intervenes and joins an action brought by a relator, the relator generally is eligible to receive at least 15 percent, but not more than 25 percent, of the recovery, depending upon the relator's contribution to the prosecution of the action.
If the Government chooses not to intervene and the relator proceeds with the action on his own, the relator can receive between 25 and 30 percent of the recovery.
12. Can there be more than one private plaintiff in a particular qui tam lawsuit?
Yes. More than one person or entity can join together and file a qui tam lawsuit.
13. Is there a deadline for filing a qui tam action?
Under the False Claims Act, an action must be filed within the later of the following two time periods:
(1) six years from the date of the violation of the Act; or
(2) three years after the Government knows or should have known about the violation, but in no event longer than ten years after the violation of the Act. (However, at least one circuit court has interpreted the second provision to require that qui tam actions be filed not later than three years after the qui tam plaintiff, rather than the Government, knows or should have known about the violation.) Further, if before you file, someone else files a False Claims Act lawsuit or helps to publicize allegations similar to yours, you may lose your right to bring a qui tam suit.
14. How is a qui tam action filed?
A qui tam complaint must be filed in federal district court in accordance with the Federal Rules of Civil Procedure. In addition, a copy of the complaint, along with a written disclosure statement of substantially all material evidence and information in the relator's possession, must be served on the Attorney General of the United States and should be served on the U.S. Attorney for the district in which the action is brought.
Further, and of utmost importance, the complaint must be filed in camera and under seal (and should be marked as such). Until the seal is lifted by the court, the complaint and its contents must be kept strictly confidential. The complaint must not be served on the defendant until the court so orders. If you violate the seal provision of the False Claims Act, your qui tam suit could be dismissed.
15. What happens after my qui tam action is filed?
After you file your qui tam complaint in federal district court and serve a copy of your complaint and disclosure statement on the U.S. Attorney General (and the U.S. Attorney for the district), your case remains under seal (i.e., in strict confidence) for at least 60 days. This 60-day seal period may be extended upon request by the Government. It is not unusual for the seal period to last a year or more.
During the seal period, the Government investigates your allegations. At the end of the seal period, the Government chooses either to intervene and proceed with the action or to decline intervention.
If the Government intervenes and proceeds with the action, the Department of Justice has primary responsibility for prosecuting the case. You, the relator, have the right to continue as a party in the action, and you (and your lawyer) may participate in the litigation subject to certain limitations. The Government may dismiss or settle the action notwithstanding your objections, but only if the court consents after a hearing on the proposed dismissal or settlement.
If the Government declines to intervene, you have the right to conduct the action on your own. The Government may, however, intervene at a later date upon a showing of good cause.
After the Government decides whether to intervene and the seal period ends, the complaint is served on the defendant. The lawsuit then proceeds generally in the same manner as any other federal civil litigation, except for the special issues raised by the qui tam concept.
16. How long does a qui tam action take?
The time from the filing of a qui tam action until its resolution varies greatly from case to case. One should, however, be prepared for a qui tam action to take years, sometimes as many as five or more.
As with other complex federal civil litigation, after the complaint is served on the defendant, a qui tam action often becomes mired in contentious, costly, and time-consuming discovery and motions. On top of this, of course, there may be a trial and appeals. In addition, the duration of a qui tam action is extended by the existence of the up front seal period. The qui tam complaint is not served on the defendant until after the seal is lifted. The seal period, during which the Government investigates the allegations and decides whether to join the action, lasts a minimum of 60 days. The seal period may be extended upon request by the Government, and it is not unusual for it to last over a year.
It is true that some qui tam actions are settled relatively quickly (e.g., within a year of filing), especially when the Government decides to intervene. But, in general, one would be wise not to expect a quick resolution.
17. What if someone else has already filed a False Claims Act lawsuit against the same company or individual that I want to file against?
If the Government or a private party has already filed a False Claims Act lawsuit based on the same allegations as the action you want to file, the statute bars you from bringing your lawsuit.
18. Do I have to report the fraud that I know about to the Government or my employer before filing a qui tam action?
In general, the False Claims Act does not require you to report the fraud before filing a qui tam action. However, there are circumstances in which you must, or would be wise to, inform the Government before filing. You may wish to speak with an attorney about this issue.
19. Have I lost my right to bring a qui tam action if I have already informed the Government about the fraud committed by the potential defendant?
No. You do not give up your right to bring a qui tam action by going to the Government before filing your qui tam lawsuit. You should be aware, however, that you are barred from bringing a qui tam suit based upon allegations or transactions which are the subject of a False Claims Act suit already filed by the Government. So, if you deliver your information to the Government before filing a qui tam action, and the Government in turn files a False Claims Act action before you file, then you will have lost your right to bring a qui tam lawsuit.
20. Can I keep my identity a secret if I file a qui tam action?
If you file a qui tam action, the Government will know your identity, and your name will likely be disclosed to the defendant at some point. During the initial seal period, (under the law) the defendant is not supposed to learn that you have filed the lawsuit; however, (in practice) defendants sometimes figure it out. After the seal period ends, when the Government announces its decision regarding intervention and the complaint is served on the defendant, your identity will be revealed. There are circumstances in which you may be able to file a qui tam action and then voluntarily dismiss it during the seal period without having your identity ever revealed to the defendant, but there is no guarantee of anonymity.
21. Do I have any protection against my employer firing or otherwise discriminating against me for blowing the whistle under the False Claims Act?
Yes. Under Section 3730(h) of the False Claims Act, any employee who is discharged, demoted, harassed, or otherwise discriminated against because of lawful acts by the employee in furtherance of an action under the Act is entitled to all relief necessary to make the employee whole. Such relief may include reinstatement, double back pay, and compensation for any special damages, including litigation costs and reasonable attorneys' fees. You should be aware, however, that the scope of whistleblower protection under Section 3730(h) is an issue that currently divides the courts.
In addition, many states have wrongful discharge or other employment laws that may provide remedies for such discrimination. You may wish to speak with an attorney in your state to learn about such state laws.
22. Will the wrongdoer(s) go to jail because of my qui tam action?
A qui tam suit is a civil action, not a criminal action. As such, imprisonment is not a remedy. Filing a qui tam action may, but does not necessarily, trigger a criminal investigation and prosecution by the Government which could lead to jail time for the wrongdoer(s). Any criminal action would be separate from the qui tam action, and you would have no control over it. However, you may be asked to assist in the Government's criminal action.
23. Do I need a lawyer to file a qui tam action?
You are not required to use a lawyer to file a qui tam lawsuit; you can file one on our own. Nevertheless, given the complexity and special features of qui tam litigation, most relators retain lawyers to represent them.
24. How much does it cost to file a qui tam action?
If you choose not to retain an attorney to represent you in your qui tam action, you will have to bear various costs directly (e.g., filing fees, photocopying, your time and effort). If you choose to hire an attorney, you will normally enter an arrangement which will set forth how much the attorney will receive in fees and who is responsible for out-of-pocket costs. Because most relators cannot afford to pay hourly fees as they are incurred, most qui tam attorneys accept a contingency fee; that is, the attorney gets paid only if there is a recovery, with the fee being some percentage of what you are awarded. With a contingency arrangement, you still may have to reimburse your attorney for out-of-pocket expenses (e.g., filing fees, travel, experts).
Copyright 1998 by Taxpayers Against Fraud, The False Claims Act Legal Center. All rights reserved.
The above is not legal advice. That can only come from a qualified attorney who is familiar with all the facts and circumstances of a particular, specific case and the relevant law. See Terms of Use. |