Qui Tam Lawsuits: Whistleblower’s Guide
The public depends on whistleblowers to keep the government and government contractors honest. Over the past two decades, qui tam suits have become important tools that the federal government and a number of states use in combating fraud in the healthcare, defense-contracting, and many other industries.
Whistleblowers, also known as qui tam relators, can earn 15-30% of the funds recovered by the government. The phrase “qui tam” (often pronounced “kee tam”) literally means “in the name of the king.” In modern days, “qui tam” refers to the type of lawsuit that allows a private person to prosecute a lawsuit for the government and receive a reward.
What is a Qui Tam Lawsuit?
Qui tam lawsuits are a type of whistleblower lawsuit brought under the federal False Claims Act (“FCA”). The False Claims Act is a law that provides rewards for whistleblowers in successful cases where the government recovers funds lost due to fraud. Many states also have false claims acts that prohibit fraud against the state government which can also be enforced through a qui tam lawsuit.
The False Claims Act is codified at 31 U.S.C. § 3729-33 with anti-fraud requirements in § 3729 and qui tam provisions in § 3730.
What Types of Fraud Might Lead to a Qui Tam Lawsuit?
The type of fraud that might lead to a qui tam lawsuit is fraud against the government that directly or indirectly implicates taxpayer dollars. This includes both government contracting fraud and fraud in industries where government monies are involved, such as healthcare or education.
Below is a list of some of the common types of fraud alleged in qui tam lawsuits:
- Defense contractor fraud;
- Overbilling the government;
- Fraud in obtaining a government contract;
- False statements (for example, to get a government lease);
- Medicare and Medicaid fraud (including unnecessary medical procedures or upcoding; illegal marketing of drugs);
- Abuse of disaster relief loans;
- Construction fraud;
- Failure to comply with government contracts or leases;
- Failure to pay monies owed to the government; and
- Providing defective goods to the government.
What is a Qui Tam Relator?
A qui tam “relator” is the term for the private person or entity that files a qui tam lawsuit. A qui tam relator has certain defined rights under the FCA, including the right to pursue a qui tam claim on their own if the government declines to intervene. Qui tam relators are also referred to as whistleblowers or qui tam whistleblowers.
Who Can File a Qui Tam Lawsuit?
If you work for a government contractor or a recipient of government funds and you have information about fraud by your employer or other parties, you can help the government recover the money it is due.
While most qui tam whistleblowers are employees of the company or contractor committing the fraud, any person with information about fraud against the government may become a whistleblower and bring a qui tam lawsuit.
How Long Do Whistleblowers Have to Decide Whether to File a Qui Tam Lawsuit?
Failing to file a timely claim can result in an otherwise qualified whistleblower losing their right to a reward. The statute of limitations for a qui tam action, which is the time by which a qui tam whistleblower must file, is either: six years from the time the fraud was committed, or three years from the time the government official with responsibility for investigating the fraud knew or reasonably should have known of the facts relating to the fraud – but this total time should not exceed 10 years from when the fraud was committed.
Potential whistleblowers should also be aware of the FCA’s “first to file” provision, which provides that whoever files first is the only person with a right to the compensation claim. Future allegations about the same fraudulent activity will be barred if they state the facts that have already been disclosed in another qui tam case.
The “first to file” clause is intended to incentivize timely whistleblower reports to the government and to discourage repetitive lawsuits that could not result in a separate and distinct recovery.
How Can Whistleblowers Safely Report Fraud and File a Qui Tam Lawsuit?
Potential whistleblowers face difficult questions in considering whether to blow the whistle as well as in considering when to do so, how, and to whom. Whistleblowing may put the whistleblower’s career at risk, but conscience and civic duty may weigh heavily in favor of blowing the whistle in spite of that risk. Moreover, as stated above, the FCA offers substantial incentives to whistleblowers who provide information that lead to a recovery by or on behalf of the government.
The FCA requires that a qui tam whistleblower use an attorney to file a qui tam case. Once the whistleblower has retained an attorney, the attorney will draft and file a complaint under seal in federal court. A filing “under seal” means that the complaint is kept confidential so that only the government is aware of the case. Even the person or organization being accused of fraud is not told about the qui tam complaint without the court’s permission. This seal provides the government with time to investigate the allegations and determine whether it will join the whistleblower’s case.
What Happens after a Qui Tam Lawsuit is Filed?
After the qui tam whistleblower’s attorney has filed the qui tam case under seal in federal court, the government investigates the allegations and determines whether to join, or “intervene,” in the case. The FCA states that a qui tam case will be sealed for 60 days while the government conducts its investigation. Courts often extend the seal period to give the government more time to complete its investigation.
The government intervenes in only a small percentage of qui tam lawsuits filed each year. If the government declines to intervene, the whistleblower may continue the case on their own. If the government chooses to intervene, it takes control of the lawsuit, although the qui tam whistleblower and their attorneys still participate. Once the government intervenes, the case is taken out of seal and filed on the public docket: this means that the whistleblower’s identity is no longer confidential. However, the qui tam whistleblower can ask the court to keep their identity confidential.
Most qui tam cases are resolved through settlement negotiations rather than through trial in court, although lawsuits may proceed to discovery, trial, and judgment.
Defendants found liable may have to pay as much as three times the government’s losses plus penalties for each false claim, and the whistleblower may be eligible to receive a portion of any recovery.
What Rewards are Available for Qui Tam Whistleblowers?
A qui tam whistleblower can receive an award of between 15 and 30 percent of the total recovery the United States gets from a defendant. There are no caps or maximum awards. The value of the information the whistleblower provides serves as the basis for the award’s amount. Therefore, the better the information provided, the larger the recovery, the larger the reward.
What Protections are Available for Qui Tam Whistleblowers?
As discussed above, until the government intervenes in a qui tam case, the filed complaint remains under seal, which keeps the identity of the qui tam whistleblower confidential. After the government intervenes, the whistleblower can ask the court to keep their identity confidential after the complaint is filed on the public docket.
In addition, the False Claims Act states that any employee who is discharged, demoted, harassed, or otherwise retaliated against for taking actions to promote the purposes of the FCA can file a retaliation claim in federal court. This action can be filed as part of a qui tam reward case or as a standalone cause of action. The FCA provides for a jury trial and full “make whole” relief, which includes double back pay, reinstatement, and compensation for any special damages including litigation costs and reasonable attorneys’ fees. The statute of limitations for an FCA retaliation claim is three years from the date of the retaliation.
Why Hire Katz Banks Kumin?
Katz Banks Kumin represents qui tam whistleblowers who seek to help the government recover money obtained through fraud in a wide range of industries. While some firms have a narrow focus on qui tam claims, we bring our qui tam clients a broad range of expertise in employment issues too. We stand out with our ability to handle all of our qui tam clients’ employment issues, including related retaliation claims and severance negotiations. If you have information about fraud in connection with government contracts or grants, contact the experienced lawyers at Katz Banks Kumin to determine whether your information might be the basis for a viable qui tam lawsuit. Your communications with us are confidential and without cost or further obligation.