- What is the goal of the False Claims Act?
- What does "qui tam"mean?
- What is a "relator"?
- Where can the False Claims Act be found?
- How old is the False Claims Act?
- How much money has been returned to the U.S. Treasury as a result of False Claims Act lawsuits?
- What types of activities are covered by the False Claims Act?
- Does the False Claims Act cover tax fraud?
- Does the False Claims Act cover government waste and mismanagement?
- What is the liability for violating the False Claims Act?
- How and when can a private plaintiff receive an award for blowing the whistle under the False Claims Act?
- How much money can a private plaintiff receive for bringing a qui tam action?
- Can there be more than one private plaintiff in a particular qui tam lawsuit?
- Is there a deadline for filing a qui tam action?
- How is a qui tam action filed?
- What happens after a qui tam action is filed?
- How long does a qui tam action take?
- What if someone else has already filed a False Claims Act lawsuit against the same company or individual that I want to file against?
- Do I have to report the fraud that I know about to the government or my employer before filing a qui tam action?
- 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?
- Can I keep my identity a secret if I file a qui tam action?
- Do I have any protection against my employer for firing or otherwise discriminating against me for blowing the whistle under the False Claims Act?
- Will the wrongdoer(s) go to jail because of my qui tam action?
- Do I need a lawyer to file a qui tam action?
- How do I find a qualified lawyer to file a qui tam action?
- How much does it cost to file a qui tam action?
- How do I find out more?
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 goal of the False Claims Act is to incentivize integrity, bring law enforcement attention on schemes that defraud taxpayers, and to change corrupt corporate cultures.
The term "qui tam" stands for a longer Latin phrase [qui tam pro domino rege quam pro se ipso in hac parte sequitur] 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.
A whistleblower that files a suit under the False Claims Act is known as a relator, instead of a plaintiff. Technically, the United States (or the state in a state FCA case) is the plaintiff.
The False Claims Act can be found in the United States Code, Title 31, Sections 3729 through 3733 (31 U.S.C. §§ 3729-3733).
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), Senator Charles Grassley (R-IA) and Representative Howard Berman (D-CA) 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.
Between 1986 and the end of FY 2011, Federal False Claims Act settlements and judgements have totaled $31 billion. This sum does not include criminal fines or money recovered to the states from associated False Claims Act cases -- an additional $9 billion.
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. Federal tax fraud is covered by the IRS whistleblower law and program.
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.
No. The False Claims Act explicitly excludes tax fraud. That said, there is an IRS Whistleblower law, separate from the Federal False Claims Act, which provides for whistleblower awards of 15 to 30 percent of the amount recovered. To file under this section of the law, however, the tax, penalties, interest, and additions in dispute must total a sum in excess of $2 million. Tax fraud for significant sums of less than $2 million may also generate a smaller associated reward. For smaller sums, an alternative course of action is to call the IRS Fraud Hotline at 1-800-366-4484 or to fill out the information referral form on the IRS web site.
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.
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 $5,500 to $11,000 for each false claim.
A whistleblower can only collect an award under the False Claims Act if he or she files a qui tam lawsuit, the case is either won or settled, and the whisteblower is the first to file on at least some portion of the covered conduct. Merely informing the government about a fraud is not enough -- a case must be filed. Furthermore, a whistleblower in a False Claims Act case will receive an award only if, and after, the government recovers money from the defendant as a result of the lawsuit.
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.
Yes. More than one person or entity can join together and file a qui tam lawsuit.
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. 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.
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.
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 also on 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.
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 several years.
As with other complex federal civil litigation, after the complaint is served on the defendant, a qui tam action may be delayed by contentious, costly, and time-consuming discovery and motions.
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, but the seal period may be extended upon request by the government, and it is not unusual for it to last well over a year or two.
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. However, if your allegations are different from those of the earlier suit, the first to file rule may not apply. Because cases are under seal, you and your attorney may not be able to determine if if a suit has already been filed addressing the fraud alleged in your complaint.
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.
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. However, this can be avoided if you file promptly after informing the government.
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 out that a False Claims Act case has been filed, as well as the identity of the relator. 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. In addition, it may be possible to incorporate so that your name does not show up on the caption line of the FCA complaint. If you are seriously concerned about the disclosure of your identity, your attorney may be able to help you minimize that eventuality.
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.
A qui tam suit is a civil action, not a criminal action. For that reason, imprisonment is not a sanction in a qui tam case.
Filing a qui tam action may, but does not necessarily, trigger a criminal investigation and prosecution by the government which could lead to criminal fines or 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.
Though the False Claims Act does not seem to bar pro se litigation, several courts have ruled that a pro se relator cannot prosecute a qui tam action on their own since they would be acting as attorney for the government.
Qui tam litigation is a specialized area of the law, and you should be careful to select a qualified attorney. Unfortunately, not many lawyers have experience in qui tam litigation. At a minimum, you should seek an attorney with experience in federal civil litigation.
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).
If you have any questions about the False Claims Act and its qui tam provisions, please feel free to contact us. You can also send an e-mail to PBurns@taf.org, but you should be aware that confidentiality cannot be guaranteed on the Internet; if you have any concerns about confidentiality, please contact us by phone or by U.S. mail.
Note: TAF Education Fund has extensive expertise in the False Claims Act and qui tam law, but it is not a law firm and does not represent outside clients or provide legal advice.