The Government’s Most Valuable Ally: The False Claims Act Whistleblower

If the year 2020 taught us anything, it is that the government spends money on almost everything. Vaccines and life-saving medical equipment, stimulus checks and loans to small businesses, schools and universities, guns and body armor and aircraft carriers. The amount of money spent by the federal government in the pandemic ($6.55 trillion in 2020, according to the U.S. Treasury) means that the opportunities for fraud in America—fraud on the government and on the taxpayers—have never been greater.

Fortunately, the government has formidable allies in its fight to stop fraud: whistleblowers. Fraud is difficult to catch, because it is based on lies and conspiracies. When people learn about fraud going on in their workplace or in their community, it may not seem worth it to tell someone. Often it is your word against your boss, or your word against an entire Fortune 500 company. A whistleblower can lose their job, and find it difficult to get a new one after they have accused their old employer of fraud. To encourage people to come forward and report fraud, the government has a powerful tool called the False Claims Act.

Passed in 1863 and signed into law by President Lincoln, the False Claims Act is based on an even older concept from England, the qui tam lawsuit. A qui tam suit is a lawsuit by an individual person on behalf of the government.[1] The False Claims Act allows whistleblowers who have original information about fraud on the government to sue the person or company they believe is committing fraud in a qui tam lawsuit. Whistleblowers who file qui tam lawsuits are called relators.

If the False Claims Act lawsuit is successful, it can recover as much as three times the amount defrauded for the government, and reward the whistleblower/relator with a percentage of the amount recovered in the lawsuit.

False Claims Act Qui Tam Lawsuits 101

If you are a potential fraud whistleblower, first, get a lawyer. The False Claims Act is an extremely complicated law, and it is difficult if not possible for whistleblowers to file a qui tam without a lawyer who understands it.

Next, the whistleblower provides all the information and evidence they have about the fraud in a disclosure to the U.S. Department of Justice. The disclosure’s purpose is to give the Justice Department all the information that they will need to investigate the whistleblower’s allegations.

Then it is time to file the qui tam lawsuit, which is filed under seal. This means that the lawsuit is absolutely secret from everyone except for the whistleblower, the whistleblower’s lawyer, and the government officials assigned to the case. The person the whistleblower is accusing of fraud does not know who the whistleblower is or what they have alleged. This gives the government time to investigate the fraud, and protects the whistleblower from retaliation.

What comes next can be a long wait, potentially years. Government investigations of fraud are complex, and may involve many factors that the whistleblower is unaware of. During this time, the whistleblower can continue to provide information and assist the government’s investigation. Eventually, the government will make a decision on whether or not to intervene in the case.

Intervention means that the government takes over the lawsuit. At this point, the whistleblower can still participate in the lawsuit, but the government makes the important decisions about the case, and decides whether or not to settle with the defendant.

The government’s decision to intervene, like the government’s investigation, is based on many factors. Unfortunately, even if the whistleblower’s information is correct and the fraud is real, the government can decide to not intervene, because it does not have enough resources to continue the lawsuit, or for other reasons that the whistleblower may never know about. However, if the government does not intervene, the whistleblower can still proceed with the lawsuit on their own, and recover the government’s money for it if they are successful.

Not A Get-Rich-Quick Scheme, But a Powerful Partnership

Whether or not the government takes over the lawsuit, a successful False Claims Act lawsuit will recover money for the government, whether through a jury trial or a settlement with the defendant. If the lawsuit recovers any money, the whistleblower is guaranteed a share of that money—between 15 and 25 percent if the government intervenes, and between 25 and 30 percent if the government does not intervene.

The whistleblower’s share is often called a bounty, but it is not a get-rich-quick opportunity for the whistleblower. False Claims Act cases are complicated, and the whistleblower has a long road ahead if they accuse their employer or a powerful company of fraud. The purpose of the whistleblower’s share is to encourage whistleblowers to give their information to the government, so that they know that when the case becomes public, they will be rewarded with some money for risking everything to file the qui tam.

The False Claims Act represents a partnership between the whistleblower and the government. And the partnership has been enormously successful. According to the Justice Department, False Claims Act lawsuits have recovered more than $64 billion for the taxpayers since 1986, and $2.2 billion in the year 2020 alone. This is why the False Claims Act is so important.

If you think you may have a False Claims Act case, contact a False Claims Act lawyer immediately. Taxpayers Against Fraud is an organization dedicated to fighting fraud against the government and protecting whistleblowers, and its members include the most experienced False Claims Act lawyers in the country.

Nicolas Mendoza is an attorney at Murphy Anderson PLLC

[1] Qui tam is part of a Latin phrase: “Qui tam pro domino rege quam pro se ipso in hac parte sequitur” which means “He who sues in this matter for the king as well as for himself.”