WHAT DOES QUI TAM MEAN?
Qui tam is shorthand for the Latin Phrase, qui tam pro domino quam pro seipso, meaning “He who is as much for the King as for himself.” Qui tam statutes date back to the 13th century England. The actions were a means of enabling private parties to allege the King’s interest and therefore gain access to the Royal Courts.
Today, a qui tam lawsuit is one brought under the False Claims Act by a private plaintiff on behalf of the Federal or State Government (rather than by the Government itself). These actions are sometimes referred to as whistleblower lawsuits.
WHAT IS A “RELATOR”?
The person (plaintiff) who brings an action under the False Claims Act is known as a “relator.” That is, a relator is a qui tam plaintiff.
HOW OLD IS THE FALSE CLAIMS ACT?
The False Claims Act was originally enacted by Congress in 1863, as a response to widespread abuses by government contractors against the Union Army during the Civil War. The Act was modified in 1943 by setting up certain restrictions concerning the relator and their recovery. Such restrictions in the 1943 amendments, and subsequent unfavorable case law, led to the decreased use of the qui tam provisions.
However, in 1986, as more and more fraud went undetected and unaddressed (especially in the defense industry), the public and Congress became outraged. The law was then amended to strengthen the incentives for citizens to expose fraud as qui tam relators. Since the revitalization in 1986, the number of qui tam lawsuits filed have greatly increased each year.
HOW MUCH MONEY HAS BEEN RETURNED TO THE U.S. TREASURY AS A RESULT OF QUI TAM LAW SUITS?
Since the 1986 amendments to the False Claims Act, qui tam actions have returned over $12 billion to the US Treasury, as reported by the DOJ in September, 2003. Relators have received over $1 billion of this amount.
WHAT TYPES OF ACTS ARE COVERED BY THE FALSE CLAIMS ACT?
Common acts that constitute legal violations under the False Claims Act are:
Knowingly submitting (or causing the submission of) false or fraudulent claims for payment.
Knowingly making (or causing to be made) a false record or statement to get a false or fraudulent claim paid or approved by the Federal Government.
Knowingly making (or causing to be made) a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit property to the Federal Government;
Conspiring to defraud the Federal Government by getting a false or fraudulent claim allowed or paid.
In general, the False Claims Act covers fraud involving any federally funded contract or program, with the exception of tax fraud. Healthcare and defense contracts have traditionally been the top two areas involving prosecution under the False Claims Act.
The False Claims Act is intended to reach all fraudulent activity which causes the government to pay out too much money. Accordingly, a false claim may take many forms, the most common being a claim for goods or services not provided, or provided in violation of contract terms, specification, statute, or regulation (such as in conjunction with kickbacks). Each and every claim submitted under a contract or other agreement which was originally obtained by means of false statements, falsities, or in knowing violation of any statute or applicable regulation, constitutes a false claim.
WHAT IS THE LIABILITY FOR VIOLATING THE FALSE CLAIMS ACT?
The defendant is liable for three times the amount of damages which the Government sustains because of the fraud/false claims. For instance, if unwarranted charges are in the amount of $1 million, the defendant is liable for $3 million, plus civil penalties for each false claim (invoice, demand, document for payment, etc.).
In addition, Defendants are liable for civil penalties between $5,500 and $11,000 for each claim. Each separate bill, voucher, or other “false payment demand” constitutes a separate claim for which a civil penalty may be imposed.
HOW AND WHEN CAN A PRIVATE PLAINTIFF (RELATOR) BE REWARDED FOR BLOWING THE WHISTLE UNDER THE FALSE CLAIMS ACT?
First, in order to be eligible to recover compensation under the False Claims Act, a person must file a qui tam lawsuit. Simply informing the Government about the false claims is not enough.
Second, a relator may receive compensation only if, and after, the Government and Relator recover money from the defendant as a result of the lawsuit. Just the act of filing the lawsuit is not enough.
In short, it is only the filing of a qui tam lawsuit and a subsequent settlement or favorable verdict resulting in a recovery, which enables a private party to receive a reward under the False Claims Act.
HOW MUCH MONEY CAN A PRIVATE PLAINTIFF (RELATOR) RECEIVE FOR BRINGING A QUI TAM ACTION?
A relator, (qui tam Plaintiff) can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable verdict or settlement.
If the Government intervenes and joins a lawsuit brought by a relator, the relator generally is eligible to receive at least 15 percent, and up to 25 percent of the recovery, depending on the relator’s contribution to the prosecution of the lawsuit.
If the Government chooses not to intervene and the relator proceeds with the lawsuit on his own, the relator can receive between 25 and 30 percent of the recovery.
From 1986 through September, 2003, the total amount of recoveries paid or to be paid to relators was approximately $1 billion.
CAN THERE BE MORE THAN ONE PLAINTIFF IN A PARTICULAR QUI TAM LAWSUIT?
Yes. More than one person or entity can join together and file a qui tam lawsuit.
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:
Six years from the date of the violation;
Three years after the Government knows or should have known about the violation, but in no event longer than 10 years after the violation of the act.
WHAT IF SOMEONE ELSE HAS ALREADY FILED A FALSE CLAIMS ACT LAWSUIT AGAINST THE SAME COMPANY THAT I WANT TO FILE AGAINST?
If the Government or another private person has already filed a False Claims Act lawsuit based on the same allegations as you are aware of, your lawsuit will be subject to dismissal.
HAVE I LOST MY RIGHT TO BRING A QUI TAM ACTION IF I HAVE ALREADY INFORMED THE GOVERNMENT ABOUT THE FRAUD?
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. In fact, Nolan Law Firm encourages such a practice, and if you have not already done so, Nolan Law Firm, once retained, will do so on your behalf.
CAN I KEEP MY IDENTITY A SECRET IF I FILE A QUI TAM ACTION?
If you file a qui tam action, the Government will obviously know your identity, and your name will be open to disclosure to the Defendant at the point at which the lawsuit is unsealed, usually years later. During the initial seal period (the lawsuit is filed and sealed), neither the Defendant nor anyone else (except the Government), is made aware that you have filed the lawsuit.
DO I HAVE ANY PROTECTION AGAINST MY EMPLOYER FIRING OR OTHERWISE DISCRIMINATING AGAINST ME FOR BLOWING THE WHISTLE UNDER THE FALSE CLAIMS ACT?
Yes – but it is an after-the-fact remedy, not protection “per se.” The False Claims Act contains a section which has become commonly known as the “whistleblower protection” provision. Section 3730 (h) of the Act provides that an employee who is discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under the False Claims Act, including preliminary investigation, is entitled to special protection. The protection afforded to whistleblowers includes reinstatement with the same seniority status such employee would have had, but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney’s fees.
It is not enough that the employee file or intend to file a qui tam action. The employee must show that his/her actions are the basis for the employer’s retaliatory actions.