False Claims Act
Qui Tam : An abbreviated version of the Latin phrase "Qui Tam pro domino rege quam pro si ipso in hac parte sequitur," which means "Who sues on behalf of the King, as well as for Himself." In Qui Tam litigation a private citizen (the whistleblower) who knows of fraud committed against the government may, through his own privately retained lawyers, file a law suit to recover the losses caused by the government fraud. When brought by private citizens, the plaintiffs are known as "relators" or "whistleblowers." The False Claims Act provides huge financial incentives to citizen whistleblowers to retain an attorney and come forward, prosecute these lawsuits and fight government fraud.
The first step to bringing a whistleblower case is deciding whether to file suit at all. Litigation should never be undertaken lightly, and qui tam litigation is no exception. Blowing the whistle can be an emotionally absorbing and career-altering step. That said, many whistleblowers who have tried and failed to stop the defrauders short of litigation see pursing qui tam actions as their civic duty and only ethical choice.
Fortunately, the law also rewards whistleblowers with a bounty, and the payments can be substantial. In the last decade alone, qui tam whistleblowers under the federal False Claims Act have recovered almost $10,000,000,000 for the United States, and have received over $1,600,000,000 for themselves as a reward. Qui tam law is truly one of the rare opportunities where you can do well by doing good. In addition to the possible financial rewards, whistleblower suits also bring needed protections for whistleblowers. The federal False Claims Act prohibits employment retaliation against whistleblowers and provides meaningful remedies, such as double back pay, emotional distress, and punitive damages, if the employer does not abide.
When the employer is a contractor exercising governmental powers, then the First Amendment to the United States Constitution can provide additional protections. Finally, if you involve an attorney early enough, it may be possible to stop the retaliation before it causes harm to your career with a court injunction that ends the harassment and preserves your job.
The federal civil False Claims Act, 31 U.S.C. § 3729, et seq., ("FCA") was originally enacted in 1863 to combat fraud perpetrated by defense contractors against the United States government during the Civil War. The current version of the FCA was enacted in 1982 and was amended in 1986; however, the FCA's purpose, to protect the United States government from fraud and abuse, remains unchanged. As discussed herein, the FCA's application to state agencies, is limited.
The FCA prohibits any "person" from:
- Knowingly submitting a false or fraudulent claim for payment to the federal government or causing such a claim to be submitted,
- Knowingly making or using a false record or statement to secure payment from the federal government for a false or fraudulent claim or causing such a false record or statement to be made or used, or
- Conspiring to get a false or fraudulent claim paid by the federal government.
The FCA specifically states that a person acts "knowingly" when that person: (1) has actual knowledge of the information, (2) deliberately ignores the truth or falsity of the information, or (3) recklessly disregards the truth or falsity of the information. The FCA also defines the term "claim" as any request or demand for money or property where the United States government provides any portion of the money or property which is requested or demanded.
A person who has violated the FCA must repay all of the falsely-obtained reimbursement and is liable for a civil penalty of up to $11,000 and three times the amount of actual damages the federal government sustained for each false claim that was submitted. In addition, a person who has violated the FCA may be terminated from participation in federal health care programs, including the Medicare and Medicaid programs.
When a relator brings a qui tam action, the United States government may choose to intervene in the lawsuit and exercise primary responsibility for prosecuting, dismissing, or settling the claim. If the government declines to intervene, the relator can pursue the suit individually. As a reward for filing the action, a qui tam relator may receive between fifteen and thirty percent of the sum recovered for the government, in addition to attorneys' fees and other expenses.
Alternatively, if a court determines that a relator's suit was frivolous, clearly vexatious, or brought primarily to harass the defendant, the relator will have to reimburse the defendant for the fees and costs it spent defending the lawsuit.
The FCA offers "whistleblower protection" to employees who bring suit pursuant to the FCA. If these employees are discharged, demoted, suspended, threatened, harassed, or discriminated against because of their involvement in an FCA claim, the employee may bring suit against his or her employer. A court may then determine that the employee is entitled to reinstatement, twice the amount of back pay plus interest, attorneys' fees, and other costs and expenses.
As previously noted, the FCA has limited application to state agencies. While state agencies may be subject to FCA lawsuits filed by the United States Attorney General, the United State Supreme Court has determined that state agencies cannot be sued by relators.
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