One avenue for whistleblowers to take to report fraud against the government is to file a qui tam lawsuit under the federal False Claims Act. These lawsuits are complex because they have not two, but three parties to them – the whistleblower, the government, and the defendant or alleged fraudster.
Here are answers to common questions that potential whistleblowers have about the qui tam process.
What Does “Qui Tam” Mean?
First, let’s get the confusing terminology out of the way. The phrase “qui tam” (pronounced key-tam) is a shortened version of the Latin phrase qui tam pro domino rege quam pro si ipso in hac parte sequitur, which translates to “one who sues on behalf of the king as well as for himself.”
This phrase highlights the unique nature of qui tam allegations: A private citizen has discovered evidence of fraud against the government (no longer the king), and is taking matters into their own hands to stop the fraud and recover what was already taken.
What Fraudulent Conduct Can Be the Basis for a Qui Tam Claim?
Qui tam lawsuits allege fraud against a government program. There are lots of different government programs that can be defrauded, including:
- Federal grants
- Government contracts, including those with defense contractors
- Healthcare programs like Medicare, Medicaid, or Tricare
- Mortgage programs, like the one run by the Federal Housing Administration (FHA)
- The Paycheck Protection Program (PPP), which provided loans during the coronavirus pandemic through the federal Small Business Administration (SBA)
Just a few examples of fraudulent conduct against these programs are:
- Lying on applications for PPP funds
- Double billing the government for services provided to it
- Billing the government for goods or services that are more expensive than what was actually provided
- Paying kickbacks with government money
- Phantom billing, or submitting bills for compensation for services that were not provided
Some of the most common industries for government program fraud are in:
- Healthcare
- Pharmaceuticals and medical devices
- Defense contracting
- Mortgage or housing
- Science research
- Environmental cleanup or protection
Basically any industry or business that receives funding from the government can defraud the government.
People who have access to information that indicates that someone or a company, including their employer, is defrauding money from the government can become a whistleblower and file a qui tam action.
What is the Process for Filing a Qui Tam Claim?
Whistleblowers who have gathered sufficient evidence of fraud against a government program to sustain a case can file a lawsuit under the False Claims Act (31 U.S.C. §§ 3729 et seq.) in federal court. The lawsuit is filed under seal so the only parties that can see it are the court and federal law enforcement.
At this point, the whistleblower becomes what is known as a “relator.”
The court holds the qui tam lawsuit under seal for 60 days while the government conducts its own investigation into the allegations that it makes. This period of time can be, and frequently is, extended on request of law enforcement to give it more time to act.
During this time, law enforcement will take measures to ensure that your identity as a whistleblower is not revealed.
After its investigation, the government will decide whether to intervene in your case or not. This is a pivotal stage in the qui tam process. If a federal law enforcement agency intervenes in your case, they will take over the investigation, putting personnel and resources into the investigation that most whistleblower law firms cannot match.
Most whistleblowers celebrate the intervention by law enforcement, even though it will likely reduce the financial award that they can recover. Government intervention makes the investigation even more thorough, and is a strong indication that the qui tam allegations have merit – enough to justify taking up the law enforcement agency’s time and resources. While law enforcement rarely intervenes in qui tam actions, the ones that it does take over are disproportionately successful.
The downside of government intervention is also its upside: A federal agency takes your case over. They make the decisions on how to proceed and if, or whether, to settle the case or even to drop it.
If the government does not intervene in your case, you and your legal team would conduct the investigation and prosecute the fraud on the government’s behalf.
Can Whistleblowers Recover a Financial Award?
Whistleblowers who file qui tam claims advance under the False Claims Act, which provides some of the most generous financial rewards of all federal whistleblower acts. Whistleblowers can recover a percentage of the proceeds of the qui tam case, based on whether the government intervened in it:
- 15 to 25 percent if there was intervention
- 25 to 30 percent if there was not
The proceeds of the case, though, are three times the following:
While it is rare for qui tam actions to collect the full amount that is owed, often due to the defendant’s lack of funds to cover it, the whistleblower award can still be massive.
Are Relators Insulated from Retaliation?
Importantly, whistleblowers who file qui tam claims under the False Claims Act and become relators are also protected by the Act’s anti-retaliation provisions, found at 31 U.S.C. § 3730(h). These forbid the relator’s employer from retaliating against the relator for blowing the whistle on misconduct and government program fraud. If the employer retaliates anyway, the relator can file another lawsuit, this one typically for wrongful termination, and recover not just their back wages, but also a civil penalty equal to twice the amount of back wages that they are owed, plus the costs of filing the lawsuit.
“Even though it is unlawful, it is not uncommon for employers to retaliate against whistleblowers for filing a qui tam action. The amount that they end up paying for their retaliatory conduct is often seen as the cost of doing businesses through deterring other whistleblowers or stripping you of access to the damning information that support your lawsuit. This is why it is so important to hold employers who unlawfully retaliate against whistleblowers accountable to the fullest extent of the law.” – Dr. Nick Oberheiden, leading qui tam lawyer and founding partner of the national law firm for whistleblowers, Oberheiden P.C.
