Dating back to the reign of England’s King Henry III, the phrase “qui tam” is part of a Latin phrase that, loosely translated, means “he who brings an action for the king as well as for himself.” Qui Tam statutes were among the earliest laws passed by the U.S. Congress, but were gradually weakened. By the time of the American Civil War, fraud against the federal government was rampant. Shoddy goods of all types – uniforms, rifles, rations – were hamstringing the Union Army. With few federal enforcement resources at his disposal, President Lincoln urged Congress to pass the 1863 False Claims Act (also known as “Lincoln’s Law”) which gave financial incentives to private citizens who took action against companies or individuals whom they knew were defrauding the government.
While the statute was effective for a time, it did not stop fraud. During the Spanish-American War, meat that had been preserved with formaldehyde poisoned hundreds of American soldiers. Similar misdeeds occurred during World War II. By the 1980s, fraud against the Defense Department—in the form of $435 hammers and $7,000 coffee makers—was rampant. So, in 1986, Sen. Charles Grassley, a conservative Iowa Republican, teamed up with Rep. Howard Berman, a liberal California Democrat, to pass legislation that strengthened “Lincoln’s Law.”
The amended False Claims Act (FCA) allowed the whistleblowers – or relators – to get up to 30 percent of any money recovered by their lawsuit, depending on whether or not the government intervened to investigate their claim. It also strengthened whistleblower protections by allowing for claims to be made under confidential seal and protecting whistleblowers from retaliatory action by their employer.
Since 1987, Qui Tam whistleblowers have helped the U.S. government recover over $40.6 billion in taxpayer funds. And, even though abuses in defense contracting were the initial impetus for strengthening the law, over three fourths of the resulting recoveries have been to health care programs such as Medicare and Medicaid.
Thirty states now have state False Claims Acts that provide similar incentives and protections for whistleblowers who bring cases of fraud against state programs.
Qui Tam whistleblowers are individuals who possess non-public knowledge and evidence of fraud against their state or federal government. Employees of a larger company may have been required by their employer to participate in a fraudulent scheme involving a government program or witnessed others doing so. As a small business owner, an individual may have been offered incentives by a larger company to serve as a pass-through for small business set-aside contracts with the government. A county or city contracts officer may have been asked to submit federal grant certifications they know to be fraudulent.
As a government employee, you are not specifically barred from filing a Qui Tam lawsuit against your own agency, but the Justice Department usually opposes suits brought by this type of whistleblower, unless the individual has first exhausted all of the internal fraud reporting channels within the agency before availing him/herself of an FCA action.
Qui Tam cases with the highest likelihood of success are generally those where the fraud is currently ongoing and the potential whistleblower is still employed in the company, but you may still have a viable claim if your case meets all of the following criteria:
- Federal money must be involved, or, in a state with a False Claims statute, state money must be involved. Some state FCA statutes cover all state programs while others are more narrowly targeted.
- The amount of fraud should be sizeable (generally into the millions of dollars) in order for the government to consider applying some of its limited resources to the investigation. There must also be a reasonable expectation that the company or entity engaged in the fraud will be able to pay back the money and resulting fines.
- You must have actual evidence (emails, bills, invoices, training materials, audio or video tape, etc.) that proves the “who, what, when and where” of the fraud. Your evidence cannot come from any publicly disclosed source such as a media report, court record, administrative hearing, Congressional or state legislative hearing, GAO report or Freedom of Information Act request.
- The fraud cannot involve a state defrauding the federal government, although it can involve fraud against the federal government by a county or city.
- The company or entity that submitted a false claim to the government must have done so knowingly. The FCA does not cover:
- Mere mismanagement by a government contractor
- Wasteful contracts which the government entered into knowingly.
- Government’s own internal waste and mismanagement
- You must file your case within six years of the violation or three years after the government knows or should have known about the violation, and in no case longer than 10 years after the violation.
Cases brought under the federal FCA are filed in a U.S. District Court while state Qui Tam cases are typically filed in a state court, as defined in that state’s statute. This type of lawsuit is filed under seal and remains a secret to everyone except the federal judge and government prosecutors for a defined period of time (typically 60 days) to allow the Justice Department (or a state attorney general’s office) the time needed to investigate the matter. Government officials can ask the judge to extend the seal further to provide additional time for their investigation.
Once its investigation is complete, the government will determine whether or not it will join the whistleblower’s attorney and “intervene” in the case. Occasionally, the government intervenes in more than one case related to the same fraud. Cases in which the government intervenes most frequently settle out of court. If a defendant is found liable in a Qui Tam lawsuit under the False Claims Act, it could be forced to pay as much as three times the amount of money it has been found to have defrauded the government. It will also have to pay other penalties.
When the government declines to intervene in a case, it may be because prosecutors feel the dollar amount is too small, the case lacks merit, the fraud would be too difficult to prove or any number of other reasons. However, they may also decline to intervene because they believe the relator’s counsel can prove the case without their help or because they are dedicating government resources to criminal charges related to the civil case. The government may also choose to file a statement of “non-intervention,” which means that, while they are not currently intervening, they reserve the option to do so in the future.
A whistleblower does have the right to continue to pursue the case even if the government chooses not to participate. Some un-intervened cases have been successful – either settled out of court or successfully tried – but they are inherently riskier for both the relator and his attorney. An experienced Qui Tam attorney will advise you of these risks.
The amount awarded to the whistleblower (also known as the relator) will be based on how much the state or federal government actually recovers from the defendant either through a settlement or a successful judgment in court – not the actual losses the government has suffered. If the federal government intervenes in the case, the whistleblower will receive anywhere from 15-25 percent of the recovery amount. If the government does not intervene, the relator could receive anywhere from 25-30 percent. Relator recoveries in state fraud cases vary from state to state. Other funds, such as attorneys’ fees, investigative and expert expenses and other court costs, may also be awarded.
Many people who witness fraud may be hesitant to file a Qui Tam lawsuit for fear of retaliation from the defendant. They may have tried unsuccessfully to raise an alarm inside their company and feel they will be risking their jobs if they bring the matter to the government’s attention. However, the False Claim Act provides protection against this type of retaliation. An employer cannot fire, demote or deny an employee benefits to which he/she is normally entitled in retaliation for having blown the whistle about fraud against the government. If the employer is found to have attempted any sort of retaliation, then the relator will be able to add these damages to his/her Qui Tam lawsuit. The employee may be able to obtain damages for not only back wages, but future wages as well.
Attorneys who file Qui Tam cases in federal or state court race against the “first-to-file” clock while, at the same time, making the initial filing as complete and compelling as possible. These time constraints make it important to choose an attorney with a successful track record in FCA cases, credibility with state and federal prosecutors, and sufficient financial resources to investigate and, if necessary, litigate your case. This is why many of Baron & Budd’s Qui Tam cases have been referred to us by another law firm, frequently by an employment lawyer whose client sought representation for a retaliation claim.
Specialized Qui Tam law practices are typically national in scope since federal FCA suits can be filed in any federal court. Experienced Qui Tam attorneys are familiar with which federal prosecutors have the experience and resources available to investigate cases such as yours, as well as with which courts are typically amenable to granting prosecutors the time necessary for a full investigation of whistleblower claims.
Even when the case involves fraud against a single state government, it may be better to hire an experienced Qui Tam lawyer from out-of-state who will establish a relationship with a local counsel in your state.
Our whistleblower team will evaluate the basic information you provided through our intake form or over the phone. If we believe that you have a potential Qui Tam case, we will typically arrange for a longer interview. Information that you provide during these initial discussions is protected under attorney client privilege in anticipation of litigation. If we feel that your case does, in fact, have a chance of significant fraud recovery for the government, we will ask you to sign a retainer agreement to authorize our firm to act on your behalf in the case.
Once a retainer is in place, clients provide us with all of the evidence they have obtained. This can be done electronically, through Baron & Budd’s secure client portal, or in hard copy documents, thumb drives, CDs, etc. Our team will review the evidence provided and will work with you to:
- Formulate a viable legal theory for your case.
- Research the likelihood that other cases involving the same fraud may already be on file.
- Determine a realistic estimate of your case’s value.
- Develop a plan for documenting potential damages of the fraud.
- Determine the defendant’s ability to pay a recovery.
- Vet the case with potential prosecutors.
- Evaluate the potential risk/reward of the case.
Once you decide to proceed, we will represent you in investigations, court filings, hearings, settlement negotiations or litigation. We are also here to answer any questions your family may have about your case as well as to handle any media inquiries when the case is unsealed or settled.