Qui Tam

The term “qui tam” originates from the Latin expression “qui tam pro domino rege quam pro sic ipso in hoc partre sequitur,” which means, “Who as well for the king as for himself sues in this matter.” Under U.S. qui tam laws a citizen may file a lawsuit against an individual or entity that has intentionally or negligently committed fraud against the federal government. U.S. qui tam rights are explicated in the False Claims Act.

The False Claims Act

The False Claims Act states that a person may not deliberately or negligently file a false claim for payment by the U.S. government. Claims are usually made for reimbursement on products or services the government has received. They may also be made to cover Medicaid and Medicare costs. The False Claims Act entitles the government, or a citizen acting on the part of the government, to recuperate moneys lost on fraudulent claims.

The False Claims Act was enacted in 1863 to stop supplier fraud against the Union Army. Rotten food, broken ammunition, damaged ships, and weak horses were just a few of the products contractors were providing the government with at exaggerated prices. Major adjustments were made to the act in 1943 in reaction to concerns that citizens would use qui tam laws to unjustly take bounties for fraudulent activities that the government was already aware of. The 1943 changes restricted qui tam relators, or ‘whistleblowers’, from filing complaints on cases that were already known by the state, and reduced the relator reward from an original fifty percent of the recovery to a maximum of ten to twenty-five percent. In 1986 further amendments were made to the False Claims Act. These changes, generally known as the qui tam amendments, were introduced in a retrospective move aimed at encouraging citizen policing of government funds. By 1986 fraud against the government had become pervasive, and was for the most part going unchecked. False claims were costing the government billions, yet citizens were hesitant to bring qui tam actions forward because there was little chance of financial return, but great potential for personal loss.

The Qui Tam Amendments

The 1986 amendments to the False Claims Act were aimed at lowering the barriers that hampered citizens from bringing fraud cases before the court. The following incentives were given to encourage fraud reporting:

• Relators would receive fifteen to twenty-five percent of the fraud settlement should the government pick up the case.
• Relators who brought forth a settlement without the assistance of the government would receive twenty-five to thirty percent of the resolution.
• Defendants, if found guilty, would be required to pay three times the amount they had falsely claimed from the government.
• Relators would be permitted to play an active role in the actions even if the government stepped in.
• Relators would be protected from retaliation by the accused parties.
• Defendants, if found at fault, would be responsible to pay the legal costs amassed by the relator.

The Whistleblower

Qui tam relators frequently work, or have worked, for the companies they are exposing and thus face significant career risks for the sake of bringing their cases forward. Although whistleblower protection rights have been written into the False Claims Act, a qui tam action is not a legal suit to be entered into without extensive legal consultation.

Whistleblower facts:

• The average qui tam recovery has been $5.8 million, and the average relator compensation has been $1 million.
• Whistleblower compensation is determined based on three questions: Was the relator an original source of information? Was he or she in any way involved in the fraud? And did he or she significantly contribute to the case?
• If the government chooses to pursue a qui tam case, the relator will be entitled to fifteen to twenty-five percent of the money recovered in addition to legal fees. If, however, the relator tries an individual or company for fraud without the assistance of the government and wins a settlement, he or she will be entitled to twenty-five to thirty percent of the settlement in addition to legal fees.
• A qui tam case carried by the relator may be deemed “clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment” by the court; if such a verdict is declared against the whistleblower, he or she will be required to bear his or her own legal costs, and may be responsible to reimburse the legal costs of the defendant.
• The 1986 Qui Tam Amendments include a clause on whistle blower protection. The amendments require that employees who have been “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against” for bringing qui tam investigations forward be compensated for double the amount of wages they lost and be reinstated at their former level of employment. They will also be reimbursed for any damages they suffered because of discriminatory treatment.

Qui Tam cases

Most qui tam cases have exposed fraud that occurred against the government’s health and defense sectors. False claims generally fit into one of the following categories: charging for a service or product that was not provided; overpricing products and services during price negotiations; charging for one service or product but substituting something of lower cost or quality; or (in the healthcare industry) providing government funded care to an ineligible person.

Some recent examples of these actions have included cases where prescription orders were only partially filled though the entire price was charged, cases where the government ordered high quality military supplies and was delivered inferior products, and cases where the government was charged man-hours for work that was not done.

A significant percentage of the U.S.’s annual health care spending is lost on fraud. Roughly $6.5 billion has been restored to the government through the efforts of qui tam relators since 1987 and approximately one billion dollars has been awarded to qui tam whistleblowers.

If you are interested in further information on qui tam, or your personal case, please contact a qualified qui tam attorney.

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