The following frequently asked questions about the False Claims Act and its qui tam provisions are answered below:
Note: The following is not intended to be and should not be considered legal advice. Rather, it is only general information about the law. For legal advice, you should consult an attorney.
The term "qui tam" stands
for a longer Latin phrase that is translated as "he
who brings an action for the king as well as for
himself." Qui tam is the technical legal term
for the unique mechanism in the federal False Claims Act
that allows persons and entities with evidence of fraud
against federal programs or contracts to sue the
wrongdoer on behalf of the Government.
A qui tam action is one brought under the False Claims Act by a private plaintiff on behalf of the Federal Government (rather than by the Government itself). These actions are sometimes referred to as "whistleblower lawsuits." With qui tam, the Government has the right to intervene and join the action. Or the Government may decline intervention, in which case the private plaintiff may proceed on his own.
There are a number of pronunciations of qui tam. The simplest, most pedestrian sounding, is key tam (rhymes with "ham"). Black's Law Dictionary suggests kweye (rhymes with "eye") tam. Others insist upon kweye tom (like the common name, but often said with an upper crust accent). And some say kwee (rhymes with "key") tam or kwee tom.
A
private plaintiff under the False Claims Act is known as
a relator. That is, a relator is a qui tam
plaintiff.
The
False Claims Act can be found in the United States Code,
Title 31, Sections 3729 through 3733 (31 U.S.C. ¤¤
3729-3733).
The
False Claims Act, also known as the "Lincoln
Law," dates back to the Civil War. Plagued by war
profiteers selling the Union Army shoddy supplies at
inflated prices, President Lincoln signed the False
Claims Act into law in 1863. The original law included qui
tam provisions that allowed private persons to sue
those who defrauded the Government and receive 50 percent
of any recovery from the defendant.
The qui tam provisions were greatly weakened as
a result of congressional amendments in 1943, and
thereafter qui tam litigation became virtually
nonexistent. However, in 1986, as more and more fraud
went undetected and unaddressed (especially in the
burgeoning defense industry), Sen. Charles Grassley (R.,
Iowa) and Rep. Howard Berman (D., California) joined
forces to amend the law and strengthen the incentives for
citizens to uncover and fight fraud as qui tam
relators. The 1986 False Claims Act Amendments received
widespread bi-partisan support and were signed into law
by President Reagan. Since their revitalization in 1986,
the qui tam provisions have been increasingly
used, with a record 278 cases filed in fiscal year 1995.
Since the 1986 False Claims Act
Amendments, qui tam actions have returned over $1
billion to the U.S. Treasury. In fiscal years 1994 and
1995 alone, over half a billion dollars was recovered by qui
tam cases.
The primary activities
that constitute violations under the False Claims Act
are: (1) knowingly presenting (or causing to be
presented) to the Federal Government a false or
fraudulent claim for payment; (2) knowingly using (or
causing to be used) a false record or statement to get a
claim paid by the Federal Government; (3) conspiring with
others to get a false or fraudulent claim paid by the
Federal Government; and (4) knowingly using (or causing
to be used) a false record or statement to conceal,
avoid, or decrease an obligation to pay money or transmit
property to the Federal Government.
In general, the False Claims Act covers fraud
involving any federally funded contract or program, with
the exception of tax fraud. While the majority of qui
tam actions to date have involved government
contracts (most notably, Department of Defense
contracts), health care fraud is increasingly a target of
qui tam suits.
A broad array of scenarios can constitute False Claims
Act violations. Some examples include the following: a
contractor falsifies test results or other information
regarding the quality or cost of products it sells to the
Government; a health care provider bills Medicare and
Medicaid for services that were not provided or were
unnecessary; or a grant recipient charges the Government
for costs not related to the grant.
No. The False Claims Act explicitly excludes
tax fraud. Section 3729(e) states that the Act "does
not apply to claims, records, or statements made under
the Internal Revenue Code."
No. While the Government
undoubtedly loses millions of dollars each year through
its own waste and mismanagement, as well as that of
outsiders (e.g., government contractors), the False
Claims Act does not provide a remedy for waste or
mismanagement that does not rise to the level of fraud.
The Act is aimed only at fraud committed against
the Government.
Violators of the False
Claims Act are liable for three times the dollar amount
that the Government is defrauded (i.e., treble damages)
and civil penalties of $5,000 to $10,000 for each false
claim.
In short, it is only the filing of
a qui tam lawsuit and a subsequent settlement or
favorable judgment which enables a private party to
receive a recovery under the False Claims Act.
First, in order to be eligible to recover money under
the Act, you must file a qui tam lawsuit. Merely
informing the Government about the False Claims Act
violation is not enough.
Further, a relator (i.e., qui tam plaintiff)
receives an award only if, and after, the Government
recovers money from the defendant as a result of the
lawsuit.
A relator (i.e., qui tam
plaintiff) can receive between 15 and 30 percent of the
total recovery from the defendant, whether through a
favorable judgment or settlement.
If the Government intervenes and joins an action
brought by a relator, the relator generally is eligible
to receive at least 15 percent, but not more than 25
percent, of the recovery, depending upon the relator's
contribution to the prosecution of the action.
If the Government chooses not to intervene and the
relator proceeds with the action on his own, the relator
can receive between 25 and 30 percent of the recovery.
Yes. More than one person or entity
can join together and file a qui tam lawsuit.
Under the False Claims
Act, an action must be filed within the later of the
following two time periods: (1) six years from the date
of the violation of the Act; or (2) three years after the
Government knows or should have known about the
violation, but in no event longer than ten years after
the violation of the Act. (However, at least one circuit
court has interpreted the second provision to require
that qui tam actions be filed not later than three
years after the qui tam plaintiff, rather than the
Government, knows or should have known about the
violation.) Further, if before you file, someone else
files a False Claims Act lawsuit or helps to publicize
allegations similar to yours, you may lose your right to
bring a qui tam suit.
A qui tam complaint must
be filed in federal district court in accordance with the
Federal Rules of Civil Procedure. In addition, a copy of
the complaint, along with a written disclosure statement
of substantially all material evidence and information in
the relator's possession, must be served on the Attorney
General of the United States and should be served on the
U.S. Attorney for the district in which the action is
brought.
Further, and of utmost importance, the complaint must be filed in camera and under seal (and should be marked as such). Until the seal is lifted by the court, the complaint and its contents must be kept strictly confidential. The complaint must not be served on the defendant until the court so orders. If you violate the seal provision of the False Claims Act, your qui tam suit could be dismissed.
After you file your qui
tam complaint in federal district court and serve a
copy of your complaint and disclosure statement on the
U.S. Attorney General (and the U.S. Attorney for the
district), your case remains under seal (i.e., in strict
confidence) for at least 60 days. This 60-day seal period
may be extended upon request by the Government. It is not
unusual for the seal period to last a year or more.
During the seal period, the Government investigates
your allegations. At the end of the seal period, the
Government chooses either to intervene and proceed with
the action or to decline intervention.
If the Government intervenes and proceeds with the
action, the Department of Justice has primary
responsibility for prosecuting the case. You, the
relator, have the right to continue as a party in the
action, and you (and your lawyer) may participate in the
litigation subject to certain limitations. The Government
may dismiss or settle the action notwithstanding your
objections, but only if the court consents after a
hearing on the proposed dismissal or settlement.
If the Government declines to intervene, you have the
right to conduct the action on your own. The Government
may, however, intervene at a later date upon a showing of
good cause.
After the Government decides whether to intervene and
the seal period ends, the complaint is served on the
defendant. The lawsuit then proceeds generally in the
same manner as any other federal civil litigation, except
for the special issues raised by the qui tam
concept.
The time from the filing of a qui
tam action until its resolution varies greatly from
case to case. One should, however, be prepared for a qui
tam action to take years, sometimes as many as five
or more.
As with other complex federal civil litigation, after
the complaint is served on the defendant, a qui tam
action often becomes mired in contentious, costly, and
time-consuming discovery and motions. On top of this, of
course, there may be a trial and appeals.
In addition, the duration of a qui tam action
is extended by the existence of the up front seal period.
The qui tam complaint is not served on the
defendant until after the seal is lifted. The seal
period, during which the Government investigates the
allegations and decides whether to join the action, lasts
a minimum of 60 days. The seal period may be extended
upon request by the Government, and it is not unusual for
it to last over a year.
It is true that some qui tam actions are
settled relatively quickly (e.g., within a year of
filing), especially when the Government decides to
intervene. But, in general, one would be wise not to
expect a quick resolution.
If the
Government or a private party has already filed a False
Claims Act lawsuit based on the same allegations as the
action you want to file, the statute bars you from
bringing your lawsuit.
In general, the False
Claims Act does not require you to report the fraud
before filing a qui tam action. However, there are
circumstances in which you must, or would be wise to,
inform the Government before filing. You may wish to
speak with an attorney about this issue.
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.
You should be aware, however, that you are barred from
bringing a qui tam suit based upon allegations or
transactions which are the subject of a False Claims Act
suit already filed by the Government. So, if you deliver
your information to the Government before filing a qui
tam action, and the Government in turn files a False
Claims Act action before you file, then you will have
lost your right to bring a qui tam lawsuit.
If you file a qui tam action, the Government will know your identity, and your name will likely be disclosed to the defendant at some point. During the initial seal period, (under the law) the defendant is not supposed to learn that you have filed the lawsuit; however, (in practice) defendants sometimes figure it out. After the seal period ends, when the Government announces its decision regarding intervention and the complaint is served on the defendant, your identity will be revealed. There are circumstances in which you may be able to file a qui tam action and then voluntarily dismiss it during the seal period without having your identity ever revealed to the defendant, but there is no guarantee of anonymity.
Yes.
Under Section 3730(h) of the False Claims Act, any
employee who is discharged, demoted, harassed, or
otherwise discriminated against because of lawful acts by
the employee in furtherance of an action under the Act is
entitled to all relief necessary to make the employee
whole. Such relief may include reinstatement, double back
pay, and compensation for any special damages, including
litigation costs and reasonable attorneys' fees. You
should be aware, however, that the scope of whistleblower
protection under Section 3730(h) is an issue that
currently divides the courts.
In addition, many states have wrongful discharge or
other employment laws that may provide remedies for such
discrimination. You may wish to speak with an attorney in
your state to learn about such state laws.
A qui
tam suit is a civil action, not a criminal action. As
such, imprisonment is not a remedy.
Filing a qui tam action may, but does not
necessarily, trigger a criminal investigation and
prosecution by the Government which could lead to jail
time for the wrongdoer(s). Any criminal action would be
separate from the qui tam action, and you would
have no control over it. However, you may be asked to
assist in the Government's criminal action.
You are not required to
use a lawyer to file a qui tam lawsuit; you can
file one on your own. Nevertheless, given the complexity
and special features of qui tam litigation, most
relators retain lawyers to represent them.
If you
have a potential qui tam case, TAF is available to
help you find an attorney with the necessary experience
to handle it. Qui tam litigation is a specialized
area of the law, and you should be careful to select a
qualified attorney. Unfortunately, not many lawyers have
experience in qui tam litigation. At a minimum,
you should seek an attorney with experience in federal
civil litigation.
If you choose not to
retain an attorney to represent you in your qui tam
action, you will have to bear various costs directly
(e.g., filing fees, photocopying, your time and effort).
If you choose to hire an attorney, you will normally enter an arrangement which will set forth how much the attorney will receive in fees and who is responsible for out-of-pocket costs. Because most relators cannot afford to pay hourly fees as they are incurred, most qui tam attorneys accept a contingency fee; that is, the attorney gets paid only if there is a recovery, with the fee being some percentage of what you are awarded. With a contingency arrangement, you still may have to reimburse your attorney for out-of-pocket expenses (e.g., filing fees, travel, experts). In cases in which TAF is involved, TAF usually assumes responsibility for out-of-pocket costs pursuant to an agreement with the relator and counsel.
If you
have any questions about the False Claims Act and its qui
tam provisions, please feel free to contact us at
Taxpayers Against Fraud, The False Claims Act Legal
Center (TAF), 1220 19th Street, N.W., Suite 501,
Washington, D.C. 20036. Our telephone number is
202-296-4826 or 1-800-US-FALSE (1-800-873-2573). We can
also be reached by facsimile at 202-296-4838. You can
also send us an e-mail at ams@taf.org, but you
should be aware that confidentiality cannot be guaranteed
on the Internet; if you have any concerns about
confidentiality, please contact us by phone or U.S. mail.
Note: TAF has extensive expertise in
the False Claims Act and qui tam, but it is not a law
firm and does not represent outside clients or provide
legal advice.
If you have questions about the law or are interested in pursuing a qui tam lawsuit, please feel free to contact us at:
Taxpayers Against Fraud The False Claims Act Legal Center 1220 19th Street, N.W. Suite 501 Washington, D.C. 20036
Phone: 202-296-4826 Toll Free: 1-800-USFALSE (1-800-873-2573) FAX: 202-296-4838 Auto-Reply E-Mail: taf-info@taf.org E-Mail: ams@taf.org (Alan Shusterman, Esq.)
Be aware that confidentiality cannot be guaranteed when sending e-mail via the Internet. If you have any concerns about confidentiality, please contact us by phone or U.S. mail.