Qui tam lawsuits are a type of whistleblower litigation. The plaintiff, known as a relator, is a private party that pursues legal action on behalf of the government. The relator’s goal in filing a qui tam lawsuit is to recover losses associated with the government being defrauded. Relators who successfully win qui tam lawsuits are generally eligible to receive a whistleblower reward.
We’ll delve deeper into what is the False Claims Act, what constitutes a violation of the Act, what a relator is, and many other details you need to know if you plan to file a qui tam lawsuit.
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What Is the False Claims Act?
This federal law, 31 U.S.C. §§ 3729 – 3733, first went into effect here in the U.S. in 1863. It gives the government the authority to hold anyone who knowingly submits a claim to defraud the government liable for doing so. The False Claims Act (FCA) allows federal officials to recover up to twice the government’s actual damages plus an additional penalty of $2,000 for each false claim filed.
The False Claims Act clearly spells out how the following activities are prohibited by federal law:
- Presenting a false claim for approval or payment
- Conspiring to violate the False Claims Act
- Making falsified records or statements to support a fraudulent claim
- Falsifying records to avoid or decrease one’s obligation to transfer property or pay the U.S. government
- Purchasing government property from someone unauthorized to facilitate such sales
- Falsifying how much or which property is intended to be used by the government
- Certifying receipt of government property on paper without knowing the veracity of that information
A whistleblower claim may result in a single individual who committed the violation—or a collective (such as company leadership) who knew about and turned a blind eye to the illicit activity—facing criminal charges or receiving fines.
18 U.S.C. § 287 states that whoever makes or presents a false, fictitious, or fraudulent claim is subject to fine or imprisonment. The U.S. Attorney’s Office may also file additional criminal charges against defendants alleged to have carried out criminal acts violating the False Claims Act. Some federal codes that federal prosecutors may allege that a defendant violated include:
- 18 U.S.C. § 288- Filing false claims through the postal service
- 18 U.S.C. § 289- Filing false claims for pension payments
- 18 U.S.C. § 291- Purchasing claims for fees by court officials
- 18 U.S.C. § 292- Solicitation of employment and receiving unapproved fees
While anyone who violates the False Claims Act may have to pay the civil penalties of double the government’s losses plus $2,000, as described above, the Court could also impose prison time and additional fines and fees if the matter ends up with a guilty verdict in a criminal trial. Sentencing guidelines allow for violators of 18 U.S.C. § 287 to receive a maximum prison term of five years.
At least 29 states, including Illinois, Missouri, Kentucky, and Ohio, have their own local qui tam provisions or similarly-intentioned legislation in place. These local statutes hold individuals and corporate entities liable for submitting fraudulent claims to city or state officials and respective governmental agencies. The U.S. Department of Health and Human Services (HHS) has certified at least 16 states, Illinois included, as having just as strong false claim acts as the federal government.
How Much in Annual Losses Do Qui Tam Lawsuits Recover?
Whistleblowers who pursue qui tam actions often allege defense contractor or procurement, securities, Medicaid or Medicare, or commodities fraud. The False Claims Act’s provisions specifically state that the federal law doesn’t apply to Internal Revenue Service (IRS) tax concerns.
An overwhelming majority of False Claims Act violations involve health care providers submitting bills for medical equipment or services that a patient didn’t need or receive.
A United States Department of Justice (DOJ) statistic published in 2020 showed these whistleblower claims netted $2.1 billion in recovered funds that went back into the U.S. Treasury Department’s budget that year. DOJ data confirms that at least $62 billion has been recovered since Congress amended the False Claims Act in 1986.
Who Can Be a Qui Tam Relator?
Relators in qui tam action cases are generally company insiders who may have personally witnessed or have otherwise learned about a business entity’s fraud. Individuals who most commonly become whistleblowers are insiders like company employees or contractors. A relator generally needs to have extensive knowledge of the fraud that occurred and be able to amass significant evidence supporting their claims.
A report previously published by the DOJ highlighted how relators in qui tam action cases are generally eligible to claim between 15-30% of the government’s recovered damages. Qui tam whistleblowers collected over $300 million in rewards in 2020 alone.
Are Qui Tam Whistleblowers Afforded Protection?
One of the reasons whistleblowers don’t often step forward and report a company’s suspected fraud is because they worry about what will happen to them if their qui tam lawsuit isn’t successful.
Whistleblowers still affiliated with the company that engaged in the alleged impropriety often worry that they will face retaliation for reporting. These individuals may fear losing their job or being sued themselves.
Know that the federal False Claims Act contains anti-retaliation provisions. The law clearly spells out how it’s illegal for a company to demote, threaten, suspend, harass, discharge, or otherwise discriminate against a whistleblower who has done nothing more than exercise their legal right to report violations of the False Claims Act.
Steps to Take When Considering Filing a Qui Tam Whistleblower Lawsuit
Just like in a game of poker, you don’t want to “show your hand” when you suspect your employer or a business affiliate is engaging in illicit activities. You may think that you’ve already built a solid case proving fraud. However, there may be additional information that you need to compile to ensure government investigators can successfully prove their case. Your ability to remain under the radar is key to ensuring your continued access to potential supporting evidence.
It can be unnerving to step out of the shadows to call attention to a company’s impropriety—especially if they attempt to retaliate against you when you do. A qui tam lawsuit attorney like ours here at Thomas Law Offices has the necessary experience to walk you through building a solid whistleblower case and advise you of laws that protect you when reporting such matters. We’d be delighted to provide you with a confidential review of your qui tam action today.