“Qui tam” is short for the Latin phrase, “qui tam pro domino rege quam pro se ipso in hac parte sequitur.” For those of us who don’t speak Latin, that roughly translates to “he who brings an action for the king as well as for himself.” Following that principle, a qui tam lawsuit is a civil suit filed by whistleblowers on behalf of the United States Government against an individual or company who has defrauded the government. The purpose of the lawsuit is to seek damages for the government losses, and the whistleblower who files the initial qui tam lawsuit is entitled to a portion of the final settlement or court judgement.
The False Claims Act
The False Claims Act (FCA) is the federal law that provides the legal basis for qui tam lawsuits. Under the FCA, whistleblowers are able to file a federal complaint “under seal” that offers a detailed explanation of how the individual or company in question has defrauded the government. The defendant will not be served notice of the complaint. As long as the case remains under seal, only the whistleblower’s attorneys, the court, and federal authorities will be privy to the case.
After the initial complaint is filed, the US Department of Justice will review the case and determine whether or not to “intervene.” If the DOJ chooses to intervene (which it does in about one-third of qui tam cases), they will completely take over the case. If the DOJ declines to intervene, the whistleblower has the right to pursue the case on their own. The latter route will require significantly more work from the whistleblower’s attorneys, but if the case is successful the whistleblower will be entitled to a larger portion of the settlement or court judgement.
Examples of Government Fraud
The majority of qui tam lawsuits involve Medicare, Medicaid, defense contractors, the financial industry, and federal grant programs. Some of the more common examples include:
- Billing the government for defective medical devices
- Billing the government for more than a healthcare program’s pre-approved price levels (known as up-coding)
- Billing the government for services that were never provided
- Billing the government for unnecessary medical procedures
- Concealing Medicare or Medicaid prescription savings from program participants
- Delivering inferior goods or services
- Failing to satisfactorily fulfill a government contract
- Fraudulently pricing financial products and securities when selling to a government entity or public pension fund.
- Government-funded researchers who misuse grant funds
- Inflating project-related costs for federal grants
- Marketing pharmaceutical drugs for uses that are not approved by the FDA
- Misrepresenting that defense-industry parts and products are purchased from American companies when they’re actually from blacklisted countries
- Misrepresenting qualifications and experiences in the process of bidding for a government contract
- Misusing funds from a FEMA government contract
- Offering kickbacks in exchange for business and/or referrals
- Referring patients to a business that the referring doctor or hospital has a financial interest in (unless a safe harbor rule applies)
- Researchers who submit a fraudulent or falsified grant proposal
- Submitting falsified or fraudulent information in conjunction with a request for financial assistance under the Capital Purchase Program (CPP) and/or Troubled Asset Relief Program (TARP)
- Submitting falsified or fraudulent information in the process of securing loan guarantees, mortgage insurance, Housing and Urban Development (HUD) funds, or Federal Housing Administration (FHA) funds
- Using CPP/TARP funds for unqualified purposes
- Violating the Federal Reserve’s Term-Asset-Backed Securities Loan Program (TALF)
- Violating the Truth-in-Negotiations Act (TINA) by withholding or misstating cost and/or pricing information from the government in the course of bidding for a government contract
Qui Tam Lawsuit Rewards
The FCA allows damages of up to 3x the defrauded amount (known as treble damages). Of that total, the whistleblower is entitled to a 15% – 30% reward depending on their involvement in the case. If the DOJ intervenes, the whistleblower will receive between 15% – 25%; if the DOJ doesn’t intervene, the whistleblower will receive 25% – 30% of the final settlement or judgement. The whistleblower is also entitled to personal damages from the defendant if the whistleblower was retaliated against as a result of the qui tam lawsuit.
Qui Tam Statute of Limitations
The statute of limitations for qui tam lawsuits hinges on whether or not the alleged fraud is known to the public and/or government. When the alleged fraud is known (e.g. the case against the defendant was already open when the whistleblower decided to come forward), the lawsuit must be filed within six years of the fraudulent activity. If the alleged fraud is undiscovered, the whistleblower has up to ten years to file a qui tam lawsuit.
How to File a Qui Tam Lawsuit
You don’t need to be an employee to file a qui tam lawsuit. Under the FCA, any individual with evidence of fraud against the government has the right to file a whistleblower lawsuit. If you have enough evidence to make a case, here’s how to go about the process:
- Consult with an employment law attorney – before taking any action, it’s important to discuss your potential case with an experienced attorney. The attorney will assess your case, determine whether there’s enough evidence, and calculate the potential damages.
- File the lawsuit – if the evidence is there and the numbers justify the time and effort to pursue the case, your attorney will file the qui tam lawsuit in federal court. If your state has its own False Claims Act, you may have the option to file in state court, too. In the initial filing, your attorney will need to clearly explain how the defendant defrauded the government.
- Submit a disclosure statement – after filing the lawsuit, your attorney will then file a disclosure statement that details all of the supporting evidence for the case (emails, files, documents, etc.).
- Wait for DOJ intervention – the DOJ will assess your case and determine whether or not to intervene. If the DOJ chooses to intervene, they’ll handle the case from here. If the DOJ declines to intervene, it’ll be up to your attorney to pursue the case.
Note that the majority of successful qui tam lawsuits result in a settlement agreement reached outside of the courtroom. Litigation is always a viable option, but it can involve significantly more time and higher court costs that may erode the ultimate value of the lawsuit.
Need Help With An Employment Law Issue?
The state of Arizona is a great place to live and work, but knowing the employment laws will help you a lot. Whether you are a newcomer to the state or a lifelong resident, understanding your workplace protections is good for your career, and the more you know, the better.
Employment law issues can cause extreme distress and can affect productivity on the job. If you are being harassed at work, or dealing with any other employment issue, consider talking to our AZ employment law team to help you settle your case.
Call our Employment Law team at (480) 464-1111 to discuss your case today.