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What does "qui tam" stand for?
"Qui tam," short for "qui tam pro domino rege quam
pro si ipso in hac parte sequitur," is a Latin phrase
which translates to "he who brings an action for the
king as well as for himself."
The qui tam mechanism allows a private person with
evidence of fraud to bring a lawsuit on behalf of the
Government (the private person is referred to as a "relator" or "whistleblower").
The whistleblower receives a portion-- which could
be up to 30%-- of the Government's recovery from the
lawsuit.
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How is "qui tam" pronounced?
"Qui tam" is pronounced a variety of ways, including "key
tam," "kwee tahm," or more formally, "kwày tæm."
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What is the False Claims Act (FCA)?
The FCA, 31 U.S.C. §3729
et seq., is a federal statute designed to combat fraud
against the federal Government. The original FCA dates
back to 1863 and was enacted to combat fraud by private
contractors during the Civil War. Congress amended the
FCA substantially in 1986 in order to strengthen the public-private
partnership between the qui tam relator and the Government.
The 1986 FCA amendments increase rewards for successful
whistleblowers, protect whistleblowers from employment retaliation,
allow whistleblowers to remain as parties even after the
Government joins in the action, and eliminate the need for
a qui tam relator (or the Government) to prove specific intent
to defraud (i.e., defendants can be held liable under the
FCA for acting in "deliberate ignorance" or in "reckless
disregard" of the truth).
Today, FCA litigation has expanded far beyond the defense
industry and in fact, spans the spectrum of fraudulent conduct.
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What types of conduct does the FCA prohibit?
The FCA is violated where a person deceives the Government
in order to obtain money or improperly be relieved from paying
money to the Government.
The FCA's specific prohibitions include:
- Knowingly presenting (or causing to be presented) to
the Federal Government a fraudulent claim for payment;
- Knowingly using (or causing to be used) a false record
or statement to get a false record or statement to get
a claim paid by the Federal Government;
- Conspiring with another to get a false or fraudulent
claim paid by the Federal Government; and
- 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.
"Knowingly" is defined under the statute as any of the following:
(1) actual knowledge of the information; (2) acts in deliberate
ignorance of the truth or falsity of the information; or
(3) acts in reckless disregard of the truth or falsity of
the information, and no proof of specific intent to defraud
is required. 31
U.S.C. §3729(c).
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Does the FCA address fraud committed against state-funded
programs?
If the state program receives any portion of its funding
from the federal Government (and many do), the FCA likely
applies. In addition, fourteen states and the District of
Columbia have enacted whistleblower statutes that specifically
address fraud against state-funded programs, most of which
are closely modeled after the federal FCA.
New
Mexico is the most recent state to enact a whistleblower
statute, joining Arkansas, California, Delaware, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, Tennessee, Texas, Utah, Virginia and
the District
of Columbia. Certain of these statutes limit the reward
the relator or whistleblower may receive (ex. Arkansas
caps a reward at 10% or $100,000) and some address fraud
in connection with the state Medicaid programs only (ex.
Arkansas, Louisiana and New Mexico). Only the Utah statute
does not contain a qui tam provision or reward for reporting
fraud.
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How much money has the Government recovered as a
result of the FCA and its qui tam provisions?
Since 1995 alone, the United States has recovered more than
$5 billion under the FCA. The vast majority of these recoveries
result from the efforts of private persons who bring qui
tam actions.
In recent years, health care fraud has become the largest
source of FCA enforcement. In 2000 alone, the Government
recovered $1.5 billion under the FCA, $840 million of which
resulted from health care fraud cases.
For more information on FCA and whistleblower recoveries,
we recommend, Reducing
Health Care Fraud: An Assessment of the Impact of the False
Claims Act.
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Do the FCA's prohibitions apply to everyone?
The FCA provides liability against "any person who knowingly
presents, or causes to be presented, to an officer or employee
of the United States Government . . . a false or fraudulent
claim for payment or approval." 31
U.S.C. §3729(a)(1).
The United States Supreme Court in U.S.
ex rel. Stevens v. Vermont Agency of Natural Resources,
529 U.S. 765 (2000), held that the FCA's definition of "person" does
not include a state government. The Supreme Court, in
a unanimous decision in U.S.
ex rel. Chandler v. Cook Cty., Illinois, 538
U.S. ___ (2003), clarified that while states cannot be
sued under the FCA, the exclusion does not extend to
local governments, including counties and municipalities.
Individuals and corporations (or other business or non-profit
entities) are also subject to FCA liability.
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What are the penalties for violating the FCA?
A person who violates the FCA is liable to the Government
for three times the actual damages suffered by the Government,
mandatory civil penalties of $5,500 to $11,000 for each false
claim submitted (the civil penalty is periodically adjusted
for inflation), and costs. 31
U.S.C. § 3729(a).
A defendant must also pay the relator's reasonable expenses,
costs and attorneys' fees incurred in bringing the qui tam
action. 31 U.S.C. §3729(d).
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Who can be a qui tam relator?
The FCA's qui tam provisions allow a private person to bring
a lawsuit on behalf of the United States Government. 31
U.S.C. §3730(b). The private person must have non-public
information of the fraud (unless they qualify as an "original
source" of the information, in which case the percentage
of recovery available is reduced). 31 U.S.C. §3730(e)(4)(A).
This jurisdictional bar (referred to as the "public disclosure" provision)
effectuates the FCA's purpose in encouraging only those qui
tam suits that actually alert the Government to fraud.
Likewise, the private person must also be the first-to-file
the lawsuit. 31
U.S.C. §3730(b)(5). This "first-to-file" rule of the
FCA is heavily-litigated. Disputes commonly arise where two
lawsuits allege the same fraud against different defendants
(even related companies) or where the two lawsuits allege
a slightly different fraud against the same defendant.
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What are the benefits to bringing a qui tam suit?
The FCA and its qui tam provisions is one of the Government's
most effective weapons against fraud. By taking the bold
step to become a whistleblower, you are exposing the fraud
that depletes federally funded programs every day.
And or course, successful whistleblowers are rewarded for
their hard work and efforts in bringing the lawsuit. Whistleblowers
may receive between 15 and 30 percentage of the money recovered
by the Government as a result of their lawsuit, whether by
judgment, settlement or otherwise. 31
U.S.C. § 3730(d).
In recent years, rewards to whistleblowers have collectively
amounted to over $800 million dollars.
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Are there disadvantages?
There are disadvantages or risks attached to any type of
litigation. Many whistleblowers experience frustration at
some point during the process. Whistleblowers may feel like
the investigation is taking too long (the Government's investigation
may take a year or more to complete). Whistleblowers may
also wish they had more information concerning the status
of the Government's investigation.
Whistleblowers may also feel nervous or apprehensive about
others "finding out" that they filed a qui tam suit. While
the efforts of whistleblowers are gaining in recognition
and prestige, there are still many people who prefer to turn
a blind eye towards fraud and dislike it when others "rock
the boat."
Finally, whistleblowers may be disappointed in the result
of the case. Despite the strength of the case at the beginning
of the lawsuit, contingencies may occur which lead to a lesser
recovery than the whistleblower (or their attorney) anticipated,
or in some cases, no recovery at all.
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Is there a time limit for filing a lawsuit?
Yes, a qui tam lawsuit must be filed within the later of
the following: (1) six years from the date of the FCA violation;
or (2) three years after the Government knows or should have
known about the material facts concerning the FCA violation,
but in no event longer than ten years. 31
U.S.C. §3731(b).
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What if someone else has already filed a qui tam
suit alleging the same fraud?
The FCA has a "first-to-file" provision intended to bar "copycat" lawsuits.
31 U.S.C. §3730(b)(5). As described above, the impact of
this provision is difficult to gauge at the time the lawsuit
is filed. It is often difficult, if not impossible, to know
whether anyone else has filed the same lawsuit since FCA
cases are filed under seal and often remain under seal for
a significant length of time during the Government's investigation.
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What happens after my qui tam suit is filed?
A qui tam complaint is filed under seal in federal court
and served on the U.S. Attorneys' Office for the judicial
district in which you file and also on the Department of
Justice in Washington D.C. A disclosure statement describing
all material evidence and information in the relator's possession
is also served on the Government. The case will remain under
seal while the Government investigates the allegations of
your complaint.
The initial seal period lasts 60 days, but in practice,
is often much longer (the Government will periodically ask
the court for extensions of the seal period). 31
U.S.C. § 3730(b)(3). At the end of the seal period, the
Government decides whether to intervene in all or a portion
of your lawsuit.
If the Government intervenes, it has primary responsibility
for prosecution of the case. The relator, however, has the
right to continue as a party in the action and to participate
in the litigation. 31
U.S.C. §3730(c)(1).
If the Government declines to intervene, the relator has
the right to prosecute the case. The Government may intervene
in the case at a later time upon a showing of good cause. 31
U.S.C. §3730(c)(3).
In either event, after the seal period ends, the qui tam
complaint is served on the defendant(s). The lawsuit will
then proceed in the same manner as most other federal litigation.
As with the vast majority of lawsuits, qui tam cases generally
result in a settlement between all the parties.
To view the Chronology of a Typical Qui Tam Case, click
here.
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How long will the lawsuit take?
It is impossible to predict how long a qui tam case will
take. Most qui tam cases take several years from the date
of filing to completion, whether by settlement, judgment
or otherwise.
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Will anyone find out if I file a qui tam suit?
At some point, yes. When a qui case is filed, the complaint
and disclosure statement are filed under seal but are served
on the Government attorneys who will know your identity.
After filing, the case remains under seal for at least 60
days (in most cases, the seal period will last much longer,
perhaps even a year or more).
During the seal period, no one else should have knowledge
of the qui tam suit, though in practice, defendants sometimes
figure it out. Of course, if you discuss the qui tam suit
with anyone other than your attorney (which you should not
do), you risk others finding out prematurely and may even
compromise the lawsuit.
After the seal period expires and the Government decides
whether it will intervene in your case, the qui tam complaint
will be served upon the defendants and your identify will
be revealed. If the Government decides not to intervene in
the action and you wish not to proceed, you may have the
option of voluntarily dismissing the case while it is still
under seal.
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Do I need to have documentation of the fraud?
It is highly preferable for a qui tam relator to have documentation
of the fraud or otherwise be able to corroborate the allegations.
However, the relator must not attempt to obtain the documentation
illegally or violate the terms of their employment, as doing
so may compromise their potential qui tam case and/or subject
them to civil and/or criminal liability.
Generally speaking, it is safe for a qui tam relator to
make copies of documents they have access to in the ordinary
course of their employment. However, a potential qui tam
relator should discuss this issue carefully with an attorney
before taking any action.
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What if I participated in the fraud?
Participation in the fraudulent conduct does not automatically
preclude you from filing a qui tam suit. Many whistleblowers
are not aware that their superiors are committing fraud or
that they are participating in it. Others are "forced" to
participate by their superiors. However, you should be aware
that being a whistleblower does not automatically protect
you from prosecution.
Moreover, if a court finds that a whistleblower "planned
or initiated" the fraudulent conduct, the court has discretion
to reduce the whistleblower's recovery. If a whistleblower
is convicted of a crime arising from the fraudulent conduct,
he or she will be dismissed from the lawsuit and will not
share in any portion of the government's recovery. 31
U.S.C. § 3730(d)(3).
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What if my employer fires me for reporting the fraud?
The FCA contains an anti-retaliation provision for the protection
of relators. 31
U.S.C. § 3730(h). Under 3730(h), any employee who is
fired, demoted, harassed or otherwise discriminated against
because of lawful acts "in furtherance of" a qui tam action
is entitled to all relief necessary to make the employee
whole. This may include reinstatement, twice the amount of
back pay, and payment of litigation costs and attorneys'
fees.
In addition to section 3730(h) of the FCA, many states have
laws that may protect a qui am relator from employment retaliation
for reporting or refusing to participate in fraud.
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How much does it cost to file a qui tam suit?
Most attorneys who specialize in whistleblower representation
take cases on a contingent basis (i.e., the attorney receives
payment only when you do) and will also pay for all costs
associated with litigating the case, including necessary
court filing fees.
If you do decide to hire an attorney to represent you in
a qui tam action, you should make sure to review the attorney's
engagement agreement carefully (or have another attorney
review it for you) so that you are aware of any contingencies
that require you to pay some of the costs.
You should also be aware that under the FCA, if the Government
declines to intervene in your case, you then decide to continue
the action anyway and the defendant prevails, the court may
require you to pay the defendant's reasonable attorneys'
fees and expenses if the court finds the action was clearly
frivolous, clearly vexatious, or brought primarily for purposes
of harassment. 31
U.S.C. §3730(d)(4).
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How do I know if I have a case?
If you think you may have a qui tam case, we recommend that
you immediately contact an attorney who specializes in the
representation of whistleblowers. Your attorney will be able
to advise you as to whether you should go forward with a
lawsuit.
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What should I look for in selecting an attorney?
FCA litigation is a highly complex area of law and therefore,
you should look for an attorney who specializes in representing
whistleblowers. While other law firms may agree to take your
case, unless qui tam litigation is a substantial part of
their practice, these firms and lawyers likely do not have
the expertise, inside knowledge and established relationships
with Government attorneys that experienced FCA litigators
do.
FCA litigation can also be very frustrating for relators
-- it is important to select a lawyer who will provide you
with prompt, individualized attention and who will take the
time to thoroughly investigate your case before advising
as to whether you should move forward.
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How can I find out more information?
Please feel free to contact
us for further information. We also recommend that
you visit the Taxpayers Against Fraud (TAF) website at www.taf.org.
TAF is a non-profit, public interest organization dedicated
to combating fraud against the federal Government through
the promotion and use of the federal False Claims Act and
its qui tam provisions.
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