What does “qui tam” stand for?
“qui tam,” pronounced (we think) “kwee tom,” is short for the Olde Latin phrase “qui tam pro domino rege quam pro si ipso in hac parte sequitur.” In translation, this means “he who brings an action for the king as well as for himself.” In modern tymes, it means a statute which allows a private person to bring a lawsuit on behalf of the United States and herself and, if there is a recovery, receive a percentage.
What is the history of the False Claims Act?
qui tam laws date back hundreds of years. When the United States of America was formed, many of the original laws passed by the Continental Congress included qui tam provisions. The modern False Claims Act was “enacted at the time of the Civil War at the urgent request of President Lincoln, who was disturbed at contractors robbing the country during its time of travail.” That’s why the False Claims Act is often called “Lincoln’s law.”
Some of the scams used back in Honest Abe’s day are remarkably similar to what goes on today. An historian wrote, of the reasons for the Act: “For sugar, [the Army] often got sand; for coffee, rye; for leather, something no better than brown paper; for sound horses and mules, spavined beasts and dying donkeys; and for serviceable muskets and pistols, the experimental failures of sanguine inventors, or the refuse of shops and foreign armories.” F. Shannon, The Organization and Administration of the Union Army 1861-1865, at 54-56 (Peter Smith Press 1965).
Other scams are as complex as modern society itself. Current False Claims Act practice includes abuse of scarce public healthcare dollars—Medicare, Medicaid, and others—by pharmaceutical companies, medical device manufacturers, hospitals, and other health-care companies; technology companies; construction contractors; and myriad other government contractors.
Is the False Claims Act important to the Nation?
YES. Call us biased, but we think that any law which empowers citizens to participate in keeping contractors honest–and which, by the way, has brought almost $23,000,000,000—that’s twenty-three billion, for the comma-impaired—back to the United States Treasury, is a good thing. Congress and the Justice Department say that the False Claims Act is “the Government’s primary litigative tool for combating fraud.” That’s lawyer talk for “a big deal.” If estimates are to be believed, a dime of every taxpayer dollar goes to fraud, waste, or abuse. That’s citizen talk for horrifying. The False Claims Act allows private citizens with knowledge of contractor misconduct to get involved and help. That’s important.
Here are two charts we like. The first one shows how dramatically FCA recoveries accelerated after the Act was amended in1986:
The second one shows how important qui tam relators were to those recoveries.
Did we mention that more than $22 billion in taxpayer money has been returned to the Treasury as a result of False Claims Act litigation in the last 22 years? That’s a billion a year, $2.7 million a day, $114,155 an hour . .
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Where’d you get those numbers?
From Uncle Sam. You can see them here.
What’s so important about 1986?
Glad you asked. In 1986, Congress passed the False Claims Amendments Act. The Act, sponsored by United States Senator Charles Grassley and Congressman Howard Berman, turned the False Claims Act into a powerhouse by applying a rational burden of proof; establishing the types of conduct which are forbidden; imposing a strong retaliation provision; and strengthening the qui tam portion of the Act. The Senate Judiciary Committee wrote a good Report to accompany the bill. We can’t say it any better. You can read or download it by clicking here.
What about false claims involving grants to states or others?
If the grant program receives any portion of its funding from the federal Government (and many do), the FCA likely applies. That said, this is under attack in the Supreme Court, and Congress may need to clarify the law. In addition, 22 states and the District of Columbia have enacted whistleblower statutes that address fraud against at least some state-funded programs, most of which are closely modeled after the federal FCA.
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What about State False Claims Acts?
22 States, the District of Columbia, and the cities of New York and Chicago all have their own False Claims Acts. Five of these—New York, New Jersey, Rhode Island, Oklahoma, and Georgia—have been passed in the last 18 months. Go to our statutes page to see which state legislatures have seen the light by implementing fraud-busting False Claims Acts of their own.
Can the False Claims Act be improved?
It can and will. While Congress did a good job in 1986, powerful defendants and big law firms have convinced courts to chip away at the Act, making it far harder than intended for damages to be recovered from contractors which violate the False Claims Act. In late 2007, the False Claims Act Corrections Act of 2007 was introduced in the United States Senate and the United States House of Representatives. In late February 2008, the Senate Judiciary Committee held a hearing at which the amendments were discussed. (To our eternal happiness, our client, Tina Gonter was the sole whistleblower chosen to testify at that hearing.) And in early April 2008, the Senate Judiciary Committee voted in favor of the Corrections Act, which is now pending a vote on the Senate floor. You can download this important legislation here.
What are the penalties for violating the FCA?
A person who violates the FCA is liable to the Government for three times the damage caused by the violations and civil penalties of $5,500 to $11,000 for each false claim submitted (the civil penalty is periodically adjusted for inflation).
Of course, cases usually settle, and a settlement is a negotiation. In health care cases, the government sometimes settles for double damages. And penalties are usually not part of the settlement dialogue (although they are mandatory where there is a trial).
A defendant must also pay the relator’s reasonable expenses, costs and attorneys’ fees incurred in bringing the qui tam action.
Just about anyone. You don’t have to be citizen to be a qui tam relator. You don’t have to be an adult (although you do have to have a lawyer). And corporations are “people” too—a company can bring a qui tam case.
The better question is who can be a good relator. Someone with inside information about serious abuse by a government contractor which is not already under investigation. Someone without a serious criminal record, and who did not “plan or initiate” the conduct which violates the Act. Someone who has a strong commitment to seeing the right thing done by working within the system. A strong moral compass, a strong stomach, and a lot of patience are very helpful, too.
Our clients are almost always hard-working and courageous people whose objections to scamming the government have been ignored by their employers, who often have turned against them for trying to do the right thing.
How are you sleeping? These cases are not about getting rich quick. They are hard slogs, mostly against big companies, almost always represented by enormous law firms. If the false claims scheme you know about is not keeping you up at night, then you might want to consider getting on with life. If it is, then you should go ahead and start interviewing lawyers. Knowledge is power.
The FCA, with 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.
Relators have earned more than a billion dollars under the False Claims Act.
These are risky, hard, long cases against big, well-funded defendants. If our client loses, we get nothing. Zip. Bupkis. Plus, we lose the money we’ve invested in the client’s case. It really stinks when that happens, and so we work our tukuses off to make sure that if it does, it’s not our fault. When our clients win, including settlements, we receive a percentage of our clients’ share (the amount paid by the government pursuant to the False Claims Act), and our hourly fees and expenses are usually paid by the defendant. The defendant’s liability can be decided by a judge if we can’t settle the amount of the fees. Here is an opinion in a recent fee dispute.
Most of the money which has been recovered under the False Claims Act has been in cases where the Justice Department intervened. But not all of it. qui tam relators are permitted to continue their cases when the government does not intervene.
Many lawyers refuse to continue in a client’s case if the Justice Department takes a pass. Although this certainly simplifies things for the lawyer, that’s not how we practice. The Justice Department intervenes in about 15% of all cases. It declines to get involved in lots of good cases. (If you haven’t watched Tina Gonter’s Senate testimony yet, you should.) We like to have the government on our side, but a number of our clients have succeeded in cases where the government declined intervention.
So if the government declines, we take a very hard look at where things are and work with our client to decide whether to go forward. We do more litigation of declined cases than most of our qui tam lawyer friends, sometimes leaving them scratching their heads. We sometimes reach out to other lawyers to form a team to take on a contractor. We believe that cases should be evaluated on their merits and proceed accordingly. Discussion of some of the non-intervened cases we’ve litigated can be found on the “Cases” page.
Usually, they take a long time. We are working on a case now (March 2008) which was filed in 1995, and another which was filed in 1999. These are unusual. Most cases are resolved in two to five years. Many relators become frustrated, and some even try to go on the offensive with the Justice Department about the length of the investigation period. (There may be a time for this, but it is usually, well, offensive.) We do our best to stay informed, and to keep our clients informed, regarding the status of the government’s investigation. The government’s wheels often turn slowly, but in the words of one investigator, “they grind fine.” If you are looking for a qui tam lawyer, you should discuss his or her approach to these delays. Is progress—even if slight–being made? Is there a discussion going on between the Justice Department and the government agency whose money was falsely claimed about how to proceed? Sometimes we can find such things out. Sometimes we can’t. But knowledge is power, and part of the service we provide our clients is to try and understand what is going on behind the scenes.
The biggest risk is that even though you are right, your case might be dismissed. Courts have dismissed cases that are based on great information. If you try to bring a case based on false information, of course, you can be required to pay the defendant’s fees. But you wouldn’t do that, and we wouldn’t either.
Beyond that, litigation, as a rule, stinks. It’s usually only fun for the lawyers. Bismarck said of law and sausage, “If you like it, don’t watch how they make it.” Every client we’ve ever represented has experienced frustration at some point during the process—including the ones who ended up winning. Relators may feel like the investigation is taking too long (the Government’s investigation may take years or more to complete). They may also wish they had more information concerning the status of the Government’s investigation.
You’ve heard it, and it’s true: Whistleblowing can end careers. It doesn’t always happen—we have clients who filed and settled cases and still work for the employer they sued. But candidly, that’s the exception.
Finally, relators are sometimes disappointed in the outcome. Lots of schemes look huge and turn out not to be. Lots of people think they know about a billion-dollar fraud, but, so far, no False Claims Act case has settled for a billion dollars.
Yes. A qui tam case 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). Like most things about the False Claims Act, there’s frequent litigation about the way the pieces of the limitations period go together. If we were you, and we knew about violations of the False Claims Act, we wouldn’t tempt fate. Call the lawyer of your choice soon.
The False Claims Act includes what we in the business call the “first to file bar.” (That’s not really what it says, but anyway….) Often, because of the seal requirement, we don’t know about a first- or second-filed case for months or years. Broadly, if a case is pending which alleges that Bobby Contractor submitted false billings on the Widget Contract, then nobody else can bring another case which makes the same or similar allegations. How similar? In practice, multiple cases are often filed involving the same false-claims scheme, and relators and their lawyers try to work things out by making an agreement that lets everybody participate. Sometimes judges decide these issues, which are a fact of life in this business.
A qui tam complaint is filed under seal in federal court and served on the U.S. Attorneys’ Office where the case is filed and also on the Attorney General in Washington. 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). 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.
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.
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.
At some point, and in almost all cases, yes. When a qui tam 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 is always put “under seal” (meaning, it’s a secret) for at least 60 days. In every case we’ve been involved in, the seal period has lasted much longer. Two years is common, and (we kid you not) we’ve seen seals last for eight years. During this period, the government investigates the client’s allegations and decides what to do; sometimes it negotiates with the defendant and resolves the case while the case is under seal.
During the seal period, no one else should have knowledge of the qui tam suit, though in practice, defendants sometimes figure it out.
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.
Documents make us happy. More documents? Happier. And we’re not alone: Government lawyers and investigators like ‘em too. But we, and they, know that there are times when we must make a decision based on what a potential relator reports, because she simply can’t figure out a way to get us documents. Maybe she’s already been fired, or quit. Maybe the relevant information has been squirreled away.
This shows how important it is that you be completely square with your lawyers. Potential relators should not attempt to obtain evidence illegally (say, by raiding your boss’s e-mail files), as doing so may compromise a potential qui tam case and/or subject them to civil and/or criminal liability.
Generally speaking, it is safe for qui tam relators 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.
Participation in the fraudulent conduct does not automatically preclude you from filing a qui tam suit. Many whistleblowers are not initially 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.
On the other hand, if a qui tam relator “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).
The FCA has a pretty good, but not great, anti-retaliation provision for the protection of qui tam relators. Someone 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 tam relator from employment retaliation for reporting or refusing to participate in fraud.
The United States Supreme Court has ruled that retaliation claims are governed by state-law statutes of limitation, and these can be as short as several months. DO NOT SIT ON A RETALIATION CLAIM. CONSULT A LAWYER.
Let’s say you own a Chevy. You wouldn’t hire a Buick mechanic to work on your engine. Furnace on the fritz? Don’t call a carpenter. qui tam cases are not simple. People getting divorced go to divorce lawyers. People with qui tam allegations should consult with lawyers experienced in qui tam cases.
So. Google “qui tam law firm” and get more than 400,000 hits. You’re probably not going to click ‘em all—at least not this year. Visit a few sites and talk to a few lawyers. Have the lawyers actually represented qui tam relators? Have they tried and settled qui tam cases themselves? Do they just bring in cases and refer them to other lawyers? How many cases do they have, and how many cases have they resolved?
Of course, if you hire your cousin’s brother’s friend from college who graduated from law school last year, he’s probably going to see your point for sure. Maybe he files a case whether one should be filed or not. And then, when the government declines to intervene, he’s going to try to find somebody with qui tam experience to bring into your case. Not very likely.
We think there’s something to be said for skipping the middleman. Worse—he may not find somebody with qui tam experience. He may do a great job, but you should keep in mind that these are complicated federal lawsuits with the added complexity of the involvement of the Justice Department and a Government agency.
Hiring a lawyer for a five-year project is a big deal. Be sure you are comfortable with your decision, and be sure you are getting someone who knows what they’re doing. There’s no guarantee you’ll win, but you’ll want to maximize your chances.
Not necessarily. A good many qui tam lawyers practice nationwide. We have been involved in cases in more than a dozen states. Because federal courts govern themselves by uniform procedural rules, it is not uncommon for federal-court practitioners to work away from home.
How can I find out more information?
We don’t have operators standing by, but we’d be happy to talk with you if you think you know about a scheme to submit false claims to the United States. 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.