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Qui Tam Policy

Who can File?

When a whistleblower files a qui tam false claims lawsuit they are referred to as the “relator.”  While these are often employees or former employees who have witnessed their company committing fraud, the relator can actually be anyone who has knowledge of the government paying a false claim.  This could even be a customer, patient, subcontractor or competitor.

Whistleblowers who have knowledge of Tax Fraud should read our section on Tax Fraud False Claims as those cases are somewhat different.

How it Works

The False Claims Act works with amazing efficiency by encouraging private citizens to police for fraud against the government by offering tremendous rewards.   The “qui tam” provision allows whistleblowers to file their own lawsuits against individuals or companies that have cheated the federal government, and recover the losses on the government’s behalf.  

Whistleblowers who file qui tam lawsuits are called “relators.”  While these are often employees or former employees who have witnessed their company committing fraud, the relator can actually be anyone who has knowledge of the government paying a false claim.  This could even be a customer, patient or competitor.

Whistleblowers who have knowledge of Tax Fraud should read our section on Tax Fraud False Claims as those cases are somewhat different.

Filing a False Claims lawsuit

Qui tam cases begin with the relator filing a False Claims lawsuit in federal court "under seal.”  This means it cannot be viewed by the public and the relator and their attorney cannot discuss the case with anyone other than the government officials investigating the case. The defendant – the company or person accused of committing fraud – is not even informed of the lawsuit. 

While the case is under seal, which initially last for 60 days but is often extended for years or more, the government investigates the fraud charges without alerting the defendant.

Once the investigation is over and the seal is lifted, the government will decide if it wants to join in the lawsuit or let the whistleblower proceed with the case on their own.  If the government intervenes, the case is handled jointly by them and the relator’s attorney.

It is important to be the first one to file a False Claims Act case when fraud is discovered since the first whistleblower to do so has priority over later cases.  There is also a Statute of Limitations, or expiration, which may be as short as 6 years.

Penalties

The False Claims Act requires that an individual or company who is found to have defrauded the government pay a penalty equal to three times the amount the government lost in paying the false claim.  In addition, the person or enterprise faces a $5,000 to $10,000 penalty for each false claim.

The government sometimes decides to settle a case by agreeing to forgive the civil penalties and accepting two to three times the amount of damages. Even in these situations the defendant must pay the hourly fees and costs of the whistleblower’s attorney.

Whistleblower’s reward

The False Claims Act provides whistleblowers with an award of between 15% and 30% of the amount recovered by the government as a result of their lawsuit.  The amount of the reward can vary depending on several factors, such as whether the government intervened to share with the litigation of the qui tam case. The Act also provides for the payment of the relator’s attorney’s hourly fees and all costs.

The rewards contained in the False Claims Act were meant to give individuals and private law firms a strong incentive to stand up and accept the personal and professional risks of reporting fraud.