When it comes to understanding qui tam, you first need to understand the concept of whistleblowing. A whistleblower is someone who discovers wrongdoing — usually fraud — and brings that wrongdoing to public light. Whistleblowers may uncover wrongdoing on the part of individuals or corporate entities. Often, wrongdoing arises in the course of employment or in the workplace, in volunteer or community service endeavors, or in environments where one person is supervising or in control of another like nursing homes or schools.
Whistleblowers bring the wrongdoing to light in hopes that someone with authority will do something to stop it, prevent it from recurring, or create some means to compensate those who have been harmed.
For example, a whistleblower may file a complaint with their HR department about sexual harassment on the part of a manager. Or, a whistleblower may file a complaint with the government about a contractor who is stealing from the government. Or, a whistleblower may bring to light the way a social media platform is creating an unsafe environment.
In many instances, federal and state law affords protection to whistleblowers, including protection from retaliation for “blowing the whistle.” These protections are complicated, so whistleblowers usually need legal representation by competent attorneys experienced in whistleblower law.
There are several whistleblower laws that prescribe ways in which private citizens can report fraud to the government. In many instances, these laws repay private citizens who report fraud to the government with a portion of the funds recovered. These laws may also offer protection to whistleblowers from retaliation
The most common whistleblower law is the federal False Claims Act or “FCA.” Whistleblowers under the FCA are called “Relators.” Relators provide key knowledge, evidence, and other information and file the case, despite the fact that the United States and/or certain states remain the true plaintiff in the action. FCA Relators can be compensated by up to 30% of the amount recovered through an FCA whistleblower action — also called a “qui tam” action. The FCA provides substantial protections to a Relator from workplace retaliation.
Commonly, whistleblowers uncover fraud in federal or state programs like Medicare and Medicaid, housing, federal and state-funded disaster relief, small business development and loans, as well as federal defense contracting. Many states have enacted their own false claims acts, which protect the state’s Medicaid program and other state-funded initiatives.
FCA defendants are usually government contractors who abuse their position by requesting reimbursement from the government when reimbursement is not proper.
What is a Qui Tam?
The federal False Claims Act (FCA) — as well as many states’ false claims acts — contains a provision that allows private citizens to sue on behalf of the government to recover fraudulently obtained funds. This is called the qui tam provision; its name is derived from a longer Latin maxim. The federal False Claims Act qui tam provision can be found in 31 U.S.C. § 3730(b)-(d).
Many states have enacted their own false claims acts, and certain states’ acts have qui tam mechanisms that operate in a similar fashion to the federal FCA.
Successful whistleblowers who file suit on the government’s behalf under the federal False Claims Act qui tam provision may be entitled to a bounty on the amount recovered — up to 30%, depending on the circumstances.
False Claims Act qui tam cases are common. The False Claims Act is one of the most robust whistleblower laws; it has paid approximately $7 billion in compensatory awards since 1986. If you are considering a whistleblower action, the qui tam attorneys at Nix Patterson would like to speak to you.
What Is a Qui Tam Lawsuit?
A qui tam lawsuit is a common name for a civil action filed under the federal False Claims Act or a state-law false claims act, which is filed by a private citizen whistleblower to recover funds that have been fraudulently received from the federal or state government. If the qui tam action is successful in recovering improperly paid government funds, the qui tam Relator may receive a portion of the amount recovered as compensation for their work on the government’s behalf.
Some of the common types of fraud that may lead to qui tam lawsuits are:
- Presenting to a government agency a fraudulent request for reimbursement
- Using a false statement or record to support a request for government reimbursement
- Conspiring with other actors to get the federal government to pay a false claim
- Using fraudulent documents to avoid, conceal, or reduce obligations to pay the U.S. government other than income tax
Fraud may arise in several government-sponsored industries, including but not limited to:
- Sponsored loans
What Is a False Claim?
The False Claims Act targets fraud in the form of false or fraudulent claims to the government for reimbursement. Government contractors — from physicians to treat Medicare insureds to manufacturers who produce supplies for the Department of Defense — provide goods or services to the government and then seek reimbursement pursuant to applicable agreements, laws, regulations, and rules.
A false claim is one that seeks reimbursement for goods or services that were not as described. In the healthcare setting, for example, this may be an injection that was never performed or an injection with ultrasonic guidance where the guidance was not used. The fraudster bills the government for the service despite the fact that the government doesn’t actually owe the fraudster for the service, as billed.
False claims also arise when the fraudster’s violation of another law, regulation, or rule taints the provision of services and the resultant claim to the government. Most commonly, this arises in cases where physicians provide services to Medicaid or Medicare insureds while taking part in an illegal kickback relationship. Even if the physician performed the services properly, the physician cannot bill the government for the services if they were referred pursuant to an illegal kickback relationship.
What is a Kickback?
A “kickback” is anything of value that is paid in exchange for something else. In the context of the False Claims Act, a kickback is anything of value paid in exchange for a federally reimbursed good or service. Kickbacks are unfortunately common in the federal healthcare industry (i.e., Medicare, Medicaid, and Tricare). For example, a hospital that pays physicians to conduct surgeries for Medicare patients at the hospital may be paying improper kickbacks.
The Anti-Kickback Statute makes the payment or receipt of kickbacks in exchange for the referral of patients or services covered by a federal healthcare program like Medicare illegal. The Anti-Kickback Statute is a criminal statute; a violation of the Anti-Kickback Statute can give rise to False Claims Act liability when someone bills the government for a service tainted by a kickback.
Can I Blow the Whistle on Tax Evasion?
Yes, you can alert the government to significant instances of tax evasion through the IRS Whistleblower program. Our experienced attorneys can guide you through the process.
The federal False Claims Act cannot be used to recover unpaid taxes. However, certain state false claims acts can be used to recover state taxes that have been unpaid or avoided through the use of false and/or fraudulent statements.
What Happens in a Qui Tam Lawsuit?
Under federal law, a worker who possesses evidence that their employer is defrauding the government can sue the company and obtain compensation from the government for exposing the fraud. The FCA offers compensation to whistleblowers if the case leads to compensation for the government. The Act also provides the employee with protection from workplace retaliation in response to reporting, challenging, or correcting fraud.
Before filing the lawsuit, your attorneys will help you disclose the case to the government. This disclosure is an important step in preserving the whistleblower’s right to recovery of a portion of any recovered funds.
After disclosure, your attorneys will file your case under seal. This means it is not made part of public record, but rather kept secret until the court orders it unsealed.
Once filed, the qui tam lawsuit remains sealed for at least sixty days, meaning it is kept secret from the organization accused of fraud. The government uses this seal period to investigate the fraud and determine its best course of action. The seal allows the Department of Justice to use the time to look into the suspected fraud. Financial fraud investigations are often lengthy and complex, so the seal may be extended multiple times to give the authorities time to investigate. It is common for cases to remain under seal for two years and even longer.
When the Department of Justice investigates, it must eventually decide if it will take action in the lawsuit. Government intervention does not always occur in qui tam cases. However, cases in which the government takes action are often successful.
Like in many other areas of litigation, many qui tam cases result in a settlement. As a result, the federal government may request that the court remove the seal to discuss the fraud allegations and possibly reach a settlement with the entity that is accused of defrauding the government.
Why Do Qui Tam Relators Bring Qui Tam Lawsuits?
When a defendant is found liable under the False Claims Act, they may be ordered to pay up to three times what the federal government lost for every false claim. There also are $5,000 to $10,000 penalties for each false claim. As noted earlier, the qui tam relator may receive 15% to 25% of the recovery when the U.S. government intervenes.
The reward depends on many factors, such as how much evidence is given to the Department of Justice or how much work you performed to ensure the litigation was successful. If the government declines to intervene, the person is awarded 25% to 30% of recovered false claims and penalties.
Furthermore, if your employer retaliated against you for whistleblowing, you may be eligible for:
- Double back pay
- Compensation for special damages
Qui Tam Reward Limitations
The idea behind a qui tam lawsuit is to encourage regular Americans to call out fraud against the government. However, some individuals do not qualify for a qui tam reward.
People actively participating in illicit activity cannot demand a reward, even if they turn on their co-conspirators later. Also, people who have a fiduciary responsibility to report illicit activity cannot receive rewards, such as:
- Law enforcement members
- Federal employees leading the investigation
- Regulatory officers
Also, the information the whistleblower offers the U.S. government must be high quality. The information must be unknown previously to the agency performing the investigation. Additionally, the information must be substantially involved in the investigation for a reward to be paid. Speaking to a qui tam attorney about the case could help to determine if you’re eligible to seek a reward in a whistleblower lawsuit.
How the Department of Justice Supports Qui Tam Lawsuits
The Department of Justice has stated that the FCA is the most essential tool American taxpayers have to recover funds that were lost to fraud. The Department also notes that whistleblowers play a critical role in uncovering fraud crimes that may have been undetected. Also, the Justice Department noted in 2018 that it recovered $2.8 billion from False Claim cases that year.
At all times, the United States and/or certain states are the “real party in interest” to a False Claims Act case filed on their behalf. Even though the Relator files suit, the governments at issue retain control over the outcome of the case.
Relators file False Claims Act suits under seal, and the cases remain under seal for an extended duration while the government investigates the allegations. Eventually, the government must make a decision: if the government chooses, it may intervene in the case (or in part of the case). In doing so, the government takes control of the case. Most intervened cases settle before trial.
However, the government may choose to decline to intervene in the Relator’s case. At that point, the Relator may have the choice to proceed without the government’s support or dismiss the case. If the Relator proceeds, the government retains final authority over settlement of the case. The government may choose to force the Relator to dismiss the case. Our experienced attorneys can explain these complexities to you in detail and guide you through the process.
What Is Retaliation?
Many whistleblower laws offer protection to private citizens who report fraud or other wrongdoing (either internally within their organization and/or to authorities) from retaliation. Retaliation in the whistleblower context can take many forms, including but not limited to:
- Reduction in compensation
- Loss of PTO or other benefits
- Public embarrassment or humiliation
- Negative comments to prospective employers
Retaliation can include actions, inactions, and/or threats. For whistleblower protections to apply, these usually must arise within the context of the whistleblower reporting, challenging, or correcting misconduct in the workplace.
If you believe your employer has subjected you to retaliation, call our experienced whistleblower representation attorneys today.
Can I Remain Anonymous?
FCA cases are filed “under seal,” which means they are kept in strict confidence. The case remains under seal during the pendency of the government’s investigation. So, while the case remains under seal, the identity of a whistleblower should remain a secret. If the government chooses to intervene in the case, the whistleblower may very likely remain anonymous.
However, once the case is unsealed, the protection of the whistleblower’s identity becomes much more challenging. And, if the government declines to intervene in the case, a Relator who chooses to proceed with litigation may find it challenging to maintain anonymity. While attorneys can use “Doe” filings and file lawsuits under disguised names, defendants often challenge the validity of this practice.
Contact Nix Patterson’s Qui Tam Attorneys
If you suspect a person or entity defrauding the U.S. government, you must speak to a qui tam attorney today. The False Claims Act requires whistleblowers to file qui tam cases with a lawyer. Your lawyer will assemble a complaint that details the alleged violations and how they break the law. The lawsuit is filed in federal court under seal for 60 days, so only the government knows the case exists as the government investigates.
The False Claims Act has many unique rules and procedures, so selecting the proper attorney to handle this complex case is critical. Contact Nix Patterson today to discuss your potential qui tam case.