Federal Civil False Claims Act & Qui Tam Law (Whistleblower Litigation)

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Law Topics >  Cause of Injuries > Federal Civil False Claims Act & Qui Tam Law (Whistleblower Litigation)

If a person is in the business of committing fraud, one of the most lucrative targets is the United States government. For hundreds of years, individuals and corporations have been successful in defrauding the most powerful government in the world. With hundreds of transactions and partnerships being made every day, it is difficult for the government to keep a watchful eye on every sale or purchase it directs. Benjamin Franklin knew this all too well when he said, "There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government."

In 1863, at the height of the Civil War, deceptive military contractors were defrauding the Union Army out of hundreds of thousands of dollars by supplying troops with defective products and faulty war equipment. Illegal price gouging was a common practice. In response, Abraham Lincoln enacted the Federal Civil False Claims Act. A provision of the act was known as qui tam.

An abbreviation from the Latin "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur," which means "who as well for the king as for himself sues in this matter," qui tam laws have existed for centuries, dating as far back as 13th century England. Qui tam actions allow a private citizen to file a lawsuit on behalf of the U.S. government in an effort to recover losses caused by fraud against the government. The law is an incentive for civilians who know of individuals or companies making false claims for profit to come forward with information. In reward, the "whistleblower" (also known as the relator) shares in any federal revenue recovered.

Since 1863, qui tam law has changed significantly. When first enacted, the law was rarely taken advantage of because of tough restrictions and rulings that made qui tam almost impossible to enforce. Whistleblowers also had to cover all the costs of filing a lawsuit and the government could take over the suit at any time. In 1943, Congress revised the law, forbidding relators to share in any recovered revenue if the government was already aware of the fraud before the lawsuit was filed. The amount a whistleblower was entitled to also decreased from 50 percent to a maximum of 25 percent. More discouraging, if the government took over the lawsuit, claimants could only receive 10 percent of the amount recovered.

During the 1980s, government fraud was at a peak. As the United States entered an intense arms race with the former Soviet Union, defense contracts were signed at an all-time high. Unfortunately, many of these contracts involved fraudulent deals that cost the US millions of dollars. As a result, in 1986, Congress amended the False Claims Act in order to make it easier for whistleblowers to file claims against fraudulent corporations and individuals. The whistleblower's share of recovery was increased to a maximum of 30 percent and the government's prior knowledge of fraud now did not necessarily bar a whistleblower from collecting lost revenue. If the government took over the lawsuit, the relator would also "continue as a party to the action." Amendments required the defendant to pay for the relator's attorney fees and protected the whistleblower from retaliatory actions by his or her employer. As a result, qui tam lawsuits increased dramatically. To date, the government has collected over $6 billion in lost revenue, nearly $1 billion of which has been rewarded to relators.

There are several examples of how companies and individuals defraud the government. The following are covered under the False Claims Act:

  • Mischarging or overcharging for goods or services.
  • Improper price data and the request for payment for services never provided.
  • Holding government property for fraudulent purposes.
    Avoiding payment of a debt to the government because of illegal reasons.
  • Knowingly providing the government with defective or dangerous products that were falsely certified.
  • Falsely certifying information for the entitlement of benefits.
  • Having any false claim paid by the government.

As a rule, anyone who defrauds the government out of revenue can be held accountable under the False Claims Act. Common defendants include government contractors and subcontractors, state and local government agencies or officials who swindle funds, private universities and members of the healthcare industry. Whistleblowers often include employees of the defrauding company, including former workers, competitors of government contractors and public interest groups.

The False Claims Act was enacted to encourage private citizens to assist the government in the fight against fraud. Often the whistleblower faces an uphill battle as large, powerful corporations or individuals are usually named as defendants. An experienced attorney in qui tam claims may help you gain a percentage of stolen government funds.

Learn more about Qui Tam Law