Whistle-Blower - Qui Tam Act
Qui Tam Whistle-Blower Overview
When a person has knowledge of a violation of the Federal
False Claims Act, the person can become what is commonly called a whistle-blower
(relator) and become involved in what is known as a Qui Tam suit.
Qui Tam refers to a suit brought by a person on behalf of the
United States Government against an individual or entity for
acts of fraud committed against it. The Qui Tam statute seeks
to expose and thereby stop the wasting of federal funds.
The Qui Tam Plaintiff (the Whistle-Blower) can Receive
Between 15% and 30% of the Recovery
Qui Tam allows a person with knowledge of a violation of the
Federal False Claims Act to bring an action for a variety of
practices. Federal funding must be involved under this statute,
and the fraud alleged must be substantial and non-frivolous in
nature.
The Federal False Claims Act is a law designed to prevent fraud
on the federal government and, in turn, the taxpayers. This
act prevents companies from charging for services or products
that they do
not deliver.
How Qui Tam Works
Filing: A qui tam relator files a complaint,
under seal, in a U.S. District Court that has jurisdiction over
the case. Along with the complaint, the relator must also file
a "written disclosure of substantially all material evidence
and information the person possesses." The primary purpose
for the written disclosure is to provide the Government with
enough information to properly investigate the claim in order
to determine if it will join in the lawsuit.
Government Role after Filing: Once a complaint
and written disclosure is filed under seal, the Department of
Justice (DOJ) has 60 days to investigate the information disclosed
and determine whether it will join in the lawsuit. The DOJ can,
and often does, request the court to grant extensions to give
it more time to investigate. It is not unusual for a complaint
to
remain under seal for as long as two to three years before the
DOJ makes a decision. However, a relator does have the right
to challenge extension requests and to have the seal lifted.
Once a complaint is filed, the DOJ will assign the case to an
investigative agency that has jurisdiction over the allegations.
During the period of time the complaint is under seal, the Government
investigators will conduct a preliminary investigation based
on the information disclosed by the relator. This usually includes
a comprehensive interview of the relator and review of relator's
records if any exists. It also will include interview of any
corroborative witnesses, review of appropriate government records
and interviews of government officials. The investigation can
also be expanded to include obtaining and reviewing the records
of the defendant through the subpoena process. Once the preliminary
investigation is completed, the results are analyzed by the DOJ
in order to determine whether it will join in the lawsuit.
While under seal, the DOJ has a number of options in making
its decision. It can elect to join in the lawsuit, decline to
join, move to dismiss the action, or attempt to settle the action
prior to a formal investigation. Under the statute, if the DOJ
elects to join in the lawsuit, it controls the action and has
the primary responsibility for prosecuting the case. The DOJ,
under the circumstances, can limit the relator's participation
during the case. If the DOJ declines to join, it pulls out of
the investigation, but the relator is entitled to investigate
and prosecute the case. The DOJ can also dismiss the complaint,
but rarely does so. Instead, the DOJ will usually just decline
to join if it feels there is no merit to the complaint, there
is a lack of resources, or for political reasons, that allows
the relator the option of continuing with the case on his or
her own.
In most cases, the DOJ will involve civil and criminal resources
from the U.S. Attorney's office within the area where the case
was filed. In some cases, the U.S. Attorney will decide to open
a criminal investigation based on the qui tam allegations. If
that occurs, the civil qui tam case will be stayed until the
completion of the criminal investigation.
Relator's Role if Government Declines: If the
DOJ declines to join in a qui tam action, the relator has the
right to investigate and prosecute the case. However, the statute
gives the Government the right to intervene in the action at
a later date if it feels there is a good reason to do so. The
relator, if pursuing the case, has full discovery rights (court
approved access to contractor and government records and sworn
testimony of witnesses) as provided under the Federal Rules of
Civil Procedure. If the Government does not join and the relator
is successful in pursuing the case, the relator, generally, will
receive a larger percentage of the award.
Relator's Share of the Award: The 1986 Amendment
to the False Claims Act increased the relator's share of the
award in qui tam actions. Prior to 1986, relators were not guaranteed
any more than 10 percent of the award. The 1986 Amendment raised
the relator's share to a minimum of 15 percent and a maximum
of 30 percent.
The size of the relator's share of the award depends
on several factors:
1. If the Government joins, and successfully prosecutes the
case, and the relator was not involved in the wrongdoing, the
relator can receive between 15 and 25 percent depending on the
extent of the relator's contribution to the case.
2. If the Government does not join and the relator successfully
prosecutes the case, the relator will receive between 25 and
30 percent of the proceeds.
3. If it is determined the relator was involved in the wrongdoing,
the court can reduce the relator's share at its discretion depending
on the circumstances of the relator's involvement. The court
will dismiss a relator out of an action and deny receipt of any
share of an award if the relator is convicted of criminal conduct
arising from the wrongdoing alleged in the lawsuit.
In addition to receiving a percentage of the award, the False
Claims Act also provides that the relator, if successful, will
be reimbursed for expenses incurred, including attorneys fees
and costs.
Employee Whistle-Blowers
An employee who brings a Qui Tam Action against an employer
is entitled to protection under the law to prevent adverse or
retaliatory consequences.
The Federal False Claims Act provides protection for employees
who are discriminated against or subject to any form of retaliation
in case the employer fires or in any other way discriminates
against the employee.
The Act provides for reinstatement and twice the amount of lost
wages as damages if the employer takes adverse action such as
firing, demotion, or any other harassment as a result of the
employee's participation in any investigation or litigation.
Any other damages that the employee incurs as a result of the
employer's wrongdoing are also recoverable under the Act.
Non-Employee Whistle-Blowers
The plaintiff (whistle-blower) does not have to be a present
or former employee, just a person with some knowledge of the
violation.
Anyone who comes upon credible information that a false or fraudulent
claim for federal funds has been submitted or paid is eligible
to file a Qui Tam action, provided that such person did not simply
learn about the fraud in the newspapers or another public forum.
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