Qui Tam Lawsuits
The federal False Claims Act is intended to protect the government from fraudulent claims against federal programs. The federal government utilizes the False Claims Act to prosecute attempts to commit fraud against the government. The qui tam lawsuit is a particularly interesting aspect of the False Claims Act.
The False Claims Act allows private individuals with direct knowledge of fraud to file a lawsuit on behalf of the government. These individuals are commonly known as whistleblowers, though under the False Claims Act they are referred to as relators. Qui tam relators are commonly former or current employees, competitors, or contractors associated with a business that allegedly committed fraud.
The False Claims Act provides a financial incentive for the relator to bring qui tam lawsuits. For example, if the qui tam action is successful, the relator can receive between ten and thirty percent of the ultimate recovery. The purpose of this incentive is not only to encourage individuals to act but also to assist whistleblowers that may end up losing their jobs by calling out corruption.
There is a statute of limitations for qui tam lawsuits. The realtor must bring the qui tam lawsuit within six years of the date that the fraud was allegedly committed. Alternatively, the lawsuit must be filed no more than three years past the date when the whistleblower or the United States should have known about the “material facts” of the fraud. In any event, a qui tam lawsuit may not be filed beyond ten years after the date of the alleged fraud.
The process for filing a qui tam lawsuit is unique. While the lawsuit is initiated by filing a complaint, the complaint is confidential and remains under seal until the federal government decides to intervene in the lawsuit. In the meantime, the realtor must make certain disclosures and keep the lawsuit confidential. If the government decides to intervene in the lawsuit, it takes over the litigation and prosecutes the case while the relator remains a party to the lawsuit. If the government doesn’t intervene, the relator may still pursue its case.
The qui tam lawsuit is a unique and powerful tool under the False Claims Act to combat corruption. By allowing private individuals to file qui tam lawsuits and providing financial incentives to do so, the government creates a partnership with whistleblowers that are privy to insider information of fraud.