A “qui tam” case is a lawsuit brought by a private person, but on behalf of the government, under the federal False Claims Act or similar state laws. Under the False Claims Act, the private person who brings the lawsuit is known as a “relator.”If the government recovers money as a result of the qui tam lawsuit, then the relator is rewarded with a share of the recovered money (usually between 15% and 30%). The rest goes to the government.
The False Claims Act prohibits the making or presentation of a “false or fraudulent claim” for money to the United States Government. Therefore, in general, the False Claims Act potentially covers all types of false or fraudulent statements made by a company or individual for the purposes of obtaining money from the government. The False Claims Act also has a provision that covers “reverse false claims.” This provision prohibits the making of false statements for the purpose of avoiding an obligation to pay money to the government. The False Claims Act has a number of specific exceptions, the most important of which is an exception for tax fraud. However, a separate law covers tax fraud, and also provides for monetary rewards to any tax fraud whistleblower who reports large tax fraud schemes.
The False Claims Act is specifically designed to encourage whistleblowers to come forward and report fraud, and to pursue qui tam whistleblower cases on behalf of the government. A successful qui tam whistleblower is entitled to a minimum of 15% of the total recovery, and can obtain as much as 30% of the recovery in some circumstances. In many cases, relators have received awards of millions of dollars as a result of their right to share in the recovery. In addition to the potential monetary reward, many qui tam whistleblowers are motivated by patriotism and a strong desire for fairness and justice. These whistleblowers are true heroes, who take on risks and burdens for the good of their country and fellow taxpayers.
Generally, anyone who has information that a company or individual has violated the False Claims Act may blow the whistle by bringing a qui tam lawsuit. Claims have been brought by employees, former employees, customers, competitors, and others who have obtained independent information about fraud against the government.
If you learn of fraud against the government from the news media or other public sources of information, you generally cannot bring a qui tam lawsuit based on that information. This is because of the “public disclosure bar” that is part of the False Claims Act. However, under the case law interpreting the public disclosure bar, a whistleblower who uses publicly-available data or information as part of a broader effect to uncover a fraud may still be able to bring a succesful case, as long as the fraud itself has not previously been made public.
When a qui tam lawsuit is filed by a False Claims Act whistleblower, it is initially kept “under seal.” This means that only the government is informed of the lawsuit. During the time that the lawsuit is “under seal,” the government has an opportunity to investigate the qui tam whistleblower’s allegations. The government, if it chooses, can then “intervene” in the lawsuit. This means that the government’s own attorneys, from the Department of Justice, will become involved in litigating the claims. Generally, intervention is a positive development for the whistleblower, because intervention brings all of the resources and prestige of the government to bear on the case. If the government decides not to intervene, however, the relator may still choose to continue the case without the government’s assistance.
Yes. A group of whistleblowers may jointly bring a False Claims Act qui tam case. In some cases, this may be beneficial because different people may have different information that, when combined, powerfully prove the fraud.
The False Claims Act has a “first to file” rule. This means that only the first relator (or group of relators acting together) to bring a lawsuit arising out of a particular fraud scheme will be entitled to share in the monetary reward. For this reason, once you decide to move forward with a qui tam case under the False Claims Act, it can be important to prepare and file the lawsuit quickly.
Yes. Subject to some exceptions, a qui tam case under the False Claims Act must be brought within six (6) years of when the fraud occurred. But if you have knowledge of fraud against the government, and are considering a qui tam action, you should not delay. If you wait too long, you may lose your right to obtain a relator’s award. If someone else discloses the fraud, or brings another qui tam action before you do, then you may lose your chance for an award.
Not initially. When a qui tam lawsuit is filed in court, it is put “under seal.” This means that it is not public, and is not disclosed to the defendants. Instead, only the government learns of the filing. The government will then investigate the claims and decide whether to intervene. If the government intervenes, then the complaint will be served on the defendants and will become public. If the government does not intervene, then the relator can choose to pursue the case without the government’s assistance and, at that time, the complaint would be served and would become public. Either way, in most cases, the defendants you are accusing of fraud will eventually learn of your allegations. The time from the filing of the complaint until the case comes out from “under seal” is typically at least a full year, and often more, so qui tam relators have anonymity for at least some period of time after they file a qui tam case.
The False Claims Act has a whistleblower protection provision. Under that provision, an employer may not discharge, demote, suspend, threaten, harass or discriminate against an employee for bringing a qui tam case under the False Claims Act. If the employer violates that prohibition, the employee can sue the employer for damages (such as lost wages) and other relief. Thus, the False Claims Act offers protection to an employee who blows the whistle on his or her employer. Most similar state false claims laws also have these types of anti-retaliation provisions.
For a number of reasons, if you are considering bringing a qui tam lawsuit under the False Claims Act, you should act quickly. If either the government or another qui tam relator discloses the fraud in a lawsuit, you likely will lose your right to a relator’s award. Accordingly, at a minimum, you should consult with a whistleblower attorney to discuss your potential case. An attorney with experience in False Claims Act whistleblower cases can help you through the process of deciding whether to go forward. Your discussions with the attorney will be confidential. Many attorneys, including the qui tam attorneys at Tycko & Zavareei LLP, will provide you with an initial consultation and advice without requiring you to pay any fees or make any commitments. You should not discuss the matter with anyone other than an attorney. Your discussions with others may not be confidential. Furthermore, you run the risk that someone else will learn of the fraud and will bring a qui tam lawsuit before you do, thereby undermining your right to a relator’s award. If you are a current employee of the company or organization that is engaged in fraud on the government, you should not communicate with your whistleblower attorney (or anyone else) about the fraud through your office computer, work email, or work telephone. Communications made that way may not be secure, and may provide a basis for your employer to take actions against you. Instead, use a home computer or personal telephone, and if you communicate by email, always use a personal email address.
A qui tam lawsuit can take hundreds, or in some cases thousands, of hours of attorney time. If you had to pay the attorneys on an hourly basis, the fees would become prohibitive to most potential qui tam whistleblowers. But many attorneys who handle qui tam cases, such as the qui tam attorneys at Tycko & Zavareei LLP, are willing to do so for a “contingency fee.” This means that the attorneys do not charge by the hour for their time. Instead, they agree to accept a percentage of your recovery as their fee, and they take on the risk that, if you do not obtain any recovery, they will not be paid. Different whistleblower lawyers may be willing to offer different terms. If you are seriously considering a qui tam lawsuit, you may wish to contact a number of different qui tam law firms, and find one that you believe will do excellent work and that will offer you favorable contingency-fee terms.
No. Finding a whistleblower attorney that you believe will effectively and aggressively represent your interests is much more important than finding one that is local. Attorneys who handle False Claims Act qui tam cases routinely work on cases around the country, and not just in the city or state where they have offices. Moreover, for various strategic reasons, the lawsuit might be filed in a city or state other than the one in which you work or live. Where to file the case is an issue that your attorney will analyze. Accordingly, in searching for representation, you should not necessarily limit yourself to lawyers who happen to have offices close to where you work or live. The qui tam attorneys at Tycko & Zavareei LLP routinely represent whistleblowers in cases throughout the United States. For more on how to choose an attorney to represent you in a qui tam case, see our page on Selecting An Attorney
In almost all jurisdictions, a whistleblower (or qui tam relator) must be represented by an attorney to help him or her bring a False Claims Act case on behalf of the United States.
What types of customs fraud are covered by the False Claims Act?
Yes. When goods are imported into the United States without country-of-origin marks, or with false country-of-origin marks, the importer may be liable for so-called “marking duties.” In a landmark case brought by Tycko & Zavareei LLP, the court ruled that “marking duties” can be recovered under the “reverse false claims” provision of the False Claims Act, and the Department of Justice has agreed with that position. Accordingly, if you have information that an importer is failing to mark, or is marking improperly, you may be able to blow the whistle through a qui tam lawsuit under the False Claims Act.