Federal False Claims Act
Qui Tam Actions under the Federal Law
The federal law authorizing qui tam actions, in its original form, was signed into law by President Lincoln during the Civil War. It was intended to deter fraud in defense contracts with the U.S. Government. The law permits private citizens to bring a lawsuit in behalf of the United States to recover damages incurred by the government as a result of its payment of false or fraudulent claims submitted by a contractor or by anybody else seeking to defraud the federal government. A whistleblowing qui tam plaintiff is entitled to a percentage of the judgment proceeds if they succeed in the lawsuit. The amount of damages sought in such a case can be quite large:
There are some fairly strict and technical procedural requirements that a qui tam plaintiff must comply with to be eligible to proceed forward with a case and to receive a percentage of the recovery in a successful case. The following discussion briefly summarizes some of the most important of those procedural rules. A qui tam plaintiff has a strong incentive to get her lawsuit filed ASAP! Only the first person to file a qui tam lawsuit which seeks to recover damages for a false claim made against the government is allowed to pursue the case: all later filed cases on the same false claim will be dismissed.
The law requires that the qui tam plaintiff file the case under seal and serve a copy of the lawsuit on the Department of Justice along with a written summary of all facts and evidence known to the plaintiff that supports the case. In other words, the qui tam plaintiff must not inform anyone except the Justice Department that she filed the case, not even the perpetrator of the fraud! The Justice Department is allowed a minimum of 60 days to review the case and make a decision on whether the federal government will take over pursuit of the lawsuit. If it decides to intervene in the case the Justice Department will have primary responsibility for pursuit of the lawsuit although the qui tam plaintiff remains a party to the action. If the Justice Department does not intervene then pursuit of the case continues to be the responsibility of the qui tam plaintiff although she will be rewarded with a larger percentage of the recovery in that event.
There are other technical rules which, if not strictly complied with, will result in a dismissal of the case. In particular, if the any of the facts of the case became public prior to the filing of the qui tam action, such as through a news article, the case will be dismissed unless the qui tam plaintiff is the original source of the information. The public disclosure bar is intended to prevent somebody from racing to the federal courthouse to file a qui tam action after learning about the underlying facts of the fraud from the news media or as a result of a criminal indictment that just came down against the perpetrators of the fraud, as examples.
At the same time, a person who is an original source of the information such as an employee who blew the whistle on a fraudulent claim submitted to the government by his employer in connection with a federal contract would still be able to bring a qui tam suit against his employer despite public disclosure of the fraud in the news media.
There is a whistleblower provision in the False Claims Act that gives significant protection from retaliation to any employee who is discharged, demoted, harassed or in any other way discriminated against by her employer as a result of bringing a qui tam action or supporting it in any way. The employee can sue for reinstatement, twice the amount of back pay and special damages, including litigation costs and attorneys fees!
