July 12, 2022
The phrase “qui tam” – like many legal terms that still exist in American usage today – derives from Latin. It is shorthand for the longer phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur.” For those rusty on their Latin phraseology, this is translated in English as: “He who sues in this matter for the king as well as himself.” Throughout history and various forms of government, a qui tam lawsuit is one in which a private person brings a lawsuit on behalf of the government.
While America famously did away with the concept of kings from the beginning, qui tam lawsuits are very much an ongoing part of our civil litigation system, and private plaintiffs who become aware of certain types of illegal actions that serve to defraud the federal government or state governments can pursue qui tam lawsuits and potentially obtain significant financial rewards for themselves while doing their part to hold accountable those individuals and entities who defraud the government.
What is Qui Tam?
While “qui tam” in a sense is a general term for private plaintiffs who pursue lawsuits on behalf of the government while seeking their own financial reward, in the United States, qui tam lawsuits are most associated with the False Claims Act, a federal anti-fraud law, as well as similar false claims statutes enacted by many state legislatures to prevent and disincentivize fraud carried out against state governments.
The federal False Claims Act – or FCA as it is commonly known – is set forth at 31 USC sections 3729 – 3733. The FCA, among other things, makes it illegal to knowingly present (or caused to be presented) a false or fraudulent claim for payment or approval to the federal government, as well as to knowingly make a false record or statement material to a false or fraudulent statement in connection with a claim for payment to the federal government. Additionally, it is a violation of the FCA to have possession or custody of government property and fail to deliver that property as required to the government. As with many federal statutes, a person can be liable for an FCA violation by conspiring to commit a violation of the FCA, meaning that a person can be liable for merely entering into such an agreement to violate the FCA, even if the underlying violation did not occur.
The FCA was originally enacted during the Civil War to hold accountable unscrupulous suppliers who provided unacceptable provisions to the federal government pursuant to government contracts (including ill mules and rancid food rations), leading to the FCA also being known as the “Lincoln Law.” Over time, and currently today, the focus of FCA lawsuits still includes defense and military suppliers but also defendants in the pharmaceutical and healthcare industries who provide medications, medical services and medical supplies pursuant to Medicare and Medicaid government contracts.
How Are Qui Tam Lawsuits Different Than Most Other Civil Cases?
In a typical civil lawsuit, a private party brings a claim against another private party for damages and/or other remedies, and the courts adjudicate the dispute. In a federal qui tam lawsuit brought pursuant to the FCA, the process is somewhat different and can be more extended and complicated.
Because a private plaintiff who pursues a qui tam FCA lawsuit is doing so on behalf of the federal government, which is the true “victim” of underlying violations of the FCA, the federal government has the option of joining with the private plaintiff in pursuing the FCA lawsuit, and this fact should guide the process for a potential qui tam plaintiff from the start.
The general process for pursuing a qui tam FCA lawsuit as a relator is as follows:
- A private individual (or group of individuals) with knowledge of a potential FCA violation – such as Medicare fraud in the form of upcoding or in submitting reimbursement claims to the federal government for services that either were not performed or were not necessary – works with an FCA plaintiff’s attorney in assembling and analyzing the evidence to substantiate the FCA claim. Although it is not absolutely necessary to work with an attorney, generally plaintiffs do so in order to manage the complexities of federal FCA litigation and maximize their chances for financial recovery.
- The plaintiff then files a complaint with the relevant U.S. District Court. The complaint remains under seal for at least 60 days, and all information contained therein is kept confidential, even from the defendant. The plaintiff also serves a copy of the complaint on the federal government.
- During this 60-day or longer period of time (typically this period is lengthened), the federal government investigates the plaintiff’s allegations in the complaint in order to determine whether the federal government itself should intervene in the lawsuit. If the government does intervene, it will assume primary responsibility for pursuing the claim while working with the plaintiff and their attorneys. Government intervention is generally a good sign for a plaintiff, as it indicates that the government has enough confidence in the allegations and the possibility of a successful lawsuit to devote its resources to pursuing it. But even if the government does not intervene, the private plaintiff can still pursue the FCA claim on their own through their own private counsel.
- The FCA case then proceeds against the defendant in federal court, either pursued by the private plaintiff along with the government, or by the private plaintiff and their counsel. If the defendants are found liable, then civil and criminal penalties may be imposed, and a private plaintiff has the ability to receive a significant portion of the financial penalties imposed on the defendant(s).
What Incentives are Provided to Whistleblowers by the FCA?
Plaintiffs who pursue FCA qui tam lawsuits (referred to as “relators”) have a strong financial incentive to successfully pursue such claims. Under federal law, a private qui tam plaintiff can recover between 15% to 30% of the financial penalties levied against an offending entity in an FCA suit.
Because some FCA claims have resulted in penalties amounting to hundreds of millions of dollars, this translates into hugely significant rewards for plaintiffs and thus incentive to work with experienced FCA counsel through the often long and complex process of pursuing a claim.
Are Whistleblowers Protected Even Without a Successful Qui Tam Lawsuit?
Protecting qui tam “whistleblowers” who pursue FCA lawsuits as private citizens is a key aspect of federal FCA legislation. Because of the nature of FCA allegations, the plaintiffs who bring such claims are often current or former employees of an organization alleged to have committed wrongdoing (and this can range from roles such as nurses or mid-level office employees to CEOs and other corporate executives).
The FCA includes specific retaliation provisions designed to prevent such plaintiffs. Separate and distinct from the primary provisions of the FCA prohibiting the submission of false claims, a plaintiff can also pursue an action against a company or individual that retaliates against a person who brings a qui tam claim on the basis of their having done so (regardless of whether the qui tam action itself is successful). A person who proves a retaliation claim can obtain relief such as reinstatement, double any back pay they might have lost, attorney’s fees, and special damages sustained as a result of the discrimination.
For both whistleblower plaintiffs and defendants alike, the process of litigating an FCA claim is often long (many such lawsuits average 3-5 years in length) and filled with risk. It is important to work with experienced FCA counsel from the earliest stages of either asserting or responding to a FCA claim to protect your interests, avoid retaliation, and maximize your chances of a positive outcome. Our attorneys have combined decades of experience in both the federal government and in the highest levels of private practice, and are ready to work with you to counsel you and/or your business on any FCA issues you may be facing.