November 21, 2023
In a typical civil lawsuit, a party who himself has been individually harmed by the actions of a defendant may pursue a lawsuit against that defendant to recover the relief caused by that injury. For example, in a personal injury lawsuit, a citizen whose car was totaled by a city bus might sue the city for their medical costs and property damage. In a contract dispute, a company might sue a separate company for monetary relief when the funds due on the contract were never paid. Based on the legal principle of “standing,” typically the law considers the person who directly suffered the harm caused by the defendant to be the only person who can pursue a lawsuit against that defendant.
In a qui tam action, however, this typical dynamic does not apply. The term qui tam is short for “qui tam pro domino rege quam pro se ipso in hac parte sequitur” which, translated from the Latin, means “Who sues on behalf of the King as well as for himself.” While the United States famously does not have kings, a qui tam action refers to a lawsuit in which a private individual sues on behalf of the government (which could be the federal government or a state government).
The term qui tam as it is most commonly used in the US generally refers to actions pursued under the federal False Claims Act (FCA) or state false claims act laws (for example, the California False Claims Act or CFCA). In an FCA lawsuit, a qui tam plaintiff (also referred to as a “relator” or more colloquially as a “whistleblower”) can file a lawsuit against a defendant alleged to have violated the FCA, a key federal law preventing fraud perpetrated against the US government. By doing so, an FCA whistleblower not only holds accountable those who defraud US taxpayers, but can also obtain a sizable financial reward amounting to between 15% and 30% of the financial penalties recovered against the defendant, which often amount into the millions of dollars.
The False Claims Act: Uncovering Fraud Against the Government
The FCA makes it illegal to, among other things, knowingly submit a false claim for payment to the federal government. In practice, FCA claims are often brought against defendants in the pharmaceutical industry, healthcare industry, international commerce, and military defense procurement industry.
The financial penalties imposed upon those who are found to violate the FCA are substantial: currently, an offender faces penalties between $13,508 and $27,018 for each false claim submitted to the federal government as well as three times the damages (“treble damages”) incurred by the government due to the false claims. Many FCA lawsuits involve many thousands of individual false claims, and the total financial penalties can exponentially rise. It is not uncommon for the total penalties imposed in a FCA lawsuit to amount to tens or hundreds of millions of dollars, and several multi-billion dollar penalties have been paid in FCA lawsuits.
Again, a qui tam FCA plaintiff stands to be rewarded between 15-30% of the total financial penalties imposed on an FCA defendant, thus the potential financial payout for an FCA plaintiff can be quite significant.
Qui Tam: A Key Tool in Fighting Fraud
It does not take a stretch of the imagination to have an understanding of the complexity that the federal government faces in fighting fraud in areas such as the Medicare and Medicaid system and the importation of international goods into the US, as millions of such transactions occur each year. Because federal officials simply cannot fully investigate every medical reimbursement claim or customs transaction, the FCA provides a way for private individuals to in a sense be “deputized” in holding accountable those who commit fraud against the government, and providing a financial reward in return. These individuals might be employees of the company who filed the fraud, or even an outside observer with evidence of the fraud.
Prior to filing the qui tam lawsuit, plaintiffs typically work with their FCA counsel to collect and best assemble the allegations and evidence necessary for a successful FCA pleading. When an FCA claim is filed in federal court, it is actually filed “in camera”, meaning the lawsuit is filed under seal and is thus not public record for at least a period of time, and thus the plaintiff can remain anonymous during this phase.
At the same time as the FCA lawsuit is filed, a copy of the complaint is also served on the relevant US Attorney’s Office. Federal prosecutors then have a period of time to investigate the accuracy and sufficiency of the allegations contained in the complaint in order to determine whether the federal government should intervene in prosecuting the FCA claim. Generally, plaintiffs want the federal government to intervene in the case, as federal prosecutors will provide prosecutorial and investigatory resources to pursue the claim, and it is a positive sign that the case is a compelling one with a significant likelihood of success.
Even if the government does not intervene, the private relator can pursue the FCA lawsuit. In either case, the lawsuit can proceed in federal court, and the plaintiff may or may not be providing testimony, as each case will depend on the evidence available to the plaintiff and/or the government.
Types of False Claims Act Violations
The types of fraud that can form the basis of an FCA lawsuit can occur in a wide variety of contexts, but common types of facts underlying successful FCA lawsuits include:
- Medicare and Medicaid claims for services or products that were not actually provided
- Medicare and Medicaid claims that are inflated and/or for services or products that were unnecessary
- Fraud related to the TRICARE health program for U.S. military service members and their families
- “Off label” marketing of drugs for uses other than their approved uses
- Overbilling for medical services that were provided, e.g. “upcoding” of medical services
- Failure to pay the full customs fees owed related to international commerce, e.g. by misstating the value and/or quantity of goods
- Providing inferior goods or services to the U.S. military
- Overbilling for services or goods provided in the defense and military context
- Failing to pay the proper amount of royalties on oil and gas leases with the federal government
- Use of kickbacks to promote the selection of goods or services, whether in the context of healthcare, military services, or other contracts that rely on reimbursement from the federal government
- Use of government resources for non-compliant financial products
- Failing to comply with federal cybersecurity
Protections for Qui Tam Whistleblowers
The FCA includes anti-retaliation provisions to protect individuals (who are often employees) who pursue a whistleblower lawsuit. Such provisions protect workers not just from being fired for coming forward with a whistleblower claim, but also protect workers from being demoted, harassed, threatened, suspended or otherwise discriminated against in the workplace.
Pursuant to the FCA, if an employee is subjected to such retaliatory behavior as a result of pursuing a whistleblower claim, then the employee can pursue legal action against the employer for reinstatement in the same position, twice the amount of back pay they were denied plus interest, compensation for any special damages they suffered as a result of the discrimination, and attorney’s fees.
Work with Experienced California FCA Counsel
Potential FCA whistleblowers are strongly encouraged to work with experienced legal counsel in pursuing their FCA claim in order to maximize their opportunity to obtain a significant financial reward and to properly protect themselves against retaliation.
If you have information that you believe may form the basis of an FCA action, contact our office today to schedule a confidential consultation with one of our experienced Whistleblower attorneys.