Qui Tam/Whistleblower Actions

Employees who discover dishonest or illegal activities in a company are in a precarious position. They may not want to participate in illegal activities, but they may be afraid of losing their jobs and sources of income. People who choose to expose dishonest or illegal activities that occur within the organization are known as “whistleblowers.”

Qui tam lawsuits are civil suits that are brought by whistleblowers under the False Claims Act to stop many different types of fraud against the government. Some types of fraud that may give rise to a qui tam lawsuit include:

  • Knowingly presenting to the federal government a fraudulent claim for payment
  • Knowingly using a false record or statement to get a claim paid by the federal government;
  • Conspiring with others to get a fraudulent claim paid by the federal government; or
  • Knowingly using a false record to conceal, avoid, or decrease obligations to pay money to the federal government.

For example, if you work at a hospital and you know that the hospital has been falsifying records in order to get Medicare reimbursements, you may bring a qui tam lawsuit against the hospital.

What Happens During a Qui Tam Lawsuit?

Under the law, an employee who has evidence that his or her employer is defrauding the government can sue the employer and recover compensation for the fraud on behalf of the government. The False Claims Act rewards whistleblowers if their case does in fact recover compensation for the government, and it gives them job protection.

The lawsuit is “under seal” for 60 days. This means it will be kept secret from the employer accused of fraud and others, except the government. The Justice Department uses this time to investigate. Investigations can take a long time, so the court may extend the seal several times to give the government more time to investigate.

Once the Justice Department investigates, the government decides whether it will “intervene” in the lawsuit. Government intervention happens in only a small percentage of qui tam cases, but cases involving government intervention are more likely to be successful. As in other areas of litigation, many qui tam cases settle. The government may ask the court to lift the seal to discuss the allegations and potentially negotiate a settlement with the organization that is accused of committing fraud.

Why would someone bring a qui tam lawsuit? Defendants found liable under the False Claims Act may have to pay up to three times what the government lost for each false claim, plus penalties of $5,000-$10,000 for each false claim. The whistleblower is entitled to 15-25% of the recovery when the government intervenes. The amount of the reward depends on multiple factors, including how much evidence you presented to the Justice Department or worked to ensure the success of the suit. When the government doesn’t intervene, the reward is 25-30% of the recovered false claims and penalties.

What job protection do you get for a qui tam lawsuit under the False Claims Act? You are protected against retaliation by your employer. An employee who is discharged, demoted, harassed, or discriminated against due to lawful acts in furtherance of a quit tam action is entitled to receive reinstatement, double back pay, and compensation for special damages, such as litigation costs and attorneys’ fees. This is an area of law in which courts are divided, and it is a good idea to ask an experienced employment and labor law attorney for advice if you are thinking of filing a qui tam action. In some states, there are wrongful termination laws that protect whistleblowers.