Fraud Law Resources for Oregon and Washington
Overview of Qui Tam Law
The traditional name for cases which attempt to recover money defrauded from the king is Qui Tam litigation. Qui Tam is pronounced "kee tam" or "kway tam") and is an abbreviation from the Latin "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur" meaning "who as well for the king as for himself sues in this matter."
History of Qui Tam Laws in the United States
Qui tam legal actions can be traced back as far as 13th Century England where they were used by private citizens to gain access to the king's court. The U.S. legal system, derived from the British allowed qui tam actions since the nation's founding in 1776. They were rare.
During the Civil War, Congressional hearings investigated widespread instances
of military contractor fraud including defective products, substitution of
inferior material, and illegal price gouging. At the urging of Abraham Lincoln,
a former practicing lawyer, Congress enacted the Civil False Claims Act in 1863
as a weapon to fight procurement fraud. This law has also been known as the
"Lincoln Law" and the "Informer's Act."
During World War II, the law was amended to add even greater restrictions. In 1943, Congress amended the Act which eliminated cases where the Government had prior knowledge of the allegations. The award to the relator was reduced from 50% to a maximum of 25% if the government did not take over the case and a maximum of 10% if it did.
1986 during "Star Wars" military buildup, Congress became alarmed over rampant
procurement fraud, inadequate efforts of regular law enforcement to control the
fraud, and the obstacles making it difficult for whistleblowers to bring qui tam
actions. Congress passed amendments to the Act increasing the whistleblower's
share of the recovery to a maximum of 30%, increasing the powers of relators in
bringing qui tam lawsuits and increasing the damages and penalties that can be
imposed on defendants. Now even if the Government joins the lawsuit and has
primary responsibility for prosecuting the action, the relator has the right to
continue as a party to the action. Prior Government knowledge of the allegations
does not prevent a relator from filing a qui tam action.
Typical False Claims Act Cases
The type of cases filed as qui tam actions generally consist of false claims made to the Government for payment or approval of claims. These false claims can be generated through the submission of false records, statements or other representations made to the Government. The 1986 Amendment defines a "claim" as:
1986 amendments do not cover false claims to the Government relating to tax
returns. However other claims that reduce an obligation owed to the government
are covered such a import fraud.
False Data: Fraudsters often submit false cost and pricing data to the government during the negotiation of a contract that subsequently results in an inflated contract price.
False Certifications: Another common type of case is product and service substitution and false certification of entitlement for benefits. Examples of product and service substitution are falsely certifying that a product meets specifications, false testing schemes such as falsely certifying that reliability testing was conducted and providing an inferior service or product. False certification of entitlement cases include falsely certifying information for FHA mortgage guarantees and price supports.
For more details see Legal Theories
Employees: Since this whistleblower is concerned about keeping his or her
job, a qui tam action is a last resort.
Almost any person, corporate organization or government entity, including government employees, can be charged as a defendant. The exceptions include certain public officials such as members of Congress, judges and senior executive branch officials. Common defendants are government contractors and subcontractors, medical providers, Medicare & Medicaid fraud (including doctors, hospitals, HMOs, and clinics), and universities. State & local governments, Indian tribes, and other person who obtain government money through grant contract or otherwise but are sovereign powers are probably exempt under current law. See Vermont Agency of Natural Resources v. Stevens, 529 U.S. 765 (2000).
A qui tam relator files a complaint under seal in a U.S. District Court that has jurisdiction over the case. The relator must also file a written disclosure of substantially all material evidence and information the person possesses. The primary purpose for the written disclosure is to provide the government with enough information to properly investigate the claim in order to determine if it will join in the lawsuit. The disclosure will be probably be made public so it must be drafted with care.
Department of Justice (DOJ) has 60 days after the complaint is filed to
investigate the information disclosed and determine whether it will join in the
lawsuit. The DOJ can, and often does, request the court grant extensions to give
it more time to investigate. It is not unusual for a complaint to remain under
seal for as long as two to three years before the DOJ makes a decision. The
relator has the right to challenge extension requests and to have the seal
If the DOJ declines to join the relator may investigate and prosecute the case. The DOJ will decline to join if it feels there is no merit to the complaint, there is a lack of resources, or for policy reasons.
In some cases, the U.S. Attorney will decide to open a criminal investigation based on the qui tam allegations. If that occurs, the civil qui tam case will be stayed until the completion of the criminal investigation.
Division of the Award
The relator's share of the award is a minimum of 15 percent and a maximum of 30 percent. Total monetary recovery under the False Claims Act is the amount of the fraud times three (tripled). If the government takes over the case and wins and the relator was not involved in the fraud, the judge will award the relator between 15 and 25 percent depending on the value of the relator's contribution to the case. If the government does not take over the case and the relator successfully prosecutes the case, the judge will award the relator between 25 and 30 percent of the proceeds. If the relator was involved in the wrongdoing, the court can reduce the relator's share at its discretion depending on the circumstances. The court will dismiss the relator entirely if you are convicted of criminal conduct arising from the fraud. Attorney fees and costs are awarded if the relator wins the case.