False Claims Act Qui Tam Law

What is the False Claims Act "Qui Tam" law all about?  How does it work?

What does the False Claims Act cover?

The False Claims Act generally prohibits making, using, or presenting a false statement or document in order to get the United States Government to pay money. It also applies where false statements or documents are used to avoid paying money to the Government that would otherwise be owed.

What is the history of the False Claims Act?

While the tradition of the qui tam provisions of the False Claims Act dates back to medieval English monarchs, the False Claims Act was enacted during the Civil War. Known as the "Abe Lincoln Law," it confirms that cheating the government is not a 20th century development, but a venerable tradition.

Among those who evaded False Claims Act liability during the Civil War, but whose misdeeds form part of the False Claims Act's legislative history, was "Commodore" Cornelius Vanderbilt, the patriarch of one of the wealthiest American families in the 19th century. Vanderbilt's fortune began modestly with a Staten Island ferry he operated as a young man. Despite his personal knowledge of vessels and their seaworthiness, he nonetheless sold the Union Navy ships with rotting hulls--at exorbitant prices--all the while vouching for their quality.

In the first 80 years of the False Claims Act, qui tam plaintiffs or "relators," as they are commonly termed, could bring "parasitic cases."  These were "copycat" civil actions, brought by relators.  They were based upon criminal or other federal actions that had already been publicly filed in the courts or publicized in newspapers, which originally disclosed the wrongdoing. Overreacting - to negative publicity regarding a few such cases, Congress passed the 1943 Amendments to the False Claims Act, in which it prohibited actions based upon facts already known to the Government. Subsequent court decisions largely rendered the False Claims Act's qui tam provisions ineffective.

Today’s False Claims Act is the result of Congressional action in 1986 and again in 2009-2010. The False Claims Act was rejuvenated under President Reagan, amidst press reports and Congressional hearings about over-priced military coffee pots, screwdrivers, and toilet seats.

The 1986 Amendments strengthened the False Claims Act by:

     (1) relaxing the "intent" element necessary to prove a False Claims Act violation;  
     (2) establishing the applicable standard of proof as preponderance of the evidence;
     (3) expanding and clarifying the relator’s role in a qui tam action;
     (4) increasing the damages and penalty provisions; and
     (5) adding employee whistleblower protections against retaliation.

The 1986 Amendments increased the "bounty" to citizens who successfully initiate and pursue a False Claims Act case, raising the maximum percentage recovery to 25-30% of the Government's recovery. As revised in 1986, the False Claims Act contained several unique procedural aspects, including the possibility of dual representation by both the Department of Justice and private counsel, filing of the qui tam complaint under seal, prohibition of jurisdiction by the federal courts over qui tam cases where there was a "public disclosure" and the relator was not an "original source," and prioritizing the first case filed.

Strengthening amendments to the False Claims Act in 2009 and 2010 have helped to make the False Claims Act more successful.  Retaliation protections were extended to government contractors.


What is the relationship between qui tam and the False Claims Act?

The False Claims Act can be enforced by private citizens, usually called whistleblowers by the public, using the special parts of the Act, known as the qui tam provisions. These special False Claims Act qui tam whistleblowers are a lot like "plaintiffs" in other civil lawsuits.  However, these whistleblowers bringing False Claims cases are not referred to as plaintiffs, but are called, in legal terms, “relators.”

The False Claims Act can also be independently enforced by the United States Department of Justice, without resort to the qui tam provisions and without a whistleblower.

What is qui tam?

The term "qui tam" is from a Latin phrase which, loosely translated, means "he who sues on behalf of the king." Private citizens frequently used early English and American qui tam provisions to recover unpaid customs duties owed the monarch or the government. Private citizens and the government usually split the recoveries 50-50.

The qui tam provisions are based upon common law developed by judges over hundreds of years and upon statutory traditions providing for private, not governmental, enforcement of laws. The "qui tam" aspect predates our Constitution and can be traced back to the 14th century in England.

In the 18th century, many of the First United States Congress' enactments were qui tam or "bounty hunter" laws. At that time, there was no Department of Justice to enforce national laws—our new federal government depended upon the states, or private attorneys general, to enforce federal laws under the qui tam statutes. The qui tam provisions helped ensure law enforcement and generated substantial funds for the new federal government's treasury.

What are the whistleblower protection provisions for employees, subcontractors, and independent contractors in the False Claims Act?

Under 31 U.S.C. § 3730(h) of the False Claims Act, any employee or contractor who is discharged, demoted, harassed, or otherwise discriminated against because of lawful acts by the employee in furtherance of an action under the Act or in an effort to stop a violation of the False Claims Act is entitled to all relief necessary to make the employee whole. Such relief may include reinstatement, double back pay, and compensation for any special damages, including litigation costs and reasonable attorneys' fees.

You should be aware, however, that the scope of whistleblower protection under § 3730(h) is an issue that currently divides the courts. That is, what is considered unlawful retaliation in one jurisdiction may not be illegal in another jurisdiction.  However, what is clear in this relatively new area of law (most of the case law developed in the last 10 years) is that you do not have to file a False Claims Act qui tam case to be protected by the law.  You can protect your rights by filing a lawsuit under § 3730(h) in federal court.

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