Whistleblower & Qui Tam Lawsuits

Whistle Blower & Qui Tam Lawsuits

One of the more prevalent types of legal actions that exists in the employment context today is a whistleblower action or qui tam lawsuit. The term qui tam is an abbreviation of a Latin phrase which when translated means, “he who sues in this matter for the king as well as for himself.”  The idea is that someone shares in the recovery received by the governmental agency for having brought the issue of fraud to the forefront in the first place. A qui tam lawsuit is an action brought by a private individual against a company or individual who is believed to have engaged in criminal activity involving fraud.  The idea behind these types of actions is to give those who blow the whistle a financial incentive to step up to report fraud when they observe it.  As noted in many news stories in recent years, there have been many instances where fraud of this nature has been discovered and reported by whistle blowers in various contexts. 

When someone discovers that fraud has occurred which involves a financial loss to the government, there are provisions in the law that allow the reporter of such fraud to both blow the whistle on the conduct without fear of reprisal and also recover part of the funds that are recovered as a result of the reporter’s good faith report.  This system is designed to give employees an incentive to report fraud when they see it both from the perspective of being protected from retaliation and also from the standpoint of being able to recover some of the benefits of their good faith action in reporting the fraud.  There are several state and federal statutes that apply in the context of whistleblower and qui tam lawsuits.  Included in this are the Federal False Claims Act, state False Claim Acts, the Securities and Exchange Commission whistleblower laws and the Internal Revenue Service Whistleblower statutes.


False Claims Act / Whistleblowers

The False Claims Act includes a qui tam provision as described above, which allows citizens to sue on behalf of the federal government for the fraud and also to be paid a percentage of the amount recovered.  This statute which originated during the Civil War was where the term “whistle blower” originated.  In today’s environment, most qui tam lawsuits under the False Claims Act stem from persons who have insider knowledge of fraudulent acts committed, including healthcare billing, medical contracts and other government spending programs such as Medicaid.  It has been common that employees working in the medical field uncover fraudulent claims being made by medical providers for reimbursement from Medicare and Medicaid. 

The False Claims Act allows for the recovery of treble (triple) damages and also provides penalties for each false claim or statement made by the offender.  If the government proceeds with the lawsuit after it is filed (as opposed to the individual claimant), the individual claimant can recover between 15 and 25 percent of what is recovered.  On the other hand, if the government declines to proceed with the lawsuit, then the individual claimant can receive between 25 and 30 percent of what is recovered, plus reasonable expenses, including attorneys’ fees.  There are attorneys that specialize in this type of litigation, in part because there is the potential to have their fees paid if there is a successful recovery.

In order for individuals to claim a reward under the False Claims Act, they must have inside information concerning fraud that is costing the taxpayers money.  In other words, the claim cannot be based upon information that is generally available to the public.  Typically, the people who have this kind of knowledge are employees or former employees, but there may be other members of the public who may also discover such information. If the whistleblower is an employee, there are strong anti-retaliation provisions that provide heavy penalties if an employee is fired for trying to stop fraud by either reporting it directly through a whistle blower report or by reporting facts to a supervisor or other member of management. 



Over the course of the years, the federal government has recouped billions of dollars through the reporting of fraud by whistle blowers.  This is an important remedy in the law that is available to citizens to protect what ultimately are resources that belong to all taxpayers and at the same time have an incentive for doing the right thing by reporting unlawful and fraudulent conduct. In today’s world of tight governmental budgets and many instances of fraud, qui tam lawsuits have become an important means of recovery not only for those that file the claims, but the American people as a whole.

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