How Does a Qui Tam Lawsuit Work | National Whistleblower & Government Law

Qui tam lawsuits work by rewarding a whistleblower who sues a person or organization that is defrauding the US government. Since the government is unaware of most of the fraud taking place against it, it relies on whistleblowers to bring the fraud to the government’s attention. One way this occurs is when the whistleblower sues the wrongdoer on the government’s behalf. In return for doing this, the whistleblower gets a portion of the money recovered by the US government.

How Does a Qui Tam Lawsuit Work: Background

Qui tam lawsuits fall under the False Claims Act. The False Claims Act is an old law, dating all the back to the Civil War. Back then, various contractors were defrauding the Union (and Confederate) government by selling war goods that were faulty, inadequate or otherwise unfit for use. To counter this problem, Congress passed the False Claims Act, which created liability on those who would defraud the government.

As a way of making the False Claims Act more effective, Congress added a qui tam provision. This allows individuals to collect a reward if they help the US government recover money taken through fraud. This “bounty” sounds like a good idea, but how exactly does the process work?

How Does a Qui Tam Lawsuit Work: The Beginning

To start a qui tam lawsuit, there must be a whistleblower (also called a relator). A relator is someone who has knowledge of the fraud and can use that knowledge to sue (or help the US government sue) the person or organization who is defrauding the government. The government relies on relators because the government is unaware of most of the fraud that takes place. Additionally, even if the government suspects possible fraud, it won’t have anywhere near the knowledge or access to information that someone inside the defrauding organization would have.

Once someone decides to be a whistleblower, they must file a complaint in federal court, just as they would in a normal civil lawsuit. But what makes the qui tam lawsuit different is that the relator must file the complaint “under seal.” This means the whistleblower cannot reveal the qui tam lawsuit to the defendants or the general public. Instead of notifying the defendant, the relator will notify the relevant US Attorney and Attorney General of the United States by providing them with a copy of the complaint.

The next step involves the government investigating the alleged fraud. This can take many months. While this investigation takes place, the qui tam complaint will remain under seal. The US government will complete its investigation and conclude whether to “intervene” or join the lawsuit. Even if the government decides not to intervene, the relator can still continue the lawsuit. However, it makes the chances of success much less likely. This is for a couple of primary reasons:

● First, the relator can’t rely on the resources of the United States to pursue the qui tam lawsuit. If the defendant is a powerful and wealthy corporation, it might be able to force the relator into giving up on the case, regardless of how much merit it has.

● Second, if the US government decides not to join the case, it probably means it believes there’s not a good chance of winning. The defendant knows this, so if it sees the government backing out, it knows the relator doesn’t have a strong case.

Whether the US government joins or not, the case can continue with the relator setting out to prove that fraud has taken place.

How Does a Quit Tam Lawsuit Work: Potential Reward for the Whistleblower

Assuming the qui tam lawsuit is successful, the relator may recover a certain percentage of the total amount of money recovered by the government. The percentage will vary depending on the facts of the case, whether the government intervened and if so, how much assistance the relator provided during the case. Typically, the relator can expect a reward of between 10% and 30% of the total recovery. The higher 25% to 30% amount is usually for relators who win cases the US government refused to join.

How Does a Qui Tam Lawsuit Work: Whistleblowing Risks

The idea of collecting a sizeable reward entices many people to become whistleblowers. But to see a case all the way through to completion takes a lot of time, hard work and risk. For example, when the relator files the qui tam lawsuit, they have some level of anonymity, but many organizations can eventually figure out who the whistleblower might be if they go digging. Even if the anonymity remains at the beginning of the case, the person’s name usually comes out during the trial. And in the rare cases where it does not, the anonymity vanishes when the person collects their reward.

All this means the relator is at risk of retribution and retaliation. The False Claims Act has special provisions to prevent this, but it’s difficult to prove retaliation. Much of it is very subtle and underhanded. A whistleblower can possibly become blackballed after filing a qui tam lawsuit, resulting in the inability to find work in their chosen industry or field – but it can be impossible to prove who did it.