What is a Qui Tam Lawsuit?
A qui tam lawsuit is a type of whistleblower lawsuit that allows individuals who have evidence of fraud or other relevant wrongdoing to initiate a legal proceeding. These types of lawsuits—qui tam—are popular when filing whistleblower complaints and are a powerful tool to assist the government in uncovering dangerous and elaborate frauds. The most notable statute for which the qui tam provision is used is the False Claims Act. The False Claims Act imposes liability on individuals and companies who defraud the federal government and governmental programs. It prohibits any individual or company from knowingly making a false record or filing a false claim regarding a federal program. Under the False Claims Act, an individual can file a qui tam lawsuit when they have evidence of fraud against the government or against federal programs. The False Claims Act prohibits retaliation for filing qui tam lawsuits. If the whistleblower is found to have endured retaliation for exercising their rights via a qui tam lawsuit, they may be entitled to back pay, reinstatement, and additional damages under certain circumstances. The qui tam provision of the False Claims Act is regarded as one of the most powerful whistleblower protection provisions in the United States.
In simple terms, the qui tam lawsuit allows the individual to sue the defendant on behalf of the United States. The whistleblower in most cases is an employee of the company violating the law. These employees are typically vested with inside company information that could be indicative of fraud or have access to sensitive company documents revealing suspicious activity. Similarly, these employees often view on a daily basis unusual business deals or overhear conversations to the same. In other cases, the whistleblower is a competitor of the company violating the law who has somehow received access to such information. It is important to note that if the government has already filed a claim under the False Claims Act against the defendant based upon the same evidence, a qui tam lawsuit will not be permitted to proceed. If this is not the case, the individual as a whistleblower can proceed to file a qui tam lawsuit on behalf of the United States.
Whistleblowers have strong motivations for filing complaints in this manner, mainly the potential monetary award that they could receive. Under certain circumstances, the whistleblower in a qui tam lawsuit under the False Claims Act can recover a reward in successful cases where the government recovers funds. Therefore, the incentive for uncovering and reporting violations of federal law that threaten the integrity of the U.S. government is always high. In addition to this incentive on the part of the whistleblower, it is worth noting how valuable whistleblowers are to the government. For instance, the government is oftentimes unaware that an individual or entity is perpetrating a scheme to defraud it. It is sometimes challenging for the government to detect and respond to such fraud in order to prevent damage to its federal programs. Because the government is very dependent on whistleblowers coming forward to reveal instances of fraud, a financial reward is offered for the information given that leads to a successful litigation. The rewards are also in recognition of the emotional stress and post-whistleblowing consequences—from isolation and anxiety to demotion and termination—that accompany blowing the whistle. Further, the information revealed may benefit not only the federal government but also society in general because it halts the risks and pervasiveness of fraud.