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| Qui Tam Litigation and the False Claims Act |
The False Claims Act is a law that is designed to reward any person who knows that an individual or company has financially defrauded the federal government, by allowing that whistleblower to file a "qui tam" lawsuit to recover damages on the government's behalf.
What is a False Claims Act Lawsuit?
The False Claims Act provides a financial incentive for people to come forward and disclose information to the government and join in prosecuting fraud. You do not need to be a corporate insider/officer to file a qui tam suit. The False Claims Act provides that anyone who is aware of fraud on the government can file a qui tam case.
Cases have been successfully brought by employees, competitors, subcontractors, physicians, dentists, consultants, and even patients. Cases have ranged from corporate officers, to line workers in the defense contract industry; and from hospital executives and doctors, to nurses and clerks in the
medical industry.
Lawsuits are Filed and Remain Sealed During the Investigation
A False Claims Act case is filed under seal, so that it is not disclosed to the public and cannot be discussed with anyone. The case can only be discussed between the whistleblower, the lawyer representing the whistleblower and government officials. Because the case is filed under seal, not even the defendants are aware of the case. The purpose of "sealing" the lawsuit is to permit the government to conduct its investigation without interference from the defendants. False Claims Act lawsuits will typically remain sealed for up to 2 to 3 years, although there have been cases sealed for as many as 9 years before the public has access to the case filing.
At the end of the seal period, the government decides whether to join the case. If the government joins the case, the lawsuit is unsealed, a copy is served on the defendant, and the government and the relator (the individual who initiated the qui tam action) work together in the prosecution of the case. If the government declines to intervene, the relator may choose to prosecute the case on his own. However, because of the Government's power over contracting and Medicare issues, the case has a much greater chance of success if the Government joins in the prosecution.
Timing is Critical to Filing
The False Claims Act provides that only the first person to file a qui tam suit alleging the fraud can proceed. No court can have jurisdiction over a case where there is already another pending case on file involving the same fraud allegations. Therefore, it is critical to be the first to file the lawsuit with allegations of fraud. A case can also be dismissed if information about the fraud becomes public before the case is filed.
There are strict time limits within which a lawsuit can be filed. Generally, lawsuits must be filed within six years of the date of the fraud. The statute's section governing the time within a lawsuit must be filed is complex and the various courts have interpreted these provisions in different ways.
Where to File a Claim
Under the False Claims Act, cases may be filed in any locale where the defendant does business however not all courts have interpreted provisions of the False Claims Act in the same way. Various Circuit Courts of Appeal and District Courts throughout the country might rule on important aspects of a case differently. Your counsel should be knowledgeable about the different court interpretations and know where to file the case to avoid negative court precedents and optimize the case results.
False Claims Act Damages and Fines
The False Claims Act provides that the government shall recover three times the amount of money it lost as a result of the defendant's fraud, plus a recovery of between $5,500 and $11,000 penalty for each false claim submitted by the defendant. When settling a case, the government often agrees to forego the civil penalties and accepts two to three times the amount of damages suffered by the government. The defendant also must pay the fees and the case-related expenses of the whistleblower's attorney.
Whistleblower's Reward
The whistleblower typically receives between 15% and 25% of the total government recovery. However, the whistleblower recovery may be up to 30% of the total in some instances. The amount varies, depending on whether the government intervened in the qui tam case and other factors. Congress decided to give whistleblowers a share of the recoveries that result from qui tam lawsuits to give people a strong incentive to step forward and take the personal and professional risks involved in reporting fraud. It also wanted to encourage private law firms to risk their resources in litigating cases on the public's behalf.
Choosing Qui Tam Representation
The attorney selected should have substantial experience in qui tam lawsuits and be knowledgeable about the False Claims Act case law in the different federal districts throughout the nation. Additionally, the counsel should also be familiar with the experience of the different U.S. Attorneys offices in prosecuting qui tam cases. Although all U.S. Attorney offices technically handle qui tam cases, only a few U.S. Attorney offices have substantial experience in prosecuting major cases under the False Claims Act. In addition, some of these offices have greater experience in defense fraud cases, and others have greater experience in Medicare fraud cases. It is important to know the strengths of the particular district where the case is to be filed.
Qui Tam cases can be very expensive and lengthy. False Claims Act cases often incur a great amount of financial costs. Depending on the case, expenses can run from the thousands to the hundreds of thousands of dollars and can take more than a decade to prosecute. In addition, there can be multiple appeals to the appellate courts to protect the whistleblower's interests. Make sure that the firm or attorney selected has the resources to pursue qui tam cases.
Donald R. Warren is part of the Warren Benson Law Group, national qui tam attorneys focused on whistleblower litigation in the United States. The firm can be reached at administration@warrenbensonlaw.com." |
