There may be plenty of waste and fraud involved in government spending. However, when you witness government fraud first-hand, it is not easy to ignore. When someone is defrauding the government, they are also defrauding you as a taxpayer. Reporting fraud may be the right thing to do but it may also put your job at risk. This is why we have whistleblower protections that protect individuals who report government fraud and abuse.
What is a Qui Tam Lawsuit?
A qui tam lawsuit allows an individual who exposes fraud on the government to bring a lawsuit on the government's behalf and receive a share of the damages recovered. When the government finds that a person or company has committed fraud against the government, the government can bring a civil claim for damages. A qui tam lawsuit gives a private individual, known as a “relator,” a right of action to file a lawsuit on behalf of the government for damages. This public-private partnership has helped the government recover billions of dollars.
Qui tam is an abbreviation of the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means, “who brings the action for the king as well as himself.”
Qui tam lawsuits generally apply to violations of the federal False Claims Act or similar state statutes. In Florida, qui tam can also apply to the Florida False Claims Act against state and local government fraud. An individual who files a qui tam claim can recover compensatory damages, civil penalties, and treble (triple) damages.
The federal False Claims Act was first passed in 1863. The statute was intended to expose fraud and corruption against the government during the Civil War. Since the Civil War, the law has been amended to expand the type of fraud covered by the law, and provide additional damages and penalties for violations of the False Claims Act.
According to the Justice Department, in 2015, whistleblowers filed more than 600 qui tam lawsuits, and the department recovered $2.8 billion in damages. During that period, the whistleblower awards totaled nearly $600 million.
Can I File a Qui Tam Whistleblower Lawsuit?
As an individual, you can file a qui tam whistleblower lawsuit on behalf of the government if you have information, knowledge, or evidence of fraud or dishonesty in certain types of transactions with the government. You must have a lawyer representing you to bring this type of action.
Under the False Claims Act, 31 U.S.C. § 3729, a claim can be made against anyone who:
- Knowingly presents a false or fraudulent claim for payment or approval;
- Knowingly makes or uses a false record or statement material to a false or fraudulent claim;
- Conspires to commit government fraud; or
- Commits other forms of fraud against the government.
In order for someone to be found guilty of government fraud, they must meet the knowledge requirement. This means the defendant has to have actual knowledge of fraud, deliberate ignorance of the truth, or a reckless disregard for the falsity of the information. However, this does not require the specific intent to defraud the government, knowledge of the fraud may be enough to be found in violation.
Even a general knowledge of fraud may be enough to file a qui tam whistleblower lawsuit. However, the individual relator's (whistleblower's) individual contribution to the prosecution for fraud determines the relator's share of the overall damages.
What Are Examples of Government Fraud
How do I know if there is government fraud? Government fraud that qualifies for a qui tam whistleblower lawsuit can involve small amounts of fraud or multi-million dollar contracts. Health care fraud is one of the most common areas of False Claims Act violations. This includes violations by healthcare providers, pharmaceutical companies, clinics, or hospitals, such as:
- Billing government agencies for unnecessary services
- Billing for unprovided services
- Unbundling billing codes
- Paying kickbacks to health care providers
- Billing for services obtained by illegal referrals
- Overcharging for goods and services
- Misrepresenting pharmaceutical safety
In these cases, a doctor, nurse, consultant, or insurance representative may become aware of fraud in the industry, and use a whistleblower lawsuit to report the fraud. After a successful recovery for fraud violations, the whistleblowers may be entitled to a percentage of the damages.
Another example of large whistleblower lawsuits involves government contractor fraud. Contractors may submit false invoices, bill for unprovided services, bill for services rendered that are not encompassed in grants, overcharge for goods, provide non-conforming products, or overcharge for shipments to military forces overseas or other government providers.
Housing and mortgage fraud represents another area of False Claim Act violations. According to the Justice Department, over $5 billion was recovered related to housing and mortgage fraud between 2009 and 2015. This included banks endorsing mortgages that did not meet eligibility requirements and mortgage companies falsely charging fees and other costs.
Certain allegations of fraud are not covered by the False Claims Act, even if they involve fraud against the government. For example, tax fraud violations generally fall outside the False Claims Act; however, the IRS may provide similar whistleblower awards for reporting federal tax fraud under the Internal Revenue Code.
Filing a Qui Tam Whistleblower Lawsuit
When filing a qui tam lawsuit, the individual brings a civil action for violations of the False Claims Act in the name of the government. The complaint is not served on the defendant at this time and remains under seal, that is, confidential. The government takes the time while the complaint is under seal to investigate the claim. The False Claims Act has many pitfalls that can affect or eliminate the relator's share. It is very important that you hire experienced qui tam counsel to navigate this very complicated area of the law.
The government can decide whether to intervene and take primary responsibility for prosecuting the claim. However, the individual who filed the lawsuit generally has the right to continue as a party to the action. If the government decides not to intervene, the individual who filed the claim can continue the lawsuit, although the government is allowed to intervene at a later time.
If you have any questions about whether someone's actions qualify as government fraud or whether you can file a qui tam claim, talk to your qui tam whistleblower lawyer about your case.
What are the Damages in a Qui Tam Claim?
A violation of the federal False Claims Act provides for triple the amount of damages and a penalty of up to $11,000 per false claim for incidents of government fraud.
In a qui tam claim, where the government proceeds with an action brought by a private individual, the individual shall receive between 15% and 25% of the proceeds of the action or settlement. The recovery amount depends on the extent of participation and cooperation in prosecuting the case.
If the government does not proceed with the lawsuit, the individual can continue to prosecute the claim. The individual can recover between 25% and 30% of the settlement or proceeds for civil penalties and damages. This also allows the individual to recover reasonable attorneys' fees and court costs against the defendant.
Retaliation Against Whistleblowers
One of the most common reasons people fail to report government fraud is fear of retaliation. Reporting fraud committed by another employee, supervisor, or the company can mean losing your job and your livelihood. If an employee comes forward to their employer to report fraud, they may face threats that could put their job and their family's future at risk. Whistleblower laws are intended to protect people from retaliation for reporting fraud and illegal actions.
The False Claims Act provides relief from retaliatory actions against whistleblowers. If an employee or contractor is fired, demoted, suspended, threatened, harassed, or discriminated against because they reported fraud, they may have a claim for damages and other equitable relief. This includes:
- Reinstatement with the same seniority status
- Back pay
- Interest on back pay
- Compensation for special damages
- Litigation costs
- Reasonable attorney's fees
In most cases, the statute of limitations on bringing a civil retaliation claim is three (3) years. In general, the individual must file a civil action not more than 3 years after the date they suffered retaliation.
State False Claims Act
Many states have their own version of the federal False Claims Act, including Florida and New York. In both states, a private individual can file a qui tam claim on behalf of the state for fraud claims. The state can elect to intervene in the case or allow the individual to proceed with the lawsuit.
The damages for a Florida False Claims Act violation include a penalty of $5,500 to $11,000 and triple the amount of damages the state sustained. A private citizen can bring a civil action for a violation of the Florida False Claims Act in the name of the State of Florida. The complaint shall be identified as a qui tam action, and the state can elect to intervene or allow the individual to proceed with the action.
The New York False Claims act includes fraud to the state or local government. The damages for a New York False Claims Act violation include a penalty of between $6,000 and $12,000 and triple the amount of damages sustained by the state or local government.
Depending on the participation and extent of the individual's contribution to the case, the individual can receive up to 30% of the proceeds of the action or settlement of the claim. In addition, the individual may be awarded reasonable attorney fees and court costs.
The New York and Florida False Claims Acts also provide protections for employees who report fraud. Employees have whistleblower's cause of action if they are retaliated against for filing a qui tam lawsuit, or assisting with a government fraud investigation.
Contact Us About Your Whistleblower Case Today
We understand how difficult it can be to come forward with a whistleblower lawsuit. Your job may be at risk and you are concerned about the repercussions for your career and your reputation. At Schechter Legal Group, we can and help protect you and your family and fight to get you the reward you deserve. Contact the Schechter Legal Group today.