Whistleblower Qui Tam Lawsuits and the False Claims Act
The Federal Government will pay you for uncovering and reporting fraud.
What Is a Qui Tam or Whistleblower Lawsuit?
Anyone who exposes fraud committed against the U.S. government can file a lawsuit on the government’s behalf. This is called a “Qui Tam” lawsuit. That person, also known as a whistleblower, is entitled to receive up to 30 percent of the amount recovered by the government if the case is successful.
In 2021, the government recovered $5.6 billion in settlement judgments under the False Claims Act. Whistleblowers with insider knowledge of fraudulent activity filed 598 qui tam lawsuits on behalf of the government in 2021.
How Does the False Claims Act Work?
The False Claims Act (FCA) is a federal civil law that holds individuals and companies accountable for stealing, defrauding, and cheating government programs. Most lawsuits filed under this act involve health care, the military, and government agencies that award contracts.
For example, if you work for Acme Inc. and can show that the company is stealing, cheating, or somehow taking money from the US government through fraud, you can file a qui tam or whistleblower lawsuit. Your lawsuit is on behalf of the US government. If the lawsuit is successful, you may be able to keep up to 30% of whatever the government gets back from Acme Inc.
The law helps recover billions of dollars in government funds and rewards those willing to speak out. By exposing unlawful activity, whistleblowers help prevent taxpayer money from being stolen or wasted.
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Other types of fraud commonly reported in whistleblower lawsuits include:
What Type of Evidence Do I Need for a Whistleblower or Qui Tam Case?
Extensive evidence helps make a qui tam case stronger. Whistleblowers should document all meetings, conversations, emails, receipts, and other paperwork that could help prove fraudulent activity. They should not steal documents or get them illegally.
It’s important to create a record of how all documents were obtained. No detail is too small, including the date, time, and place the conversations about fraud took place. Whistleblowers have a strong case when they can show their information comes from direct contact with the people committing fraud. The attorneys at mctlaw can help you gather the evidence you need to build a strong case.
Legal Protections for Whistleblowers
Whistleblowers file qui tam lawsuits so they can be protected from retaliation by the company where they work. A qui tam lawsuit is “under seal,” or secret, for at least 60 days while the government investigates the potential fraud. That means the company will not know who reported them during that time.
There’s also protection for whistleblowers after they’re identified. The False Claims Act says that if an employee is fired, harassed, or discriminated against, he or she may be eligible to get their job back with back pay and compensation for legal fees.
How Much Money Can a Whistleblower Get in Compensation?
Whistleblowers in successful qui tam cases can win substantial amounts of money. Companies found liable can be fined up to three times the amount lost by the government plus penalties on each claim. The whistleblower is entitled to get a percentage of what’s recovered.
If the government gets involved with the qui tam case, then the whistleblower, also known as the relator, is eligible to receive 15 to 25 percent of that money.
Health Care Fraud
Healthcare fraud often involves Medicare fraud, which typically consists of overbilling or over-inflating the illness of patients in order to get more money from the government. Whistleblowers in these cases are often doctors within the healthcare organization who have noticed that the company they work for is not billing appropriately. An example of this is a massage studio that claims they have a licensed massage therapist present and is billing insurance for therapeutic massage when there is not a licensed massage therapist present.
Procurement fraud can happen at multiple stages through the bidding process, both during the bidding phase and after a contract is awarded.
During the bidding process, procurement fraud can look like inflating prices, bid rigging, favoring a specific contractor, and false costs.
After a contract is awarded there are additional ways procurement fraud can take place including:
- Falsified invoices
- Accounting fraud
- Falsifying materials
- Charging incorrectly for materials or labor
Whistleblowers in cases involving procurement fraud often report fraud during the bidding process for government contracts, but also can report fraud during the bidding and contracting process for private entities.
The Covid-19 Pandemic has provided new avenues for fraud, and with it, new areas where whistleblowers can help. Some of the areas where pandemic-related fraud can take place include:
- Mismanagement of grants for the development of preventative measures
- Paycheck Protection Loan fraud
- Fraud related to funds given to nursing homes
- Stimulus fraud
- Medicare/Medicaid fraud
Buy American Act Fraud
In some cases, including government procurement, purchases are required to be made of American-made products, or from countries with Trade Agreements with the United States.
An example of this would be if the Veterans Administration needed to purchase medical supplies, like stethoscopes, the stethoscopes would be required to be made in the US, or a country with a trade agreement. If the person, or business, selling the stethoscopes represented that they were from an appropriate country, but were in fact not, this would be considered country of origin fraud. This type of fraud is not limited to the VA, and could be seen in any area of government purchasing.
Content Reviewed by Jason Cejka – Government Contracts Lawyer
Jason Cejka is a Government Contracts lawyer and also represents clients in the firm’s Indian Law and Whistleblower practice areas. Mr. Cejka spent much of his career as in-house counsel and business advisor for multi-national government and military contractors. At Lockheed Martin, Cejka worked as Contracts Manager for Missiles and Fire Control. His responsibilities at mctlaw also include cases related to Buy American Act fraud and procurement fraud.
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