The United States has authorized individuals to file a qui tam lawsuit in cases of violations of the False Claims Act. But what is this weird type of lawsuit with a latin name that no one really knows how to pronounce? In short, it is the government’s primary weapon in the fight against fraud in the United States.
In the 1980s, fraud was draining millions of dollars every year from the government’s coffers. The people were (and still are) paying for these frauds with their tax dollars. So the Government amended the False Claims Act to strengthen the public-private partnership between the government and citizens in the fight against health care fraud and procurement fraud.
The mechanism to do so was the qui tam lawsuit and whistleblower rewards. The False Claims Act, as amended, allows individual whistleblowers (known as relators) to file a lawsuit on behalf of the government. For more about the word qui tam, click here.
It is not standard practice for an individual to be able to file a lawsuit on behalf of another party. There must be standing, a legal concept that ensures there is a case and controversy. Only in certain instances (such as minor children) is one party allowed to stand in the shoes of another. The False Claims Act allows a relator to do so by statute. It is a key part of the government’s mechanism for fighting fraud.
Other whistleblower programs have not adopted the qui tam lawsuit. The IRS, SEC and CFTC all require the government to bring an enforcement action and do not give that right to whistleblowers. The False Claims Act is unique – and it has been very successful.
The False Claims Act gives the government the chance to intervene and take over the litigation from the Relator. The Government can also dismiss the lawsuit over the objections of the Relator. So the qui tam lawsuit does not completely cede control to the Relator.
If the Government declines to take control of the case, it typically allows the Relator to proceed on its behalf. It then becomes a true qui tam case. The Relator can attempt to prosecute the case and recover funds on behalf of the United States Government. The US has essentially assigned a private cause of action to the whistleblower with regard to the case. If the Relator is victorious, they receive a healthy percentage of the Government’s take in exchange for their hard work and pursuit of the fraud.