Qui Tam

Many people have heard of protection for whistleblowers.  What many have not heard of is the process of qui tam.  This whistleblower law not only protects those who help track down people or companies defrauding the government; it also allows them to collect a portion of the proceeds.  Do you know of fraud, but unsure of what to do?  Get in touch with one of the qui tam attorneys with Arentz Law Group P.C. by calling 1-800-305-6000 or by filling out the contact form on this page.  You may be entitled to a portion of the settlement.

Whistleblower Rights

When a person turns in someone committing fraud, it is because they have close access to that person (or company).  This means that there is the potential that the accused will act out against the whistleblower.  In order to protect the whistleblower, the False Claims Act contains some specific rights for the one reporting the crime.

Whistleblowers almost always report the companies that they work, or used to work, for.  They know the processes, they know where corners are being cut, and they know that if they turn in their employers, there could be some serious repercussions.

As a whistleblower, you have rights.  If you turn in your employer, you can rest assured that the employer cannot:

  • Fire or lay you off
  • Demote you
  • Deny promotions
  • Deliver undue discipline
  • Intimidate you
  • Threaten you
  • Reduce your pay
  • Reassign you

When blowing the whistle on your employer, you should not have to worry that anything is going to change.  In fact, the way many of these cases are handled, is that the defendant does not even know who blew the whistle.  The case is kept under wraps for at least 60 days (it can be extended by the court for ongoing investigations) where not much information (if any) is released.  This allows the government to complete their investigation without worrying about public or employer interference.

Qui Tam

There is a Latin phrase which states, “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which roughly means he “who sues in this matter for the king as well as for himself.”  Commonly this is just shortened to qui tam.

The way these lawsuits work is that when someone discovers fraud that is costing the government money, they can file a suit against the defendant on behalf of the federal government.  The idea is that the whistleblower, called the relator, is rewarded for his or her service, the government is reimbursed for a portion of their losses, and the defendant is stopped from causing further damage and corruption.

The actual process of qui tam, however, is a little more difficult than just collecting restitution.  Once the government is notified, there are protections for the whistleblowers that are put in place (so no revenge can be sought on the relator) and the government investigates deciding whether or not they should get involved in the lawsuit.  If found guilty, the defendant will pay restitution and a penalty (as high as $11,000).  The relator, or whistleblower, is eligible to collect up to 30% of the settlement proceeds.

History of Qui Tam

In 1863 the US Civil War was in the heat of its battle.  However, there were those on both sides of the fight that were actively engaged in defrauding the government by selling them horses that were about to die, food rations that were about to spoil, and ammunition that didn’t work.  The idea was that the government would go to use them, find out that the products were no good, and have to go by more.  In order to combat this corruption President Lincoln signed into law the False Claims Act.  This act basically allowed the government to pursue legal action against those who were deliberately trying to defraud the government.

While pursuing the fraudsters was one thing, finding out about them was another.  So the law incorporated a qui tam clause.  This clause allowed the whistleblower, or relator as they are called in qui tam cases, to also collect on a portion of the settlement.

Through the years the Federal False Claims Act has gone through many changes and revisions, some for better and some for worse.  Today the majority of qui tam cases are brought against pharmaceutical companies for offering kickbacks to doctors who push their products.  These products are often sold to Medicare and Medicaid patients, and in the end the government has to pay the bill.

Although this is the first instance where qui tam shows up in US law, the concept is not at all new.  The idea dates back to the 1300’s where the King would reward citizens for turning in those who were doing wrong.  The original agreement was rather simple, the perpetrator would be assessed a fine, and the whistleblower would be given one third of that as their monetary reward, or bounty, for turning in the fraudster.

Government Contractors

The US government hires contractors to help out with many different business activities.  Everything from construction, to maintenance, to transportation is all outsourced.  However, there are times where the contractor that wins the bid is not as honest as is necessary to perform this work.  Here are some ways that contractors will attempt to defraud the government:

Failure to Follow Contract
This is a common theme in fraud cases.  The government has specific requests for the buildings or construction projects.  The company doing the work will bid at the full cost, but then cut corners in order to save money.
Bid Rigging
This is when one company is promised the job, despite the fact that many other bids may be a better deal for the government.  Often this requires people from both parties to be in on the fraud.  There are many more forms of bid rigging.
Skipping Steps
When completing a job, skipping steps like safety inspection are the easiest way for a contractor to make their job more profitable.  It is also how problems arise later in the life of the building requiring further costs.

Government contractors are entrusted to do a job that does not put the safety of the public at risk, and help the government work in the most efficient manner possible.  When a contractor defrauds the government, they not only cost the taxpayer money now, but also later when the work must be performed another time to correct the initial problems.

False Claims Act

In 1863 the US was in the middle of their civil war.  As President Lincoln was running the country, there were many accounts of fraud that were going unchecked; mostly in the form of government contractors selling damaged supplies for the war effort, or charging the government for the same item several times over.  In an effort to combat this fraud, Lincoln signed into law the False Claims Act, or Lincoln Law as it is sometimes referred to.

As it was written the law was simple and straightforward.  If they were found guilty, the person or company defrauding the government had to repay double the damages, and a $2,000 penalty.  The relator, or whistleblower, would collect 50% of the amount recovered.  The law remained relatively unchanged until the 1940’s.

In the 1943 amendments to the law, the provisions were changed drastically.  The result was that the relator would not collect as much of a reward, thus the incentive for turning in someone committing fraud was greatly lessened.  To make things worse, the government would refuse any reward if any of the information was already in the federal government’s possession.  This meant that if even a small fraction of information was already known, the whistleblower received no compensation.

These amendments stood until 1986 when the law was changed again.  The provision that the qui tam would be refused if any knowledge was already possessed was eliminated.  The reward was increased to between 15 and 30 percent of the overall case, and the fine levied against the perpetrator was set at between $5,000 and $10,000.  From this point until the next revision, the focus of many of the lawsuits was upon department of defense fraud.

The 2009 amendment, called the Fraud Enforcement and Recovery Act, made some key adjustments to how the lawsuits were filed, pursued, and how the whistleblower was protected.  The monetary reward system was left basically unchanged from the 1986 provisions.

Currently there are still billions of dollars recovered each year through the False Claims Act; of which an estimated 70% come through whistleblowers.  While the focus was on department of defense and government contractors, currently the majority of the lawsuits deal with healthcare fraud, specifically overcharging Medicare and Medicaid.

Department of Defense Fraud

Like all forms of fraud, there are various ways that it can be done.  Since many of these contracts are highly secretive, to avoid any leaks of intelligence, they are often hard to track down.  Some ways that a company may commit fraud against the Department of Defense are:

Cross Charging
Many companies have several contracts with the government.  The contracts often pay different amounts.  By cross charging, that is working on one project yet billing it to another, the company ends up double dipping.
Product Substitution
When working on defense projects, the government will pay more for a higher quality, or more vigorously tested product.  However, some companies will substitute parts of a lower quality (and cost less) for higher quality parts, yet still charge for the higher quality parts.
Non-compliance with Contracts
The government has specific requirements for materials, testing, and quality of the product.  If a project is over budget, a company may try to skip a step, or substitute parts.  For instance, Teledyne Relays was approving switches that drastically failed the testing phase.

There are many other ways that a company selling to the Department of Defense can cut corners, misrepresent, or otherwise defraud the government.  It is up to those who work for these companies to blow the whistle on any wrongdoing.  Since many of these projects are highly secretive, this is the only way to the fraudsters will be caught.

Contacting an Attorney

With your initial contact, your attorney will work with you to get all of the details of the case.  You will review the documents with the attorney, and determine if your case meets the statute of limitations.  That is, the fraud must have occurred within the past 6 years; after this time, the time has expired and a suit cannot be brought.

Filing a Complaint

After working closely with your Arentz Law qui tam attorney, he or she will file the complaint with the US District Court.  This filing will be kept under seal, meaning it will not be made available to public records.  This initial seal lasts for 60 days, however, in most cases the seal is extended while the government reviews the case and decides if they want to join in the lawsuit.

Government Investigation

There are two ways in which your case can go.  If the government decides to take on the lawsuit, they will take over the investigation and the entire lawsuit.  You may still be required to participate, and you will help the government bring their case against the offending person or company.

If the government declines to get involved, you still can file the lawsuit on behalf of the government.  If this is the case, you will work with your Arentz Law attorney to pursue justice against the offending party.  While a case where the government is not involved is more difficult to win, the reward for you, the whistleblower, is greater than if the government is involved.

Time Period

An important aspect to keep in mind is that many of these cases are not resolved quickly.  In fact, from the initial contact with a qui tam attorney, until the case is settled and closed can be several years.  A bulk of that time is spent dealing with the government and helping to build the case against the party that has committed the fraud.

Contact Arentz Law

There are many different ways a person can try to defraud the government.  Unscrupulous government contractors who knowingly overcharge, Medicaid or Medicare billing that is deliberately inaccurate, or pharmaceutical companies that allow kickbacks for pushing their product, are just some of the many acts of theft from the government.  The qui tam attorneys with Arentz Law know that these con artists need to get caught, and the person turning them in should be rewarded for their efforts.  If you know of someone, or a company, that is defrauding the government through any means, contact a lawyer from Arentz Law Group P.C. to schedule your free initial consultation.  Simply fill out the contact form on this page, or call 1-800-305-6000.

Arentz Law attorneys can handle qui tam cases for clients who reside in all 50 states.

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