False Claims Act | Qui Tam | Whistleblowers - False Claims Act Information

The False Claims Act - Qui Tam is intended to encourage people to come forward with information and assist the government in stopping Medicare fraud, defense contractor fraud and other kinds of fraud. Under the statute, individuals are awarded a percentage of the money the government recovers as a result of their successful whistleblower lawsuits.

The False Claims Act was enacted during the Civil War to combat the fraud perpetrated by companies selling supplies to the Union Army. War profiteers were shipping boxes of sawdust instead of guns, for instance, and swindling the Union Army into purchasing the same cavalry horses several times. "You can sell anything to the government at almost any price you’ve got the guts to ask," boasted one profiteer who made millions unloading moth-eaten blankets to the military.

President Abraham Lincoln strongly advocated passage of the False Claims Act. It contained a "qui tam" provision that allowed private citizens to sue, on the government’s behalf, companies and individuals that were defrauding the government. "Qui tam" is short for a Latin phrase, "qui tam pro domino rege quam pro se ipso in hac parte sequitur," which roughly means "he who brings an action for the king as well as for himself."

President Lincoln knew fraud was so pervasive the government did not have the resources to stop it without strong help from insiders who could combat fraudulent contractors as "private attorneys general." The reward provisions were included not only as a strong incentive for individuals, but also as an incentive for private law firms to risk their own resources to prosecute powerful government contractors on behalf of themselves and the United States.

To empower the whistleblower -government partnership in combating fraud, 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. 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 qui tam provision has had the effect of privatizing government legal remedies by allowing private citizens to act as "private attorneys general" in the effort to prosecute government procurement and program fraud. Although most of the early successes in qui tam actions have been against defense contractors, more and more actions are being filed that involve other governmental agencies such as Health and Human Services, Environment, Energy, Education, NASA, Agriculture and Transportation. U.S. recoveries for qui tam cases, as of the end of 2003, has totaled $7.8 billion. During the same period, relator shares, as a result of the recoveries, has totaled $1.3 billion.

Several states have corresponding laws allowing private citizens to file suit against companies that defraud governments and share a percentage of the recovery. These states include:

False Claims Act / Qui Tam