Qui Tam / Whistleblower Claims / Government Fraud / False Claims
Act
A suit under the False Claims Act, also known as a “qui tam”
action, allows people who have insider information of fraud against
the Government, known as a “relator” or “whistleblower,” to file a
suit to help stop the perpetrators from defrauding the United States
Government. The False Claims Act seeks to deter fraud against the
United States Government by providing for penalties of three times
the amount of the fraud in addition to fines of $5,000 to $10,000
per violation. It is estimated that the United States has collected
almost $8 billion in fines and penalties in False Claims Act cases
since 1986.The False Claims Act encourages whistleblowers that are aware of
fraud being perpetrated against the Government to report and civilly
prosecute those responsible for the unlawful actions against the
United States. If the whistleblower’s case is either settled or a
judgment is rendered against the offending defendant, the
whistleblower is entitled to up to 30% of the Government’s recovery
as a reward for coming forward. The False Claims Act also prohibits
employers from retaliating against whistleblowers, and allows
whistleblowers that are retaliated against to sue for their damages.
Ultimately, whistleblowers save the United States money by recouping
the fraudulent losses they report and by deterring future frauds
against the Government.
It is critical that the whistleblower come forward with his
information as soon as possible. The False Claims Act requires that
the relator be an “original source” of the information, which
generally means that he has direct and independent knowledge of the
fraudulent conduct and he has voluntarily provided this information
to the Government before filing the qui tam suit. Information about
fraudulent conduct which is in the public domain prior to the time
the whistleblower reports the same to the Government generally
precludes the prosecution of a qui tam suit.
Frauds against the Government which may be subject to the False
Claims Act can involve a wide variety of conduct, including but not
limited to:
- False billings or invoices by Government contractors, i.e.,
defense contractors
- False invoices by Government suppliers
- False environmental compliance reports to Government
agencies
- False Medicare and Medicaid invoices by health care
providers
- False reporting of mineral lease royalties
- False tax returns
The specific language of the qui tam section of the False Claims
Act, 31 U.S.C. § 3730, provides as follows:
Civil Actions for False Claims
- Responsibilities of the Attorney General. --The Attorney General
diligently shall investigate a violation under section 3729. If the
Attorney General finds that a person has violated or is violating
section 3729, the Attorney General may bring a civil action under
this section against the person.
- Actions by private persons.—
(1) A person may bring a civil action for a violation of section
3729 for the person and for the United States Government. The action
shall be brought in the name of the Government. The action may be
dismissed only if the court and the Attorney General give written
consent to the dismissal and their reasons for consenting.
(2) A copy of the complaint and written disclosure of substantially
all material evidence and information the person possesses shall be
served on the Government pursuant to Rule 4(d)(4) of the Federal
Rules of Civil Procedure. The complaint shall be filed in camera,
shall remain under seal for at least 60 days, and shall not be
served on the defendant until the court so orders. The Government
may elect to intervene and proceed with the action within 60 days
after it receives both the complaint and the material evidence and
information.
(3) The Government may, for good cause shown, move the court for
extensions of the time during which the complaint remains under seal
under paragraph (2). Any such motions may be supported by affidavits
or other submissions in camera. The defendant shall not be required
to respond to any complaint filed under this section until 20 days
after the complaint is unsealed and served upon the defendant
pursuant to Rule 4 of the Federal Rules of Civil Procedure.
(4) Before the expiration of the 60-day period or any extensions
obtained under paragraph (3), the Government shall--
(A) Proceed with the action, in which case the action shall be
conducted by the Government; or
(B) Notify the court that it declines to take over the action, in
which case the person bringing the action shall have the right to
conduct the action.
(5) When a person brings an action under this subsection, no person
other than the Government may intervene or bring a related action
based on the facts underlying the pending action.
- Rights of the parties to qui tam actions.—
(1) If the Government proceeds with the action, it shall have the
primary responsibility for prosecuting the action, and shall not be
bound by an act of the person bringing the action. Such person shall
have the right to continue as a party to the action, subject to the
limitations set forth in paragraph (2).
(2)(A) The Government
may dismiss the action notwithstanding the objections of the
person initiating the action if the person has been notified by
the Government of the filing of the motion and the court has
provided the person with an opportunity for a hearing on the
motion.
(B) The Government may settle the action with the defendant
notwithstanding the objections of the person initiating the action
if the court determines, after a hearing, that the proposed
settlement is fair, adequate, and reasonable under all the
circumstances. Upon a showing of good cause, such hearing may be
held in camera.(C) Upon a showing by the Government that unrestricted
participation during the course of the litigation by the person
initiating the action would interfere with or unduly delay the
Government's prosecution of the case, or would be repetitious,
irrelevant, or for purposes of harassment, the court may, in its
discretion, impose limitations on the person's participation, such
as--
(i) limiting the number of witnesses the person may call;
(ii) limiting the length of the testimony of such witnesses;
(iii) limiting the person's cross-examination of witnesses; or
(iv) otherwise limiting the participation by the person in the
litigation.
(D) Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the person
initiating the action would be for purposes of harassment or would
cause the defendant undue burden or unnecessary expense, the court
may limit the participation by the person in the litigation.
(3) If the Government elects not to proceed with the action, the
person who initiated the action shall have the right to conduct the
action. If the Government so requests, it shall be served with
copies of all pleadings filed in the action and shall be supplied
with copies of all deposition transcripts (at the Government's
expense). When a person proceeds with the action, the court, without
limiting the status and rights of the person initiating the action,
may nevertheless permit the Government to intervene at a later date
upon a showing of good cause.
(4) Whether or not the Government proceeds with the action, upon a
showing by the Government that certain actions of discovery by the
person initiating the action would interfere with the Government's
investigation or prosecution of a criminal or civil matter arising
out of the same facts, the court may stay such discovery for a
period of not more than 60 days. Such a showing shall be conducted
in camera. The court may extend the 60-day period upon a further
showing in camera that the Government has pursued the criminal or
civil investigation or proceedings with reasonable diligence and any
proposed discovery in the civil action will interfere with the
ongoing criminal or civil investigation or proceedings.
(5) Notwithstanding subsection (b), the Government may elect to
pursue its claim through any alternate remedy available to the
Government, including any administrative proceeding to determine a
civil money penalty. If any such alternate remedy is pursued in
another proceeding, the person initiating the action shall have the
same rights in such proceeding as such person would have had if the
action had continued under this section. Any finding of fact or
conclusion of law made in such other proceeding that has become
final shall be conclusive on all parties to an action under this
section. For purposes of the preceding sentence, a finding or
conclusion is final if it has been finally determined on appeal to
the appropriate court of the United States, if all time for filing
such an appeal with respect to the finding or conclusion has
expired, or if the finding or conclusion is not subject to judicial
review.
- Award to qui tam plaintiff.—
(1) If the Government proceeds with an action brought by a person
under subsection (b), such person shall, subject to the second
sentence of this paragraph, receive at least 15 percent but not more
than 25 percent of the proceeds of the action or settlement of the
claim, depending upon the extent to which the person substantially
contributed to the prosecution of the action. Where the action is
one which the court finds to be based primarily on disclosures of
specific information (other than information provided by the person
bringing the action) relating to allegations or transactions in a
criminal, civil, or administrative hearing, in a congressional,
administrative, or Government Accounting Office report, hearing,
audit, or investigation, or from the news media, the court may award
such sums as it considers appropriate, but in no case more than 10
percent of the proceeds, taking into account the significance of the
information and the role of the person bringing the action in
advancing the case to litigation. Any payment to a person under the
first or second sentence of this paragraph shall be made from the
proceeds. Any such person shall also receive an amount for
reasonable expenses which the court finds to have been necessarily
incurred, plus reasonable attorneys’ fees and costs. All such
expenses, fees, and costs shall be awarded against the defendant.
(2) If the Government does not proceed with an action under this
section, the person bringing the action or settling the claim shall
receive an amount which the court decides is reasonable for
collecting the civil penalty and damages. The amount shall be not
less than 25 percent and not more than 30 percent of the proceeds of
the action or settlement and shall be paid out of such proceeds.
Such person shall also receive an amount for reasonable expenses
which the court finds to have been necessarily incurred, plus
reasonable attorneys’ fees and costs. All such expenses, fees, and
costs shall be awarded against the defendant.
(3) Whether or not the Government proceeds with the action, if the
court finds that the action was brought by a person who planned and
initiated the violation of section 3729 upon which the action was
brought, then the court may, to the extent the court considers
appropriate, reduce the share of the proceeds of the action which
the person would otherwise receive under paragraph (1) or (2) of
this subsection, taking into account the role of that person in
advancing the case to litigation and any relevant circumstances
pertaining to the violation. If the person bringing the action is
convicted of criminal conduct arising from his or her role in the
violation of section 3729, that person shall be dismissed from the
civil action and shall not receive any share of the proceeds of the
action. Such dismissal shall not prejudice the right of the United
States to continue the action, represented by the Department of
Justice.
(4) If the Government does not proceed with the action and the
person bringing the action conducts the action, the court may award
to the defendant its reasonable attorneys’ fees and expenses if the
defendant prevails in the action and the court finds that the claim
of the person bringing the action was clearly frivolous, clearly
vexatious, or brought primarily for purposes of harassment.
- Certain actions barred.—
(1) No court shall have jurisdiction over an action brought by a
former or present member of the armed forces under subsection (b) of
this section against a member of the armed forces arising out of
such person’s service in the armed forces.
(2)(A) No court shall have jurisdiction over an action brought under
subsection (b) against a Member of Congress, a member of the
judiciary, or a senior executive branch official if the action is
based on evidence or information known to the Government when the
action was brought.
(B) For purposes of this paragraph, “senior executive branch
official” means any officer or employee listed in paragraphs (1)
through (8) of section 101(f) of the Ethics in Government Act of
1978 (5 U.S.C. App.).
(3) In no event may a person bring an action under subsection (b)
which is based upon allegations or transactions which are the
subject of a civil suit or an administrative civil money penalty
proceeding in which the Government is already a party.
(4)(A) No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing, in a
congressional, administrative, or Government Accounting Office
report, hearing, audit, or investigation, or from the news media,
unless the action is brought by the Attorney General or the person
bringing the action is an original source of the information.
(B) For purposes of this paragraph, “original source” means an
individual who has direct and independent knowledge of the
information on which the allegations are based and has voluntarily
provided the information to the Government before filing an action
under this section which is based on the information.
- Government not liable for certain expenses. --The Government is
not liable for expenses which a person incurs in bringing an action
under this section.
- Fees and expenses to prevailing defendant. --In civil actions
brought under this section by the United States, the provisions of
section 2412(d) of title 28 shall apply.
- Any employee who is discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in the terms
and conditions of employment by his or her employer because of
lawful acts done by the employee on behalf of the employee or others
in furtherance of an action under this section, including
investigation for, initiation of, testimony for, or assistance in an
action filed or to be filed under this section, shall be entitled to
all relief necessary to make the employee whole. Such relief shall
include reinstatement with the same seniority status such employee
would have had but for the discrimination, 2 times the amount of
back pay, interest on the back pay, and compensation for any special
damages sustained as a result of the discrimination, including
litigation costs and reasonable attorneys’ fees. An employee may
bring an action in the appropriate district court of the United
States for the relief provided in this subsection.
31 U.S.C.A. § 3729, entitled “False Claims,” provides as follows:
(a) Liability for certain acts.--Any person who--
(1) knowingly presents, or causes to be presented, to an officer or
employee of the United States Government or a member of the Armed
Forces of the United States a false or fraudulent claim for payment
or approval;
(2) knowingly makes, uses, or causes to be made or used, a false
record or statement to get a false or fraudulent claim paid or
approved by the Government;
(3) conspires to defraud the Government by getting a false or
fraudulent claim allowed or paid;
(4) has possession, custody, or control of property or money used,
or to be used, by the Government and, intending to defraud the
Government or willfully to conceal the property, delivers, or causes
to be delivered, less property than the amount for which the person
receives a certificate or receipt;
(5) authorized to make or deliver a document certifying receipt of
property used, or to be used, by the Government and, intending to
defraud the Government, makes or delivers the receipt without
completely knowing that the information on the receipt is true;
(6) knowingly buys, or receives as a pledge of an obligation or
debt, public property from an officer or employee of the Government,
or a member of the Armed Forces, who lawfully may not sell or pledge
the property; or
(7) knowingly makes, uses, or causes to be made or used, a false
record or statement to conceal, avoid, or decrease an obligation to
pay or transmit money or property to the Government,
is liable to the United States Government for a civil penalty of not
less than $5,000 and not more than $10,000, plus 3 times the amount
of damages which the Government sustains because of the act of that
person, except that if the court finds that--
(A) the person committing the violation of this subsection furnished
officials of the United States responsible for investigating false
claims violations with all information known to such person about
the violation within 30 days after the date on which the defendant
first obtained the information;
(B) such person fully cooperated with any Government investigation
of such violation; and
(C) at the time such person furnished the United States with the
information about the violation, no criminal prosecution, civil
action, or administrative action had commenced under this title with
respect to such violation, and the person did not have actual
knowledge of the existence of an investigation into such violation;
the court may assess not less than 2 times the amount of damages
which the Government sustains because of the act of the person. A
person violating this subsection shall also be liable to the United
States Government for the costs of a civil action brought to recover
any such penalty or damages.
(b) Knowing and knowingly defined.--For purposes of this section,
the terms "knowing" and "knowingly" mean that a person, with respect
to information--
(1) has actual knowledge of the information;
(2) acts in deliberate ignorance of the truth or falsity of the
information; or
(3) acts in reckless disregard of the truth or falsity of the
information,
and no proof of specific intent to defraud is required.
(c) Claim defined.--For purposes of this section, "claim" includes
any request or demand, whether under a contract or otherwise, for
money or property which is made to a contractor, grantee, or other
recipient if the United States Government provides any portion of
the money or property which is requested or demanded, or if the
Government will reimburse such contractor, grantee, or other
recipient for any portion of the money or property which is
requested or demanded.
(d) Exemption from disclosure.--Any information furnished pursuant
to subparagraphs (A) through (C) of subsection (a) shall be exempt
from disclosure under section 552 of title 5.
(e) Exclusion.--This section does not apply to claims, records, or
statements made under the Internal Revenue Code of 1986.
The Joe Griffith Law Firm has the knowledge and experience to
aggressively represent whistleblowers and best pursue their qui tam
claims. If you believe you have information regarding a false claim
having been made against the United States Government, please
immediately contact an experienced qui tam and whistleblower claim
attorney at Joe Griffith Law Firm with any questions or if you would
like to discuss your legal rights.
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