Editor ™s note: This article is an excerpt from the Association ™s Fraud Examiners Manual, Third Edition. The excerpt is not meant to be a substitute for the study of the entire manual. In this issue, the article covers the discussion on "Qui tam Suits and the False Claims Act," pages 2.273 to 2.277.  

When a private individual finds evidence of fraud in a federal program or contract, he has the option of filing a "qui tam" civil suit on behalf of the government to recover damages for the criminal or fraudulent actions.

Sometimes referred to as "whistleblower lawsuits," most qui tam actions are brought under the False Claims Act, 31 USC §3729 et seq. This statute provides, in part, that anyone who commits the following acts is liable to the government for three times the amount of damages it sustains plus a civil penalty of $5,000 to $10,000 per false claim:

  • Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval [§3729 (a) (1)];
  • 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 [§3729 (a) (2)];
  • Conspires to defraud the government by getting a false or fraudulent claim allowed or paid [§3729 (a) (3)];
  • Making or delivering a document certifying receipt of property to be used by the government without completely knowing that the information on the receipt is true [' 3729 (a) (5)]; or
  • Knowingly makes or 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 [§3729 (a) (7)].

Most qui tam actions seek to recover damages and statutory penalties for false claims made to the government by government contractors such as defense contractors and healthcare providers.

Since the qui tam provisions were added to the Act in 1986 (see sidebar article below), the U.S. Department of Justice calculates that the government has recovered more than $1.09 billion in qui tam cases, with whistleblowers receiving nearly 18 percent (or $184 million) of the government ™s recovery.  

Filing an Action  

 

 

 

 

If an individual has knowledge that a false claim was submitted to the government, that person can elect to become a whistleblower and retain an attorney who will draft a complaint and a disclosure statement. The whistleblower will file these two documents under seal in U.S. district court and send copies to the Department of Justice.

After the filing of the complaint, the Justice Department has 60 days to investigate the allegations and determine whether it will join the lawsuit. If the Justice Department does join the lawsuit, it has the primary responsibility for prosecuting the case and can limit the whistleblower ™s participation in the action. If the qui tam action is successful, the whistleblower ™s share of the recovery will range from 15 to 30 percent depending on the extent of the individual ™s investigation. The judge normally determines the percentage.

If the department decides not to participate, the whistleblower has the right to continue to pursue the claim on behalf of the United States and will receive a higher portion of any recovery received.


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