Qui Tam Suits and The False Claims Act

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:

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.