Whistleblower Attorney

What is a qui tam action?

“Qui Tam” is short for the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur.”  In plain English, this translates to “he who brings an action for the king as well as for himself.”  The concept originated in the Middle Ages in England when the king did not have enough resources to enforce the laws.  Instead, he relied on average citizens to act as private prosecutors to bring “qui tam” actions and would pay them a bounty if they won.

The qui tam concept carried over to the United States when the First Continental Congress passed several laws with qui tam provisions.  However, it was not until the passage of the False Claims Act in 1863 that qui tam provisions became a robust part of the American legal landscape.  Passed during the American Civil War, the law also came to be informally referred to as “Lincoln’s Law” after President Abraham Lincoln.  At the time, the False Claims Act was signed into law by President Lincoln in order to combat fraud by war profiteers who were seeking to enrich themselves by selling defective supplies to the Union Army.

In the 1980s, the United States Congress revised the False Claims Act in the face of widespread reports of fraud being perpetrated by military defense contractors.  You may recall hearing news accounts involving the $500 hammers being sold to the Navy?  Well, because of this and outrageous price gouging, the Congress further strengthened the False Claims Act to combat fraud. 

Later, in 2010, amendments were made to the False Claims Act to address healthcare and corporate fraud through provisions of the Patient Protection and Affordable Care Act (often referred to as “Obamacare”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act.  These provisions added much more robust incentives for blowing the whistle on government and corporate related fraud. 

Today, the False Claims Act is the government’s most powerful tool for fighting fraud.  There are not enough federal prosecutors and investigators for the government to ferret out every fraud being committed in the United States.  Accordingly, the False Claims Act serves as a powerful weapon to incentivize individuals to come forward and report fraud and receive a financial reward in exchange for information leading to a recovery by the government.

Whistleblower Rewards

There are several other avenues for blowing the whistle on fraud apart from government program fraud.  Whistleblowers (referred to as “relators” in qui tam lawsuits because they are relating fraud to the government) are awarded a financial reward based on a percentage of the money recovered by the government when those recoveries are due to a qui tam lawsuit or claim made under the whistleblower provisions of federal laws governing the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS) or the Commodities Futures Trading Commission (CFTC).  Each of these agencies are governed by federal laws that have their own qui tam provisions separate and apart from the stand-alone False Claims Act. 

Blowing the whistle on fraud can be financially lucrative if the government is able to obtain a recovery.  Here are the potential rewards a whistleblower can obtain:

• FCA  – Under the False Claims Act a whistleblower can get 15-25% of any recovery for blowing the whistle on government program fraud if the government intervenes in the case and obtains a recovery.
• SEC  – A whistleblower reporting fraud to the SEC can get between 10-30% of any recovery by the SEC that exceeds $1 million.
• CFTC – A whistleblower reporting fraud to the CFTC can get between 10-30% of any recovery by the SEC that exceeds $1 million.
• IRS    – A whistleblower reporting fraud to the IRS can get 15-30% of the money recovered by the IRS but the collection must exceed $2 million.  Where the tax fraud involves an individual, that person must have an income exceeding $200,000 per year. 

The government is interested in fraud of a substantial and significant nature.  Thus, not every fraud reported will interest the government.  Accordingly, it’s important to work with a whistleblower that understands the law, the procedures and how to present a case that will interest the federal authorities.