Qui Tam and Whistleblower Cases

By Susan Stern, Esq.  …..

“Qui tam” cases are a type of civil lawsuit brought under a federal law known as the False Claims Act that allows whistleblowers to help the government stop many kinds of fraud including Medicare and Medicaid fraud, financial industry fraud, defense contractor fraud and many other types of fraud that cost the government billions of dollars that have been stolen from the U.S. government and taxpayers. Defendants found liable under the False Claims Act may have to pay as much as three times the government’s losses plus penalties for each false claim.

Under the False Claims Act, a private citizen may sue an individual or a business that is defrauding the government and recover funds on the government’s behalf. The qui tam lawsuit is filed “under seal,” which means that it cannot be seen by the public while the Justice Department  investigates the allegations. The government investigates the allegations with the assistance of the whistleblower’s attorney, and decides whether it will join, or “intervene,” in the case.  Although whistleblowers have the option under the False Claims Act to pursue qui tam cases on their own, the chances of success are much higher when the government joins.

Whistleblowers are entitled to receive an award if the case is settled or won at trail.  The amount of the whistleblower reward depends on many factors including the quality and value of the case presented to the Justice Department and the work of the whistleblower and his or her attorney to help the case succeed. If the government intervenes in the case and recovers funds through a settlement or a trial, the whistleblower  is entitled to 15 percent to 25 percent of the recovery. If the government does not intervene in the case and it is pursued by the whistleblower and his attorney, the whistleblower’s reward is between 25 and 30 percent of the recovery.

Whistleblowers often fear coming forward because they are afraid of retaliation by the entity that engaged in the fraud.  Often, this is the company they work for and they fear losing their job.  Retaliation against a whistleblower by his or her employer is illegal  and the law provides protection against such retaliation.  Whistleblowers are protected against  discrimination, termination, reduction in pay, or demotion as a result of coming forward with the whistleblower complaint.  In addition to the person who brings the complaint, other people who have knowledge of the fraud and participates in the investigation also  may be protected under the law.

The False Claims Act limits the time in which a lawsuit can be filed and a qui tam lawsuit can be dismissed if it is not the first one to make the allegations, so it is important to bring such cases quickly once they are discovered.

Whistleblower claims are often brought against the following industries:  pharmaceutical industry including off-label marketing, kickbacks, scientific study fraud; medical devices and implants; defense contractors including best price violations under GSA regulations, trade agreement act fraud and billing fraud; funds received from federal bailout programs under false pretenses or which aren’t used as required under the terms of the programs; mispricing securities or financial services purchased by public pension funds or federal, state and municipal governments; insider trading or other securities frauds affecting public pension funds.  Other claims can also be brought by SEC and IRS whistleblowers.

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