Qui Tam

Any person, including an employee, who is aware that another person or organization is committing fraud against the government, can file a special kind of whistleblower case called a “qui tam” false claims act case. When a lawyer files a qui tam case, it is filed on behalf of the whistleblower (who is called a “relator”) and on behalf of the government. The case may be filed “under seal,” meaning it is not a public matter and the defendant is unaware of it.

After the qui tam case is filed, the government (federal, state or local) conducts an investigation of the allegations and then decides whether to become actively involved in the lawsuit. Usually, if the case is successful and the defendant pays money back to the government, the relator will get a percentage of the recovery as a reward from the government. Relators who investigate and/or file qui tam cases are generally protected from unlawful retaliation under the false claims act statutes.

Qui tam cases can be brought in a wide range of industries and can be based on just about any form of fraud. For example, under both the federal and New York State False Claims Acts, an employee may be able to sue an employer to protect the government when the employee believes the employer has defrauded the government by:

• submitting false or exaggerated invoices to the government
• providing substandard goods or services to the government
• paying kickbacks
• covering up regulatory violations

Currently, the most common qui tam cases involve the health care industry (Medicare/Medicaid fraud) and defense industries (fraudulent pricing/overbilling), financial services (mortgage guarantee fraud), medical and scientific grant research, for profit colleges, government programs (such as Small Business Administration) and environmental protection. However, valid cases can arise in any area where government funds are paid out or distributed to private entities and even some state and local governments. Some examples include the following:

• You work in a medical office that bills Medicare for tests that were never actually performed, by using codes for more expensive tests than were performed, or for doing tests that are known to be unnecessary.
• You work for a military defense contractor and you know that your employer is intentionally supplying parts it knows are likely to fail when used as intended.
• You work for a mortgage company that provides false information on borrowers’ credit scores so that they can get loans from the Federal Housing Authority.
• You work for a company that has a contract with the government to clean a toxic waste site, and the company certifies to the government that the work has been done, but you know it has not been done according to the contract, and the contract has a serious penalty for failing to clean the site properly.
• You work for a hospital that is improperly admitting inpatients from the emergency department that should have been placed on observation.
• You learn that a durable medical equipment supplier is paying bribes to medical doctors or their staff to get prescriptions for their products.
• You know that a major healthcare system is giving money, reduced rent, kickbacks or other things of service to providers in order to get patient referrals.

This is a very complicated area of law and there are some difficulties that you might face if you want to pursue a qui tam case. For example, any case you file might get dismissed if someone else has already brought the same or similar information to the government’s attention or if the information you have is already public knowledge. A case can also be dismissed if it lacks enough details of the fraud or if the statute of limitations has already run or expired. These days, the focus is also on whether the affected government agencies (such as the Department of Health and Human Services or the Centers for Medicare and Medicaid Services) think that the alleged misconduct is “material” to their reimbursement decisions.

If you have any thoughts about investigating and/or starting a qui tam case, it is important that you consult with an experienced qui tam whistleblower attorney as quickly as possible. The number one mistake most potential relators make is waiting too long. By then, opportunities to gather evidence have been lost, other people file their case first, the matter becomes public or the statute of limitations expires. You don’t want to wait and miss the opportunity to possibly be compensated as a relator.

Legal Editor: Timothy McInnis, January 2015 (updated September 2020)