What is a Qui Tam Lawsuit, and How Does it Apply to an Employee?
What is a qui tam Lawsuit?
The term “qui tam” (pronounced kee-tam) finds its origin in a Latin phrase that roughly means “who as well for the king as for himself sues in this matter.” The term describes a cause of action where a private citizen, also known as a “whistleblower” or “relator,” brings a lawsuit on the government’s behalf. These civil suits, which are brought under the False Claims Act (FCA) 31 U.S.C. § 3730, help stop fraud against the government and also protect the employee from retaliation for their cooperation. Generally, the whistleblower will be an employee or a contractor of the defendant company, but they don’t have to be. Even though the private citizen is bringing the action, the government is the “true” plaintiff. If the lawsuit is successful, then the whistleblower will receive a share of the award.
What does this mean for employees?
If an employee discovers that someone at their company is defrauding the government, they can choose to become a whistleblower and file a complaint. The FCA outlines seven types of prohibited conduct and applies a broad knowledge standard. Meaning, that liability under the FCA attaches even if the defendant did not act with “actual knowledge,” it is enough for them to have shown reckless disregard. The FCA also imposes a “materiality” requirement for some violations. Materiality is defined as “having a natural tendency to influence, or be capable of influencing, the payment of receipt of money or property.” 31 U.S.C. § 3729(b)(4)
Two FCA claims that frequently arise are the false claim provision under 31 U.S.C. § 3729(a)(1)(A) and the false statement provision under 31 U.S.C. § 3729(a)(1)(B). The false claim provision creates liability for knowingly (remember, this is a broad standard) presenting or causing to be presented, a false or fraudulent claim for payment. The false statement provision creates liability for knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim. Therefore, as an employee you can file a claim if you are made aware of your employer taking part in this or other types of fraudulent activities outlined in the FCA statute.
How does one initiate a qui tam lawsuit?
You must file a complaint under seal and give the government a copy of the complaint as well as the evidence you have of the alleged violation(s). The government will then begin an independent investigation into the claim. While the complaint is “under seal,” the defendant will be unaware of the claim. The government must choose whether to intervene in the lawsuit within 60 days. However, this can be extended by the court for good cause. The action can continue whether or not the government decides to intervene, but this decision can impact the potential “reward” you can receive, as will be discussed later.
When do you need to file a complaint by (statute of limitations)?
The statute of limitations for a federal FCA claim is the later of either six years after the date on which the violation was committed or three years after the date when the US official responsible to act knew of or reasonably should have known the facts material to the right of action, but not more than ten years after the date on which the violation was committed. See 31 U.S.C. § 3731(b).
What if someone else has already initiated a qui tam lawsuit against my employer?
There is a “first-to-file bar” for a qui tam lawsuit, which means that if a private citizen or the government has already initiated a lawsuit based on the same underlying facts, you will be prohibited from bringing that claim while that related claim is pending. See 31 U.S.C. § 3730(b)(5). However, the Supreme Court held that if the related claim is dismissed then it is no longer considered to be pending, meaning that you will be able to then bring your claim. Kellogg Brown & Root Services, Inc., et al. v. United States ex rel. Carter, 135 S. Ct. 1970, 1978-79 (2015)
How is a whistleblower rewarded?
If the FCA claim is successful and the government chose not to intervene, then the whistleblower can receive between 25% and 30% of the proceeds of any judgment or settlement. If the government did choose to intervene, a qui tam plaintiff can receive up to 25% of the proceeds. The amount you receive can depend on how much evidence you presented or how much you contributed to the success of the lawsuit. You are also entitled to receive reasonable expenses and attorneys’ fees. However, the court can choose to eliminate or reduce the reward if you played a part in the FCA violation. See 31 U.S.C. § 3730(d)(3) for more detail.
Can my employer retaliate against me for initiating a qui tam lawsuit?
No. The FCA prohibits employers from taking retaliatory actions against the employees, contractors or agents that report FCA violations. 31 U.S.C. § 3730(h)(1). If you are discharged, demoted, suspended, threatened, harassed or in any manner discriminated against because of the qui tam action, then you may be entitled to reinstatement with the same seniority status, twice amount of back pay plus interest, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees. 31 U.S.C. § 3730(h)(2).
If you believe you have a qui tam claim, please contact us for a free consultation.
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