Qui Tam Law: The Whistleblower's Sword
- By Wilson P. Dizard III
- Apr 18, 2006
Frauds committed against the E-Rate program often are addressed under the federal and state qui tam, or whistleblower, laws.
The laws, which date back to common-law principles established in 13th century England, allow private citizens to recover part of the funds that a company or individual has taken from the government by fraud.
Under the federal qui tam law, the government can recover triple damages.
Sometimes the defendant pays only double damages, as a result of cooperating with the government.
The whistleblower, or 'relator,' can receive 10 percent to 30 percent of the funds recovered.
The main federal qui tam law'the Federal Civil False Claims Act'dates back to 1863. President Abraham Lincoln sought to enlist private citizens and their attorneys in the struggle against military contractors who sold rancid beef, broken rifles, lame horses, unseaworthy ships and other defective products.
The 'Lincoln Law' spawned few cases, however, because of the legal risks and costs whistleblowers faced. Congress further weakened the law in 1943, and it fell into disuse until the military buildup of the 1980s.
By 1985, nine of the top 10 military contractors were under criminal indictment, and Uncle Sam reached for the qui tam hammer again.
With bipartisan support and President Ronald Reagan's approval, Congress amended the law in 1986 and ushered in a new era of whistleblower activity.
Under the False Claims Act's qui tam process, a whistleblower collects evidence about a fraud and presents it to the Justice Department in the form of a request for federal intervention in the case.
If Justice's Civil Division or the local U.S. Attorney's Office decides that the evidence is strong and the potential recovery large, the government joins the case and usually takes over the probe.
Once the Justice Department gets involved in the case, the investigation is sealed to protect the probe itself, the reputation of the potential defendants and the whistleblower. However, the underlying fraud is not sealed.
After the federal attorneys and the FBI gather more evidence, they generally call in the targets of the investigation for a meeting at which the government presents a summary of the case.
The defendants then have the option of rejecting the government's offer of a plea bargain and contesting the charges in a trial.
However, defendants usually take the plea bargain, according to attorneys who specialize in the field. As a general rule, Justice attorneys and FBI investigators, as well as the whistleblowers and their lawyers, routinely have collected such conclusive evidence that a courtroom battle would be fruitless and expensive, attorneys say.
Justice does, at times, include criminal counts in its settlement agreements, to which the corporations and individuals plead guilty.
The department also sometimes specifies that corporations who are defendants adopt strict compliance programs and ethics rules.
Justice attorneys generally have their pick of qui tam cases, because the department's resources for the civil cases are limited and many cases come over the transom. 'This isn't low-hanging fruit, it's fallen fruit,' said one specialist in the field.