Qui Tam Law: The Whistleblower's Sword

Qui Tam by the Numbers

  • Between fiscal years 1987 and 2005, settlements and judgments in favor of the federal government as a result of qui tam, or whistleblower, cases brought under the Federal Civil False Claims Act amounted to $9.6 billion. The cases accounted for 64 percent of all funds recovered under the law.

  • The Justice Department's Civil Division received 5,129 qui tam False Claims Act cases between fiscal year 1987 and 2005. That figure does not include additional, typically smaller cases brought by U.S. attorneys.

  • A study of 2,490 closed, unsealed cases showed that they were filed in 92 federal district courts. Health care and procurement fraud cases accounted for about 79 percent of all the cases. Total recoveries in health care cases amounted to just over $5 billion, while total recoveries in procurement cases amounted to $1.6 billion.

  • The federal government recovered a median of $784,597 in qui tam cases closed and unsealed between 1987 and 2005. The mean sum recovered was $10 million, which partly reflects the fact that there were 18 cases in which settlements and judgments topped $100 million. Whistleblowers recovered a median of $123,885 from each case in the same period. The mean whistleblower share was $1.7 million.

    Source: Government Accountability Office letter and report to Rep. James Sensenbrenner (R-Wis.), chairman of the House Judiciary Committee, and Chris Cannon (R-Utah), chairman of the Judiciary Subcommittee on Commercial and Administrative Law, Jan. 31, 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.


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