Frequently Asked Questions about qui tam and the False Claims Act

Who can bring a qui tam case?

There are no limits under the False Claims Act on who can file a case.  While most qui tam whistleblowers are corporate employees, anyone who interacts with a corporation can bring a case.  Many successful cases have been brought by customers, consultants, and vendors, including, in the health care context, pharmacists, doctors and patients. Successful cases have also been brought by competitors.  The False Claims Act can help law-abiding corporations level the playing field by stopping fraudulent conduct and getting bad actors out of the marketplace.

Many corporate employees who bring successful qui tam cases are management level employees or even executives.  In fact, the classic FCA qui tam whistleblower profile these days is someone who is smart enough and senior enough to have been given access to information, and driven enough to do something about what they see as wrongdoing.  Chief Financial Officers, Vice Presidents, and even Senior Vice Presidents have brought qui tam cases.  They have come from all parts of the company including marketing, billing, regulatory, manufacturing, and even Compliance.

If I am a corporate employee, do I have to report to the Compliance Department first?

There is no requirement in the False Claims Act to report first to the corporate Compliance Department before filing a case. However, an internal report serves to demonstrate the whistleblower’s sincere desire to correct wrongdoing and enhances the whistleblower’s credibility with the government.  While there may be circumstances in which the whistleblower reasonably fears retaliation, or where management is part of the problem to the extent that an internal report would be futile, most qui tam plaintiffs who were ultimately successful in their cases reported internally first.  For these individuals, the compliance function didn’t work  –  it didn’t succeed in stopping the misconduct.

For example, a 2010 study in the New England Journal of Medicine examined the behaviors of qui tam whistleblowers who won large False Claims Act judgments against pharmaceutical companies. 18 of the 22 individuals in the control group initially attempted to report their concerns internally.  The four individuals who reported their concerns to the government were not employees of the defendant companies  — thus every qui tam whistleblower who had the opportunity to report internally in fact did so.

How long do I have to file my case?

Under the False Claims Act, the statute of limitations   —  the time limit for filing a case  —  is 6 years after the violation of the Act, or 3 years after the government knew, or should have known, about the violation, but in no event more than ten years.

What if someone else files the same qui tam case?

If more than one qui tam plaintiff files the same case, only the first to file survives. The False Claims Act bars any qui tam case that is similar to the “facts underlying” an existing action. The courts have interpreted the law broadly, so that qui tam relators with knowledge of the same fraud essentially are in a “race to the courthouse.”  The False Claims Act also provides that if a qui tam plaintiff files the same case as an existing civil case filed by government, the qui tam action is barred.  This “first to file” rule is intended to encourage the prompt reporting of fraud.

For the most part, this rule applies even if the person who is not first to file has more detailed knowledge of the fraud and provides the government with more information and assistance.  However, if the first-filed case is defective in one or more technical ways (for example, if it is overly broad or purely speculative), subsequently filed cases may not be barred.  The rationale is that opportunistic plaintiffs with little useful information should not be allowed to displace legitimate whistleblowers by filing “placeholder” cases.

At the time of filing, it is impossible to know whether a similar case has already been filed, because qui tam cases are filed under seal. Only the government knows what cases have been filed, and the government decides when and in what circumstances to reveal the existence of “competing” qui tam plaintiffs to each other. When this occurs, whistleblower lawyers often reach sharing agreements on behalf of their clients to avoid disputes.  The facts underlying qui tam cases are complex and two or more cases are rarely identical.  Often, there are factual variations so that cases are complementary rather than competing.

The “first-to-file” rule means that you should not delay reporting, but neither should you rush to judgment or make a decision without carefully weighing the impact on you, your career and family.  Many qui tam plaintiffs think long and hard about whether a qui tam case is the right thing to do.  For example, many individuals in a corporate setting spend years trying to have their management address their concerns before resorting to a whistleblower case.

Can I use public information to support my qui tam case?

The qui tam law is designed to encourage individuals with inside knowledge of fraud on the government to come forward and report it. Therefore, the FCA prohibits qui tam cases that rely solely or primarily on information that is substantially the same as information in the public domain, unless the qui tam plaintiff is an “original source” of the information. An “original source” is defined as someone who gave the information to the government before the public disclosure, or who has information that is “independent of and materially adds” to the publicly disclosed information, and who gave the information to the government before filing the qui tam case.

This does not mean that public information has no place in a qui tam action.  For example, information in Medicare’s Open Payments database can be useful to confirm a whistleblower’s inside information about misconduct by physicians and other health care providers. In New York, information obtained from public sources under freedom on information laws (federal or state) is not considered to be a public disclosure. Public information is often used to supplement a whistleblower’s non-public information and a case-by-case evaluation should be made.

What happens if the government decides not to join my case?

After a qui tam complaint is filed in court, a copy of the complaint is delivered, together with a “disclosure statement” containing all facts material to the action, to the Department of Justice. The government then conducts an investigation, which may take several years. At the end of that period, the government decides whether to “intervene in,” (or join) the case. If the government decides not to join, the qui tam plaintiff may pursue the action alone, or the plaintiff may dismiss the case with the government’s consent. If the plaintiff elects to go forward, the government has the right to intervene at a later date upon a showing to the court of good cause. A declination by the government does not always amount to a vote of no-confidence on the merits. Sometimes the government declines because of resource constraints or other considerations wholly unrelated to the viability of the claims.

Statistically, a successful result is more likely when the government joins the case.  Since 1986, $40 billion has been recovered in qui tam cases that the government joined.  $2.5 billion has been recovered in cases the government declined to join.

How can I get the government to join my case?

A professional and effective presentation of the case to the government at the outset — both written and oral — is crucial to persuading the government that the case should be at the top of their list of priorities. The complaint should be of the highest quality, the disclosure statement should be detailed, sophisticated and meticulously prepared, and the legal analysis should be thorough and incisive. The skill and reputation of the attorneys who represent the qui tam plaintiff are important factors in the ultimate success of a qui tam case.

You should seek a qui tam attorney with well-established credentials and success in the qui tam practice area, and ask about previous qui tam cases they have handled.

How long will my qui tam case be under seal?

Qui tam cases are filed in court under seal (i.e., in confidence) and are not initially served on the defendant. The purpose of filing the case under seal is to give the government an opportunity to investigate the allegations without the defendant’s knowledge. While the statutory period of time for the case to be under seal is 60 days, the government is allowed to ask the court to extend this period and almost always does so. Complex qui tam cases, particularly those involving investigation of criminal conduct in addition to the civil violations alleged in the case, frequently are under seal for several years. Qui tam plaintiffs and their attorneys often work together with the government during the investigation reviewing documents, giving evidence and providing other support.

Still, it can be a frustrating and anxious time awaiting the outcome of the government’s investigation. The best advice one can give a qui tam plaintiff is this: “Don’t expect immediate results and don’t live your life around the case.”

How much is the reward if my qui tam case is successful?

The False Claims Act provides for a qui tam reward of 15-25% if the government intervenes in, or joins, the case, and 25-30% if the government declines to intervene and the plaintiff pursues the action alone. In special circumstances, lower percentages may apply. There is no cap on the amount a qui tam whistleblower can receive.

The False Claims Act does not provide much guidance about what determines the size of the qui tam reward, stating only that it depends on the extent to which the qui tam plaintiff “substantially contributed” to the prosecution of the case. The average reward in an intervened case is around 16%, and usually is resolved by negotiation between the qui tam plaintiff’s lawyers and the Department of Justice. If the DOJ and the plaintiff cannot agree, the plaintiff can apply to the court for a ruling. Typically, the DOJ seeks to preserve as much of the recovery for the government as possible, and so offers of percentages near the 25% maximum tend to be reserved for cases in which the plaintiff has provided extraordinary assistance.

The DOJ has developed a series of guidelines for government attorneys to follow when deciding what percentage to offer successful qui tam plaintiffs. These guidelines do not have binding authority in court, but they provide a list of the factors that the government regards as relevant. Factors that will tend to increase relator share are the promptness with which the plaintiff reported the fraud, whether the plaintiff tried to stop it, the extent of the plaintiff’s knowledge of the fraud and his/her assistance to the government. Decrease factors include the relator’s involvement in the fraud, a substantial effort on the part of the government to develop the case, and delay in reporting the fraud.

Since 1986, qui tam awards have exceeded a total of $7 billion.

Can I receive a reward if I was involved in the fraud?

Under the False Claims Act, the court is authorized to reduce the reward of a qui tam plaintiff who “planned and initiated” the wrongdoing. If a qui tam plaintiff is criminally convicted for conduct arising from his or her role in the fraud alleged in the qui tam case, that person must be dismissed from the case and will not receive any share of the proceeds.