Q. I have read a little about a Qui tam action, but why does a "whistleblower" need a lawyer?
Qui tam actions are a part of the False Claims Act. Whenever a government contractor or payee defrauds the Federal Government, the Federal Government wants to know about it so that they might recover lost funds or in some cases the False Claims Act can cover illegal acts by companies. To do so the Federal Government encourages “whistleblowers” to report the wrongful action and if found to be legitimate, a private attorney and possibly Government inclusion (intervention) may pursue the wrongful gains for a recovery. In addition to wrongful gains, the actions by those that have defrauded the government may even cause harm to patients having insurance such as Medicare, Medicaid and Tricare or harm to military personnel. For the “whistleblower” it may well include monetary compensation for reporting the wrongful action.
The False Claims Act was passed in 1862 during the War Between the States and is sometimes called the Lincoln Law. Originally the “whistleblower’s” reward was 50% plus $2,000.00. In the 1940’s the reward was significantly reduced. Qui tam actions were significantly reduced as a result. When reports in the 1980’s of $400 hammers and $600 toilet seats surfaced, Congress looked again at the False Claims Act. Congress decided that the wrongdoer should be fined triple the actual damages to the government. Amendments in 2009 addressed judicial interpretations that did not fall in line with original Congressional intent and amended in 2010 under the Patient Protection Act and the Affordable Care Act.
The “whistleblower”, dubbed a relator under these cases is generally an employee, an ex-employee, a contractor or subcontractor or even a competitor. If the relator is an employee then protection is extended to the relator in that the relator cannot be terminated from employment because they have turned in their employer.
Rewards to relators can fall between 10% and 30% of the penalty. Where most of the facts are publicly known a relator’s recovery is 10%. When the government is included, the relator’s recovery falls between 15% and 25%. When the government does not intervene the relator’s recovery falls between 25% and 30%.
As an example I have met an individual that saw an irregularity within the company that the individual worked for. My description is purposely vague to protect the person’s identity even though it is publicly available. My understanding is that this person objected to the practice and ultimately left the company. At some point the individual contacted an attorney and the government did become involved. When the case was resolved the company was fined several million dollars and the individual received a very handsome reward. Though still significant, after taxes and attorney fees that amount becomes significantly less.
In answering the original question let’s consider what we have discussed thus far. Number one, the government does not always intervene so attempting to bring such an action without being an attorney and even specializing in qui tam actions would be at a significant disadvantage. Number two the government does not per se represent the individual so there would be no protective counsel from a private attorney. Even though a current employer cannot retaliate against a relator one must consider that professional harm might come once an individual is identified. I would guess that future employers may well be concerned that they might become the subject of a False Claims Act investigation even if they always attempt to do everything within the law. With an investigation a company could end up settling a claim and should they end up with multiple claims for different issues it could be financially difficult.
If you have determined that a company is defrauding the government and feel you should “do the right thing” you should contact an attorney that specializes in qui tam actions.
This article is informative only and not meant to be all inclusive. Additionally this article does not serve as legal advice to the reader and does not constitute an attorney- client relationship. The reader should seek counsel from their attorney should any questions exist.
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Ronald A. Holtsford, Esq.
Ronald A. Holtsford, LLC
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