What is a Qui Tam Lawsuit?

False Claims Act

Qui tam lawsuits provide a way for whistleblowers to receive compensation for reporting fraud committed against the U.S. government

Qui tam lawsuits (pronounced “kee tam”) have been around for more than 150 years. The lawsuits allow whistleblowers to receive compensation for reporting fraud committed against the government. In this article, we’ll explain who can file a qui tam lawsuit, how to file a qui tam lawsuit, and what compensation a qui tam plaintiff can receive. We’ll also take a look at some recent high-profile qui tam lawsuits.
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Imagine you work as a bookkeeper at Bristol-Myers Squibb, a global biopharmaceutical company. While organizing some files, you realize that the company has been underpaying rebates owed to the federal government under the Medicaid Drug Rebate Program. You dig a little deeper and find a note from your boss indicating that the underpayments were intentional.

Is there something you can do to right the wrong and receive compensation for your trouble?

Qui tam lawsuits allow private individuals to file a lawsuit on behalf of the government and receive some compensation if the lawsuit is successful.

Let’s take a closer look.

What is a qui tam lawsuit?

A “qui tam lawsuit” is a type of lawsuit in which a private party (often called a “relator,” “whistleblower,” or “qui tam plaintiff”) files a lawsuit on behalf of the government. If the lawsuit is successful, the qui tam plaintiff receives a share of the award.

The term qui tam comes from the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which literally means “he who sues for the king as well as himself.”

In the United States, qui tam lawsuits must be brought under the False Claims Act.

What is the False Claims Act?

The False Claim Act is a federal law (31 U.S.C. 3729-3733) passed all the way back in 1863 in response to defense contractors who were providing substandard equipment to soldiers during the American Civil War.

Simply put, the False Claims Act allows private individuals to sue parties who have defrauded the federal government.

Some actions that would be considered violations under the False Claims Act include:

  • Charging the government for more than was actually provided
  • Making a false statement to receive a government contract
  • Submitting a false application to receive a government loan
  • Submitting a false application to receive a government grant
  • Improperly withholding the government’s money or property
  • Demanding payment for goods or services that don’t conform to contractual requirements
  • Requesting payment for goods or services that are defective or of a lesser quality than were contracted for
  • Attempting to pay the government less than is owed

Examples of successful qui tam lawsuits filed under the False Claims Act

There are roughly 650 qui tam lawsuits filed under the False Claims Act every year.

Let’s look at a few real examples: 

United States ex rel. Moldex-Metric v. 3M Company

From 2003-2012, 3M Company was the exclusive supplier of Combat Arms earplugs to the U.S. military for use in training and combat. Unfortunately, the 3M Combat Arms earplugs had a design defect that caused the seal to loosen in the wearer’s ear. As a result, soldiers who wore these earplugs weren’t protected from loud noises such as gunfire and explosions.

On May 12, 2016, Moldex-Metric (the qui tam plaintiff) filed a qui tam action in the United States District Court for the District of South Carolina. The qui tam plaintiff alleged that the earplugs had a defect that caused the earplug to loosen in users’ ears, rendering the earplugs useless.

The qui tam plaintiff further alleged that 3M knowingly sold the earplugs to the U.S. military without first disclosing the design defect and the inaccurate noise reduction rating.

In 2018, the U.S. Department of Justice reached a $9.1 million settlement with 3M to resolve the allegations brought under the False Claims Act.

Learn more about the 3M Combat Arms earplug lawsuit.

United States ex rel. Landis v. Tailwind Sports Corporation, et al.

Lance Armstrong paid $5 million to resolve a qui tam lawsuit alleging that his admitted use of performance-enhancing drugs (PEDs) resulted in the submission of millions of dollars in false claims for sponsorship payments to the U.S. Postal Service (USPS), which sponsored Lance’s cycling team.

The lawsuit alleged that Lance regularly and systematically employed PEDs, that he made numerous false statements denying his PED use, and that he took active measures to conceal his PED use during the USPS sponsorship.

United States ex rel. Mayes v. Berkeley HeartLab Inc., et al.

After a 2-week jury trial, the U.S. Department of Justice obtained judgments totaling more than $114 million against 3 individuals who were found to have paid physicians illegal payments disguised as “handling fees” for each patient they referred to 2 blood testing laboratories: Health Diagnostic Laboratory of Richmond, Virginia (HDL), and Singulex Inc., of Alameda, California (Singulex).

During the trial, the government introduced evidence that this kickback scheme resulted in physicians referring patients to HDL and Singulex for medically unnecessary tests, which were then billed to federal health care programs.

Who can file a qui tam lawsuit?

Any private citizen or non-governmental organization can file a qui tam lawsuit. Qui tam plaintiffs are typically employees or contractors of the defendant companies (i.e., whistleblowers), but that’s not required.

How does someone file a qui tam lawsuit?

To start a qui tam lawsuit under the False Claims Act, the qui tam plaintiff must:

  • File a complaint under seal, and
  • Give the government a copy of the complaint along with all of the material evidence.

Once the government receives a copy of the complaint, it reviews the evidence, conducts an investigation, and decides whether to intervene in the case. All of this must be done within 60 days of receiving a copy of the complaint.

If the government decides to intervene, it assumes primary responsibility for prosecuting the case (although the government will often work with the qui tam plaintiff’s attorney). If the government doesn’t intervene, the qui tam plaintiff can continue with the lawsuit on their own.

Facing factsAccording to the U.S. Department of Justice, the overwhelming majority of recoveries in qui tam actions (88.6%) have come in actions where the U.S. Department of Justice intervened. This is probably because the U.S. Department of Justice has extensive investigative and prosecutorial resources.

Proving a defendant violated the False Claims Act

It’s not enough to prove that the defendant deceived or attempted to deceive the government. Under the False Claims Act, liability requires proving that the defendant knowingly deceived or attempted to deceive the government, which means the defendant acted with:

  • Actual knowledge,
  • Deliberate ignorance of the truth, or
  • Reckless disregard of the truth.

United States ex rel. Rudolph v. Inchcape Shipping Services Holdings Limited, et al.,

Inchcape Shipping Services paid $20 million to settle a qui tam lawsuit alleging that the company overbilled the U.S. Navy under contracts to provide services to Navy ships at ports in several regions around the world.

The lawsuit alleged that the company knowingly overbilled the Navy by submitting invoices overstating the quantity of goods and services provided, and by double-billing for some goods and services.

What damages can be recovered in a qui tam lawsuit?

If the lawsuit is successful, a qui tam plaintiff can recover a percentage of any judgment or settlement.

More specifically, a qui tam plaintiff can recover:

  • Up to 25% of the proceeds of any judgment or settlement if the government intervenes, or
  • Between 25% and 30% of the proceeds of any judgment or settlement if the government does not intervene.

The specific percentage a qui tam plaintiff will receive depends on a host of factors, including:

  • The extent to which the qui tam plaintiff’s counsel contributed to the prosecution
  • The extent to which the action was based on evidence and information provided by the qui tam plaintiff

All qui tam plaintiffs are entitled to attorney’s fees if they win, meaning the defendant will be required to reimburse the qui tam plaintiff for money the qui tam plaintiff paid for legal services.

Facing factsThe Department of Justice obtained more than $2.2 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2020.

Is the qui tam plaintiff protected from retaliation?

The False Claims Act prohibits retaliation for filing a qui tam action or for attempting to stop violations of the False Claims Act. Specifically, the act protects employees, contractors, and other agents from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.”

To establish retaliation under the False Claims Act, a qui tam plaintiff must show that:

  1. They engaged in a protected activity (e.g., reporting the fraud to a supervisor, refusing to participate in violating the False Claims Act, pursuing a qui tam suit),
  2. The employer engaged in an adverse employment action against the qui tam plaintiff, and
  3. The adverse employment action was because of the protected activity.
Enjuris tip:Qui tam plaintiffs are protected from retaliation for filing an action against a company that defrauded the government by the False Claims Act’s anti-retaliation provisions.

Statute of limitations for qui tam lawsuits filed under the False Claims Act

Plaintiffs must file lawsuits within a certain period of time. This period of time is called the statute of limitations.

A qui tam plaintiff filing a lawsuit under the False Claims Act must do so within 6 years of the date on which the violation was committed. In rare circumstances, the statute of limitations can be extended.

Qui tam lawsuits are complex and time-consuming. If you have reason to believe the government has been defrauded, it’s a good idea to meet with an experienced attorney as soon as possible. You can find an attorney near you using our free legal directory.


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