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Qui Tam Lawsuits: How to Report Fraud Under the False Claims Act

Posted  June 14, 2019

What potential whistleblowers need to know about working with a qui tam lawyer to report fraud under the False Claims Act

Using the False Claims Act (FCA), a whistleblower can bring a lawsuit on behalf of the United States to recover damages from parties who are cheating the government out of taxpayer funds.  Also called qui tam actions, these lawsuits allow eligible whistleblowers, referred to as “relators,” to claim a percentage of any funds recovered by the government.

If you plan to file a qui tam lawsuit, you may be inclined to reach out to an attorney you know, or an attorney who has helped you on other matters. But qui tam lawsuits are not like ordinary litigation.  They have unique procedural rules, and the underlying law and regulations are often complex.

An attorney who works in another practice area – an employment lawyer, a personal injury lawyer, or a class action lawyer – is unlikely to have detailed knowledge of the underlying federal rules and regulations, or adequate experience in qui tam procedures.

The truth is, an experienced qui tam attorney will be your best choice to bring and maintain a qui tam case. The best whistleblower attorney for you will have extensive experience representing whistleblowers like you, a long track record of success, the resources and time to respond to your claim quickly and effectively, and a willingness to protect your interests above all else.

Qui Tam Actions often involve Complex Facts, Laws, and Regulations

Sometimes, fraud claims are straightforward:  a defendant makes a false statement about a fact. However, defendants are endlessly creative in devising schemes to gain financial advantage, and the fraud schemes underlying whistleblower claims are often complex.  There may be purchases or sales through a related entity, kickbacks or other financial incentives disguised as legitimate compensation, or billings that exploit regulatory changes in systems that often lack adequate oversight.

Experienced qui tam lawyers will be able to more quickly understand the wrongful conduct alleged and the relevant rules and regulations.  Qui tam cases can arise in industries including healthcare and pharmaceuticals, banking, telecommunications, technology, defense and aerospace, construction, and more. Experienced qui tam counsel will have worked on matters in different relevant industries, and be able to quickly understand the alleged wrongdoing and how that wrongdoing fits into the broader legal, regulatory, or contractual structure.

In addition, relators often have a choice about where to file their qui tam action, and the choice of venue can have a significant impact on the case.  Different courts interpret the law differently, and different DOJ offices have different resources for qui tam cases. Experienced whistleblower counsel will be able to advise you about favorable and unfavorable venues for your case.

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Qui Tam Actions are Subject to Specialized Rules

Qui Tam Lawsuits are Filed Under Seal

One thing that makes qui tam lawsuits unique is that they are required to be filed under seal, which protects sensitive information by allowing it to be presented to the government without becoming a public record or known to the defendant.

The filing of a complaint under seal is not a common procedure, and even court clerks may be unfamiliar with under seal filing procedures.  Some district courts have local rules regarding such filings; others do not.

Following correct procedures for a qui tam filing is particularly critical, because a misstep in the process can result in a “seal breach.”  A seal breach – even an unintended one – can put your entire case at risk of dismissal.

Moreover, confidential, under seal filing is often of particular personal importance to whistleblowers.  Because most whistleblowers are employees, former employees, contractors, or competitors, filing a qui tam action may put them in a position where they are risking their livelihood. With so much at stake, a qui tam lawyer that can help make sure you follow the law to the letter is absolutely necessary.

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Evidence Must be Presented in a Disclosure Statement

Along with the under seal filing of the complaint, a “disclosure statement” must also be served on the United States. This statement should contain the evidence in possession of the relator regarding the allegations in the complaint. An experienced qui tam attorney can not only help guide you when it comes to what evidence is crucial for your case but also make sure it’s put together and presented to the government in the most effective way possible.

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Qui Tam Cases Must be Based on Non-Public Information

Claims brought under the FCA should be based on non-public information. But what if the information you have includes some public information? When is information considered public? An attorney that has handled qui tam lawsuits before can help you craft your complaint in a way to avoid potential pitfalls if any public information is involved.

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First-to-File Rules Require Quick Effective Action

The FCA rewards whistleblowers who bring new information to the government; once a whistleblower case has been filed about a particular fraud scheme, later whistleblower actions may be blocked. First-to-file disputes are not uncommon, as far-reaching fraud schemes will almost certainly become apparent to multiple parties, leading to multiple qui tam complaints. If you intend to file a qui tam action, it is best to work with experienced qui tam counsel to file your claim as soon as possible.

However, being the second to file is not a death knell.  The details of the schemes alleged in the different complaints matter greatly, whether you are the first relator trying to hold your place in line, or the second relator trying to claim a place in line.  In either position, relators benefit from having experienced whistleblower counsel help them navigate the different arguments available.

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A Qui Tam Attorney Understands the Consequences of Being a Whistleblower

Blowing the whistle and seeking to hold wrongdoers to account for their actions is a noble quest, and filing a qui tam action gets your claims before the Department of Justice and other government officials.  However, being a whistleblower comes with many challenges and difficulties.

First, while there are laws protecting whistleblowers from retaliation, the risk of adverse action from the defendant or others remains a serious concern. An employer, for example, may seek remedies for its employee disclosing confidential or protected information. Or, a relator may be accused of having participated in the fraudulent scheme in some way.  A qui tam attorney can anticipate these actions and arguments and be prepared if and when they arise.

Second, outside of the possibility of retaliation, being a whistleblower can be difficult in other ways too. There may be long periods where it feels like no progress is being made. The government may not communicate, and as a relator you may feel out of the loop. An experienced qui tam attorney can be your advocate and someone to talk to during the investigation. This can be particularly important while the case is under seal and the relator is not allowed to discuss the case. Staying silent when these cases can last for years can be a challenge.

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A Qui Tam Lawyer Can Help You Maximize Your Reward

The False Claims Act allows the government to seek “treble damages,” or three times the amount of actual losses, in addition to other statutory penalties. The relator’s share of the government’s recovery, typically between 15% and 30%, depends on many factors, and is usually negotiated with the government after recovery from the defendant.

Experienced qui tam counsel will represent your interests in relator’s share negotiations with the government, and can ensure that you enter those negotiations in a strong position. The government often looks to assistance provided by the relator and relator’s counsel during the investigation and any litigation. You may be interviewed, asked to provide additional evidence, and otherwise assist government attorneys and officials as they work through the case. Being cooperative, hard-working, and honest can strengthen your argument for a larger relator’s share.

RECOMMENDED READING: ZDNET

Cisco to pay $8.6 million for selling vulnerable software to US government

“This video surveillance software is used by airports, police departments, and schools. It is supposed to make us safer, making the vulnerabilities at issue all the more troubling,” said Hamsa Mahendranathan, an attorney at Constantine Cannon, the law firm that represented Glenn.

Click here to read the full article on ZDNet.com »

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Think You Might Have a Qui Tam Case?

Helping the government catch and prosecute fraudsters is an important choice and one that takes courage. To make sure your interests are properly represented and that you will receive the compensation you deserve, it’s essential to hire a qui tam lawyer. Contact Constantine Cannon today for a confidential consultation.

Tagged in: FCA Federal, Importance of Whistleblowers, Whistleblower Rewards,


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