Qui Tam Law

In 1986, the U.S. Congress amended the antiquated, and useless up until then, qui tam provisions of the U.S. False Claims act in a way to make it more viable and probable that a private citizen could file and win a qui tam suit (The Qui Tam law was originally enacted in 1863, during the Abraham Lincoln administration, to combat rampant contractor fraud during the Civil War). The move to amend the complaint was driven by the proliferation of news stories of companies defrauding the federal government, especially within the Defense Department during the Reagan Administration. Some of the improvements included increasing the damages, expanding the role of the qui tam whistleblower, (who is formally called a “relator” in a qui tam action), guaranteeing the whistleblower a set percentage of the money that the government recovers, and adding a whistleblower protection clause.

By increasing the damages of the amount of fraud discovered, the qui tam whistleblower is in a better position to convince others, especially attorneys, that it is worth the costs involved to file a lawsuit. One million dollars of fraud discovered could mean as much as three million dollars back to the U.S. Treasury and ultimately a higher percentage of money to the whistleblower. It also encourages companies who have defrauded the government to settle the case rather than to risk a high damage amount determined by the Department of Justice.

The role of the whistleblower was enhanced by the 1986 amendment because, prior to 1986, he, or she, did not have the right to play a role once the government intervened in the case. Although the government has the primary role if they intervene, the whistleblower now “shall have the right to continue as a party to the action.” This clause gives you and your attorney the right to monitor the Justice Department’s handling of the case before settlement and allows you to go to the judge if you believe that the case is not being handled well or not in your best interests.

Before the 1986 amendment, the court could arbitrarily set the percentage of award for the whistleblower. The 1986 amendment guaranteed a minimum of 15 percent of the recovery and a maximum of 25 percent if the Government intervened and 30 percent if the whistlebower continued the action successfully after government declination.

The effect of the 1986 amendment has dramatically changed the way that attorneys view whistleblowers. Before the False Claims Act was amended, attorneys had very little financial incentive to help whistleblowers and most legal help consisted of attorneys helping whistleblowers protect their rights pro bono (for free) or through long, painful and personal wrongful discharge suits.

The amendment was able to change the attitude of attorneys toward qui tam and whistleblowers by showing them that they could share in the recovery as a reward for fronting costs and taking risks on potentially complicated litigation. The good news is that whistleblowers’ complaints are now seen as valuable to both the government and the attorneys.