Qui Tam Basics

Qui tam, or “whistleblower,” laws are designed to protect against the fraudulent use of public funds by encouraging people with knowledge of fraud on the government to blow the whistle on wrongdoers.  Under qui tam laws, whistleblowers receive a share of the money they help the government recover.

The Federal False Claims Act (FCA), which dates back to the Civil War era, allows private citizens (individuals or corporations) to bring a lawsuit under the Act on behalf of the government and receive up to 30% of the recovery. The Federal FCA provides for treble (triple) damages and penalties of up to $11,000 per violation for virtually any kind of fraud on federally funded programs. A number of state governments also have adopted their own versions of the law.

The Department of Justice (DOJ) has called the False Claims Act the “single most important tool U.S. taxpayers have to recover funds lost due to fraud against the government.”    The DOJ has also praised Senator Grassley and Congressman Berman’s bipartisan efforts to revitalize the FCA in 1986, as a work of “leadership and vision,” and noted that the amount of federal dollars recovered under the act “demonstrates that the public-private partnership encouraged by the statute works and is an effective tool in our continuing fight against the fraudulent use of public funds.”

False Claims Act recoveries far exceed the cost of prosecuting fraud.  For every dollar the federal government invests in investigating and prosecuting these cases, it receives over $20 back. As of the end of FY 2013, the DOJ had recovered more than $38.9 billion under the False Claims Act since the 1986 amendments, roughly $27.2 billion of which resulted from cases which were initiated by whistleblowers. Of the $3.8 billion recovered by the federal government under the False Claims Act in FY 2013, over $2.9 billion resulted from suits initiated by whistleblowers. During the course of the same year, relators received nearly $388 million in qui tam awards. These numbers do not include Medicaid recoveries to the States or criminal fines arising from qui tam cases.

These figures demonstrate why the qui tam law is now the weapon of choice for federal (and an increasing number of state) prosecutors seeking to recover defrauded taxpayer funds. The qui tam law has become in practice what it was intended to be in theory — a “public-private partnership” of the government and the people.