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Guide to How Awards in Qui Tam Actions Work

A qui tam action is when a private citizen reports fraud against the government. This is known as whistleblowing. Qui tam actions carry with them the potential for large monetary judgments. A part of that judgment goes to the person who initiated the action. 

Read on to learn more about whistleblower rewards in connection with qui tam actions.

Common Types of Qui Tam Actions

There are various types of fraud reported in qui tam actions. A majority are meant to defraud the government and taxpayers. Healthcare fraud involves providers submitting false claims for services not provided. It can also involve inflating billing amounts. This is common in programs like Medicare and Medicaid

Procurement fraud includes fraudulent contracts or bids for government goods or services. Financial fraud encompasses misrepresenting financial information to government agencies like the IRS. 

Fraudulent activities may also occur in government contracts, with companies engaging in kickback schemes or submitting false invoices. Whistleblowers play a crucial role in uncovering these activities and holding perpetrators accountable.

Qui Tam Award Requirements and Eligibility

Qui tam award requirements are outlined under the federal False Claims Act (FCA). The FCA empowers whistleblowers to report fraud on behalf of the government through qui tam lawsuits. To qualify for an award, whistleblowers must provide original information about types of fraud that violate the law. This information should lead to a successful recovery of funds by the government.

The FCA includes qui tam provisions that incentivize individuals to report fraud. It does this by offering a percentage of the recovered funds as an award. Whistleblowers must file their complaints under seal, ensuring confidentiality during the government's investigation. 

If the government declines to intervene, whistleblowers may proceed with the lawsuit on their own. 

Adhering to these requirements is essential for whistleblowers seeking to report fraud.

Qui Tam Action and Award Process

Navigating the qui tam award process involves several key steps. Following these steps ensures that whistleblowers are protected throughout the process. It also increases the likelihood of a successful outcome.

  1. Reporting Fraud: A private citizen, known as a relator, reports fraud against the government by filing a complaint in federal court. This complaint details the alleged fraudulent activities.
  2. Government Investigation: The government reviews the whistleblower's complaint. It then investigates the allegations. This investigation is conducted in secret while the complaint is under seal.
  3. Government Intervention Decision: After investigating, the government decides whether to intervene. If they do, they take over the lawsuit. If not, the whistleblower may proceed with the lawsuit on their own.
  4. Litigation: If the government intervenes, they lead the litigation process. If not, the whistleblower's legal team handles the case. The lawsuit proceeds through the legal system. This is when both sides present evidence and arguments.
  5. Award Distribution: If the lawsuit is successful, the whistleblower may receive a portion of the funds as a reward. This award is typically a percentage of the recovered amount. It often ranges from 15% to 30%, depending on various factors.

Qui Tam Damages and Penalties

A defendant found liable in a qui tam action faces significant consequences. They may be liable to the federal government for treble damages. This means three times the amount of monetary damages sustained by the government. If the defendant gives full cooperation with the government's investigation, their liability may be reduced to double the amount of damages sustained.

Defendants found liable may also be required to pay a penalty for each false claim submitted. This penalty is determined by the court and adjusts with inflation. As of February 2024, the penalties ranged between $13,946 and $27,894 per claim. 

Whistleblowers may also be entitled to receive special damages. Special damages can include back pay, reinstatement to their former position, and reasonable attorneys' fees. These additional remedies help protect whistleblowers and encourage them to come forward to report fraud against the government.

Qui Tam Award Amount

The FCA provides a significant monetary incentive for bringing a qui tam action. The person who initiates a successful qui tam suit receives a portion of the penalty and damage award. This award is:

  • No more than 10% if the government pursued the action and the action is based on information brought out in a public report or testimony
  • Between 15% and 25% if the government pursued the action, depending on the extent of participation by the person who initiated the suit
  • Between 25% and 30% if the government does not participate in the action

The exact amount of the award is fixed by the court that hears the case. If the person bringing the qui tam action is also the person responsible for the wrongdoing or fraud, the court will reduce the reward.

Qui Tam Whistleblower Protection

To safeguard whistleblowers, various protections are in place. The FCA prohibits employers from retaliating against whistleblowers for reporting fraud. Whistleblowers who experience retaliation have legal recourse. They may be entitled to remedies for any damages suffered. 

In addition, federal laws provide anonymity protections for whistleblowers who file qui tam lawsuits. This allows them to maintain confidentiality during the initial stages of the case. 

These protections, coupled with the existence of whistleblower programs, encourage individuals to come forward and report wrongdoing. It's important that whistleblowers feel safe and supported throughout the process. It helps maintain the integrity of qui tam actions and promotes accountability for fraudulent activities.

Getting Legal Help With a Qui Tam Action

Both the federal government and society have a vested interest in combating fraud. This is why whistleblowers are rewarded for their involvement. According to the United States Department of Justice, in 2023, the awards to private citizens initiating qui tam actions totaled $2.68 billion

Given the complexity of whistleblower cases, you may consider seeking legal advice from a whistleblower attorney. They can provide valuable guidance on employment laws and whistleblower laws. A skilled lawyer will help you navigate your qui tam case toward a successful resolution.

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