The False Claims Act is designed to bring law enforcement attention to schemes that defraud taxpayers, and to remedy fraudulent corporate culture by imposing liability on companies and individuals that defraud the federal government. It empowers private individuals, who are not affiliated with the government, to file complaints on the government’s behalf. These claims are called qui tam lawsuits.
Under the False Claims Act, whistleblowers can obtain significant compensation for the professional and personal risks they take to expose and stop fraud against the government. In addition, the False Claims Act provides whistleblowers considerable protections against retaliation by the entity allegedly engaged in the fraud. If an employee experiences retaliation because he, she or they lawfully reported the fraud, then that employee is entitled to the relief necessary to make them whole, including reinstatement, double back pay, and reasonable attorneys’ fees. Additional state employment laws may provide further remedies against such retaliation.
A qui tam action must be filed in federal district court. The lawsuit is initially filed “under seal” for at least 60 days, meaning that it is kept secret from everyone but the government. This gives the Department of Justice time to investigate the allegations. Even the person or entity being accused of fraud is not told about the case. The government may request a longer period, and it is not unusual for the seal period to last a year or more. While the action is sealed, the government investigates the allegations, often with the assistance of the attorney retained by the whistleblower, and decides whether it will join, or “intervene,” in the case.
A whistleblower in a qui tam lawsuit is eligible receive between 15% and 30% of the total recovery from the defendant, whether the recovery is achieved through a favorable judgment or settlement. If the government intervenes and joins an action brought by the whistleblower, then the whistleblower generally is eligible to receive at least 15%, but not more than 25% of the recovery.