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What is a Qui Tam Action?

Jim B.
Jim B.

A qui tam action is a writ that allows a private individual who has sued an institution on behalf of the government to receive part of the penalty imposed if the institution is found guilty. The writ of qui tam is a common law provision most closely associated with the False Claims Act, which was passed by the United States Congress during the American Civil War. It was then strengthened in 1986 to encourage whistleblowers to shed light on fraud or other misconduct committed by government contractors and other companies or entities that receive governmental funding. An individual who files a qui tam action may be joined by the government in the suit or may pursue the case alone, with a possible reward of anywhere from 15 to 30 percent of the eventual penalty as the outcome.

The term qui tam comes from a longer Latin phrase that translates into "whoever sues in the matter for the king as for himself." By this provision, an individual who files suit on behalf of the government may be entitled to a portion of whatever penalty is levied on the guilty party. The qui tam provision can only be invoked in cases involving companies or entities that do business with the government, such as subcontractors, or those receiving government funds, such as health care companies, universities, or government spending programs.

Woman with hand on her hip
Woman with hand on her hip

In 1863, Congress, frustrated by rampant Civil War fraud, passed the False Claims Act, also known as the Lincoln Law, as a legal tool to help local governments that were reluctant to prosecute such cases. The law encouraged whistleblowers to assist in the prosecution of fraud and other similar cases via a qui tam action. Though the law fell out of favor for much of the first half of the 20th century, it was strengthened by an amendment in 1986 that allowed state and local governments to act as relators, or plaintiffs, in such cases. A person or entity filing a qui tam action is known as a private attorney general, which refers to any individual filing a lawsuit in the public interest.

When an individual files a qui tam action, the government then decides whether or not it will join the suit on the plaintiff's behalf. A whistleblower must provide written documentation of all evidence relating to the case, which the government reviews and investigates before deciding whether or not to proceed. The accused party is notified of the suit and is required to not notify anyone of the case's existence — this is because a qui tam action is filed under seal. This seal must eventually be lifted to allow disclosure in the case. If the government chooses not to pursue the case, the whistleblower may proceed without the government's help.

The general amount rewarded to a whistleblower in a successful qui tam action is between 15 and 25 percent of the overall penalty. This amount can go up to as high as 30 percent in cases that proceed without the government's help, but those rewards are rare because the government usually abandons a case only when they feel it is not able to be won. In addition, all attorney fees for those representing a whistleblower in a qui tam action are also awarded to the plaintiff if the defendant is found guilty, since plaintiffs in these cases are prohibited by law from representing themselves.

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