qui tam lawsuits Archives | Galiher DeRobertis & Waxman LLP

In 2021, the U.S. Department of Justice recuperated $5.6 billion from False Claims Act (FCA) cases. Whistleblowers played an important role in this recovery.

Who Are Whistleblowers?

Private citizens, called “relators,‚Äù are allowed to file suit for FCA violations on behalf of the government. These are known as¬†qui tam¬†actions. Anyone can become a whistleblower to report fraud to federal officials.

Whistleblowers have supported justice in the United States from the beginning of its history. In 1778, the Continental Congress enacted the first law protecting whistleblowers and provided funds for the successful legal defense of two men who had accused the commander of the Continental Navy of war profiteering and other crimes.

During the Civil War, when dishonest dealers were selling poor-quality goods to the Union Army, President Abraham Lincoln signed the FCA in 1863, a law Congress had passed to encourage citizens to report fraud against government agencies. Since then, the U.S. government has used the FCA to deal with fraud by imposing significant penalties on anyone who submits a false claim to the government.

Although the FCA also empowered the government to financially reward the people who report the misconduct, payment of these rewards was optional. In 1986, the FCA was significantly updated, with increased penalties and mandatory rewards for whistleblowers. Health care fraud and tax fraud are among the areas covered by provisions in the FCA.

Do Cash-for-Information Whistleblower Programs Work?

Prior to the 1986 revision of the FCA, because rewards to whistleblowers were optional and hence not paid, whistleblowers were hesitant to step forth. The revision increased payment and made it mandatory and thus created a more successful system. Whistleblowers know they will be compensated for taking a big personal risk to report fraud. And because payment is a percentage of the penalties imposed, the more significant the case, the more the whistleblower will be paid. The government wins, too. Since the 1986 FCA revision, cases initiated by whistleblowers have brought in $100 billion in fines and penalties.

Former U.S. Assistant Attorney General Stuart Delery said the revised FCA was “the most powerful tool the American people have to protect the government from fraud,‚Äù attributing its success to the “commitment advocacy‚Äù of participating whistleblowers.

When other government agencies, such as the Internal Revenue Service and the Securities and Exchange Commission, revised their laws and made whistleblower payouts mandatory, their rates of success also improved.

“If you want effective anti-fraud programs, we need whistleblowers,‚Äù said Stephen M. Kohn, Executive Director of the National Whistleblower Center.

How Do We Fight Fraud Against Taxpayers and Shareholders?¬†

Seek justice on behalf of taxpayers with the help of our experienced attorneys. Our Dallas, Texas, whistleblower team has battled corporate giants for 20 years, aggressively fighting to hold corporations, individuals, and other entities accountable for fraud committed against the government. If you believe you have a whistleblower case, we can help.

Last year, whistleblowers led the way to over $1.6 billion in False Claims Act recoveries, continuing a long legacy of ordinary citizens fighting for what’s right since the United States’ first qui tam whistleblower law was passed in 1778. But how do whistleblower laws work, and why do they matter? Fraud on the government takes many forms, but its result is the same‚Äîhigh cost to taxpayers and damage to the foundation on which our free society is built.

What’s Behind Most Whistleblower Cases?

Many of today’s whistleblowers operate under the provisions of the False Claims Act (31 U.S.C. §§ 3729–3733, also called the “Lincoln Law” or “FCA”), one of the federal government’s primary tools used to combat fraud. The Act’s “qui tam” provisions allow a private citizen to sue on behalf of the government. These whistleblowers, called “relators” under the FCA, may be awarded 15 to 30 percent of the government’s recovery in their case, and in 2021 alone, they received $237 million in relator share awards.

What Counts as Fraud Under the False Claims Act?

The False Claims Act applies to fraud involving any federally-funded contract or program, except in cases of tax fraud. That can include defense contractors, health care providers, pharmaceutical companies, mortgage lenders, and telecommunications companies. In fact, we’ve worked on all kinds of whistleblower qui tam cases. It is impossible to list all the types of cases prosecuted under the False Claims Act, but here’s a general idea:

Billing for goods and services not delivered or rendered
Obtaining any federal contract through kickbacks or bribes
Shifting expenses from one fixed-price federal contract to another
Providing inferior or defective products to the government
Defective testing of products
Double billing
Upcoding healthcare charges using a different code for a more expensive treatment
Billing for healthcare tests not performed
Providing kickbacks for the referral of Medicare, Medicaid or other federally funded healthcare program beneficiaries.
Billing for non-FDA approved drugs or devices
Illegal marketing of prescription drugs and medical devices

History of the False Claims Act
One of the first whistleblower laws came into existence to protect soldiers in the Continental Army seeking protection when blowing the whistle on their superior’s illegal behavior. The current False Claims Act was passed into law during the Civil War. The contractors used by the Union Army often cut corners when providing necessities like uniforms, shoes, guns, gunpowder, and horses. “Soldiers complained about shoddy uniforms that would dissolve in the rain. They would get horses that were withered, that were weak and in some cases blind,‚Äù said Mark Greenbaum, an attorney who studies the Civil War era.

All of the government’s resources were being put towards the war effort. Without enough inspectors to ferret out the fraud, Congress created a law that provided an incentive for individuals to shine the light on fraud, giving whistleblowers a portion of any fine it collected based on their allegations.

It came to prominence again in the 1980s, when stories about military spending, including $400 hammers and $600 toilet seats, began to surface. Congress strengthened the law and defense industry whistleblowers began to come forward. Eventually, individuals in the pharmaceutical and health care industries brought more cases as well.

Importance of Whistleblowers Today
The False Claims Act is alive and well today. It’s critical to fighting fraud involving government spending on defense, health care, medical devices, prescription drugs, and much more. The False Claims Act is all but useless without brave whistleblowers. The government needs the help of everyday people to assist in uncovering and prosecuting fraud.

Our attorneys represent whistleblowers who expose fraud and false claims against the government. Our lawyers representing qui tam whistleblowers in False Claims Act matters have worked on cases including government contractor and procurement fraud, health care fraud, and higher-education fraud. They also represent whistleblowers who report securities fraud to the SEC, including Foreign Corrupt Practices Act (FCPA) violations.

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