Qui Tam & the False Claims Act: How Whistleblower Lawsuits Work

A qui tam lawsuit is a case brought under the federal False Claims Act (31 U.S.C. §§ 3729–3733) in which a private person, called a relator or whistleblower, sues on behalf of the United States against someone who allegedly defrauded a government program. The relator files the complaint under seal and serves it on the Department of Justice, which investigates and decides whether to intervene. If the case succeeds, the relator shares in the money the government recovers. The term comes from a Latin phrase meaning "who sues for the king as well as for himself."

The False Claims Act, 31 U.S.C. §§ 3729–3733, is the federal government's primary tool for fighting fraud against public funds. First passed during the Civil War and strengthened by amendments in 1986 and later, it imposes liability on anyone who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the government — for example, false Medicare or Medicaid billing, defense-contract fraud, or misuse of grant money. Violators owe three times the government's damages plus a civil penalty for each false claim, and the law lets private whistleblowers enforce it through qui tam suits.

A relator is the private person or entity who brings a qui tam case on the government's behalf. It is often an insider — an employee, former employee, contractor, or competitor — who has direct, non-public knowledge of the alleged fraud. The False Claims Act discourages opportunistic suits through a "public disclosure bar" that can block a case built only on already-public information, unless the relator is an "original source" with independent knowledge. There can generally be only one relator case on a given set of facts; the first to file usually controls.

If a qui tam case recovers money, the relator receives a share of it. When the government intervenes and takes over the case, the relator's share is generally 15% to 25% of the recovery, depending on how much the relator contributed. When the government declines and the relator pursues the case alone and wins, the share is generally 25% to 30%. The exact percentage is set within those ranges by the court and the statute, and a relator who planned or initiated the fraud can have the share reduced or eliminated.

A qui tam complaint is filed under seal, meaning it is kept secret from the defendant and the public for an initial 60 days (routinely extended) while the Department of Justice investigates and decides whether to intervene. During the seal period the relator cannot publicize the case, and the defendant typically does not know it has been sued. After the government makes its decision, the court usually lifts the seal and the case proceeds either with the government leading it or with the relator continuing on the government's behalf.

A qui tam case and a class action are different tools. In a qui tam suit, a single relator sues on behalf of the government to recover money the defendant allegedly took from public funds, and the relator — not a class of consumers — shares in the recovery. A class action is brought by representative plaintiffs on behalf of a group of similarly situated people to recover their own losses. The same misconduct can sometimes lead to both a government False Claims Act recovery and separate consumer litigation, but the qui tam recovery goes mainly to the government, with the relator's share carved out.