Qui tam
Encyclopedia
In common law
, a writ
of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed. Its name is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning "[he] who sues in this matter for the king as [well as] for himself." A more literal translation would be "who as much for [our] lord the king as for himself in this action pursues" or "follows."
The writ fell into disuse in England and Wales
following the Common Informers Act 1951
but, , remains current in the United States
under the False Claims Act
, et seq., which allows for a private individual, or "whistleblower
," with knowledge of past or present fraud
committed against the federal government
to bring suit on its behalf. There are also qui tam provisions in regarding arming vessels against friendly nations, regarding violating Indian protection laws, 46a U.S.C. 723 regarding the removal of undersea treasure from the Florida coast to foreign nations, and regarding false marking. In February 2011, the qui tam provision regarding false marking was held to be unconstitutional by a U.S. District Court
, and in September of that year, the enactment of the Leahy-Smith America Invents Act effectively removed qui tam remedies from § 292.
which allows people who are not affiliated with the government to file actions against federal contractors claiming fraud against the government. The act of filing such actions is informally called "whistleblowing
." Persons filing under the Act stand to receive a portion (usually about 15-25 percent) of any recovered damages. The Act provides a legal tool to counteract fraudulent billings turned in to the Federal Government. Claims under the law have been filed by persons with insider knowledge of false claims which have typically involved health care, military, or other government spending programs.
The provision allows a private person, known as a "relator
," to bring a lawsuit on behalf of the United States, where the private detective or other person has information that the named defendant
has knowingly submitted or caused the submission of false or fraudulent claims to the United States. The relator need not have been personally harmed by the defendant's conduct; instead, the relator is recognized as receiving legal standing
to sue by way of a "partial assignment" of the injury to the government caused by the alleged fraud. The information must not be public knowledge, unless the relator qualifies as an "original source."
The American Civil War
(1861–1865) was marked by fraud on all levels in the Union north and the Confederate south. Some say the False Claims Act came about because of bad mules. During the Civil War, unscrupulous early day defense contractors sold the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions among other unscrupulous actions. The False Claims Act, passed by Congress on March 2, 1863, was an effort by the government to respond to entrenched fraud where the official Justice Department was reluctant to prosecute fraud cases. Importantly, a reward was offered in what is called the "qui tam" provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery.
The False Claims Act provides incentive to relators by granting them between 15% and 25% of any award or settlement amount. In addition, the statute provides an award of the relator's attorneys' fees, making qui tam actions a popular topic for the plaintiff
's bar. An individual bringing suit pro se—that is, without the representation of a lawyer—may not bring a qui tam action under the False Claims Act (see, for example, United States ex Rel. Lu v. Ou, 368 F.3d 773 [7th Cir. 2004]).
Once a relator brings suit on behalf of the government, the Department of Justice
, in conjunction with a U.S. Attorney
for the district in which the suit was filed, have the option to intervene in the suit. If the government does intervene, it will notify the company or person being sued that a claim has been filed. Qui tam actions are filed under seal, which has to be partially lifted by the court to allow this type of disclosure. The seal prohibits the defendant
from disclosing even the mere existence of the case to anyone, including its shareholders, a fact which may cause conflicts with the defendant's obligation under Securities & Exchange Commission
or stock exchange
regulations that require it to disclose lawsuits that could materially affect stock prices. The government may subsequently, without disclosing the identity of the plaintiff or any of the facts, begin taking discovery from the defendant.
If the government does not decide to participate in a qui tam action, the relator may proceed alone without the Department of Justice, though such cases historically have a much lower success rate. Relators who do prevail in such cases will get a higher relator's share, about 25% to 30%. It is conventionally thought that the government chooses legal matters it would prosecute because the government would only want to get involved in what it believes are winning cases.
as a way to enforce the King's laws. They existed in the United States in colonial
times, and were embraced by the first U.S. Congress as a way to enforce the laws when the new federal government had virtually no law enforcement officers. The False Claims Act
was passed in 1863 during the U.S. Civil War, but was substantially weakened in 1943 during World War II
while the government rushed to sign large military procurement contracts. It was strengthened again in 1986 after a period of military expansion at a time when there were many stories of defense contractor price gouging
.
The practice fell into disrepute in England in the 19th century by which time it was principally used to enforce laws related to Christian Sunday observance. It was brought to an effective end by the Common Informers Act 1951
but, in 2007, there were proposals to introduce legal provision on the U.S. model back to the United Kingdom.
' can mean any person who reveals misconduct by his or her employer or another business or entity. The misconduct may be in the form of breaking the law, committing fraud, or corruption. That type of fraud can be a violation of the False Claims Act, or similar state and local laws. And a whistleblower who exposes fraud on the government can bring a qui tam lawsuit on behalf of the government, and can receive a share of the recovery as his or her reward.
In order for a whistleblower (also known as a "relator" in the context of the FCA) to bring a qui tam action that is based upon publicly-disclosed information, that person must legally qualify as an "original source." See Rockwell International Corp. v. United States
.
In 2011, the United States District Court for the Northern District of Ohio
held that the False Marking Statute was unconstitutional. Judge Dan Aaron Polster determined that it violated the Take Care Clause of Article II
of the Constitution, because it represented "a wholesale delegation of criminal law enforcement power to private entities with no control exercised by the Department of Justice
".
The America Invents Act made significant changes to false marking laws, which affected all pending and future false marking actions:
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, a writ
Writ
In common law, a writ is a formal written order issued by a body with administrative or judicial jurisdiction; in modern usage, this body is generally a court...
of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed. Its name is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning "[he] who sues in this matter for the king as [well as] for himself." A more literal translation would be "who as much for [our] lord the king as for himself in this action pursues" or "follows."
The writ fell into disuse in England and Wales
England and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...
following the Common Informers Act 1951
Common Informers Act 1951
The Common Informers Act 1951 is an Act of the United Kingdom Parliament that abolishes the principle of, and procedures concerning a common informer.-Background:...
but, , remains current in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
under the False Claims Act
False Claims Act
The False Claims Act is an American federal law that imposes liability on persons and companies who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government...
, et seq., which allows for a private individual, or "whistleblower
Whistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
," with knowledge of past or present fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
committed against the federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
to bring suit on its behalf. There are also qui tam provisions in regarding arming vessels against friendly nations, regarding violating Indian protection laws, 46a U.S.C. 723 regarding the removal of undersea treasure from the Florida coast to foreign nations, and regarding false marking. In February 2011, the qui tam provision regarding false marking was held to be unconstitutional by a U.S. District Court
United States District Court for the Northern District of Ohio
The U.S. District Court for the Northern District of Ohio is the federal trial court for the northern half of Ohio...
, and in September of that year, the enactment of the Leahy-Smith America Invents Act effectively removed qui tam remedies from § 292.
False Claims Act
The False Claims Act is an American federal lawFederal law
Federal law is the body of law created by the federal government of a country. A federal government is formed when a group of political units, such as states or provinces join together in a federation, surrendering their individual sovereignty and many powers to the central government while...
which allows people who are not affiliated with the government to file actions against federal contractors claiming fraud against the government. The act of filing such actions is informally called "whistleblowing
Whistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
." Persons filing under the Act stand to receive a portion (usually about 15-25 percent) of any recovered damages. The Act provides a legal tool to counteract fraudulent billings turned in to the Federal Government. Claims under the law have been filed by persons with insider knowledge of false claims which have typically involved health care, military, or other government spending programs.
The provision allows a private person, known as a "relator
Relator (law)
-Qui Tam action:A Qui Tam Action may be brought by any party against an entity that is fraudulently collecting money from the United States government by filing false claims. The party bringing the suit -- the relator -- must have possession of information substantiating the claim of fraud against...
," to bring a lawsuit on behalf of the United States, where the private detective or other person has information that the named defendant
Defendant
A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute...
has knowingly submitted or caused the submission of false or fraudulent claims to the United States. The relator need not have been personally harmed by the defendant's conduct; instead, the relator is recognized as receiving legal standing
Standing (law)
In law, standing or locus standi is the term for the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case...
to sue by way of a "partial assignment" of the injury to the government caused by the alleged fraud. The information must not be public knowledge, unless the relator qualifies as an "original source."
The American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
(1861–1865) was marked by fraud on all levels in the Union north and the Confederate south. Some say the False Claims Act came about because of bad mules. During the Civil War, unscrupulous early day defense contractors sold the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions among other unscrupulous actions. The False Claims Act, passed by Congress on March 2, 1863, was an effort by the government to respond to entrenched fraud where the official Justice Department was reluctant to prosecute fraud cases. Importantly, a reward was offered in what is called the "qui tam" provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery.
The False Claims Act provides incentive to relators by granting them between 15% and 25% of any award or settlement amount. In addition, the statute provides an award of the relator's attorneys' fees, making qui tam actions a popular topic for the plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
's bar. An individual bringing suit pro se—that is, without the representation of a lawyer—may not bring a qui tam action under the False Claims Act (see, for example, United States ex Rel. Lu v. Ou, 368 F.3d 773 [7th Cir. 2004]).
Once a relator brings suit on behalf of the government, the Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
, in conjunction with a U.S. Attorney
United States Attorney
United States Attorneys represent the United States federal government in United States district court and United States court of appeals. There are 93 U.S. Attorneys stationed throughout the United States, Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands...
for the district in which the suit was filed, have the option to intervene in the suit. If the government does intervene, it will notify the company or person being sued that a claim has been filed. Qui tam actions are filed under seal, which has to be partially lifted by the court to allow this type of disclosure. The seal prohibits the defendant
Defendant
A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute...
from disclosing even the mere existence of the case to anyone, including its shareholders, a fact which may cause conflicts with the defendant's obligation under Securities & Exchange Commission
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
or stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
regulations that require it to disclose lawsuits that could materially affect stock prices. The government may subsequently, without disclosing the identity of the plaintiff or any of the facts, begin taking discovery from the defendant.
If the government does not decide to participate in a qui tam action, the relator may proceed alone without the Department of Justice, though such cases historically have a much lower success rate. Relators who do prevail in such cases will get a higher relator's share, about 25% to 30%. It is conventionally thought that the government chooses legal matters it would prosecute because the government would only want to get involved in what it believes are winning cases.
History
Qui tam actions were first used in 13th century EnglandEngland
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
as a way to enforce the King's laws. They existed in the United States in colonial
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
times, and were embraced by the first U.S. Congress as a way to enforce the laws when the new federal government had virtually no law enforcement officers. The False Claims Act
False Claims Act
The False Claims Act is an American federal law that imposes liability on persons and companies who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government...
was passed in 1863 during the U.S. Civil War, but was substantially weakened in 1943 during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
while the government rushed to sign large military procurement contracts. It was strengthened again in 1986 after a period of military expansion at a time when there were many stories of defense contractor price gouging
Price gouging
Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies...
.
The practice fell into disrepute in England in the 19th century by which time it was principally used to enforce laws related to Christian Sunday observance. It was brought to an effective end by the Common Informers Act 1951
Common Informers Act 1951
The Common Informers Act 1951 is an Act of the United Kingdom Parliament that abolishes the principle of, and procedures concerning a common informer.-Background:...
but, in 2007, there were proposals to introduce legal provision on the U.S. model back to the United Kingdom.
Whistleblowers
'WhistleblowerWhistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
' can mean any person who reveals misconduct by his or her employer or another business or entity. The misconduct may be in the form of breaking the law, committing fraud, or corruption. That type of fraud can be a violation of the False Claims Act, or similar state and local laws. And a whistleblower who exposes fraud on the government can bring a qui tam lawsuit on behalf of the government, and can receive a share of the recovery as his or her reward.
In order for a whistleblower (also known as a "relator" in the context of the FCA) to bring a qui tam action that is based upon publicly-disclosed information, that person must legally qualify as an "original source." See Rockwell International Corp. v. United States
Rockwell International Corp. v. United States
Rockwell International Corp. v. United States, No. 05-1272, 549 U.S. 457 , was a case in which the Supreme Court of the United States that examined the "original source" exception to the "public-disclosure" bar of the False Claims Act...
.
Examples
- In September 2009, a former Pfizer Inc. sales representative, John Kopchinski, was awarded $51.5 million for his role as a whistleblower in the investigation of Pfizer's marketing practices of Bextra. Pfizer pled guilty to various civil and criminal charges and paid in total $2.3 billion to the government. The case netted the largest criminal fine ever imposed in the United States for any matter, $1.195 billion, and the largest civil fraud settlement against any pharmaceutical company. Qui tam "relators" are not eligible to receive shares of criminal fines. The $102 million that was distributed between the six whistleblowers was calculated from the fines paid in the civil settlement. Kopchinski's allegations were the basis for the majority of Pfizer's assessed civil fine, hence the size of his share relative to the other whistleblowers. Kopchinski and his attorneys filed the False Claims Act complaint in 2004 and alleged Pfizer systemically violated the federal Anti-Kickback statute, 42 U.S.C. § 1320a-7b(b) and the off-label marketing provision within the Federal Food, Drug, and Cosmetic ActFederal Food, Drug, and Cosmetic ActThe United States Federal Food, Drug, and Cosmetic Act , is a set of laws passed by Congress in 1938 giving authority to the U.S. Food and Drug Administration to oversee the safety of food, drugs, and cosmetics. A principal author of this law was Royal S. Copeland, a three-term U.S. Senator from...
("FDCA"), 21 U.S.C. §§301-97. The qui tam provisions of the False Claims Act were triggered by the reimbursement for Bextra through Federal and State government programs, including but not limited to MedicareMedicare (United States)Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
and MedicaidMedicaidMedicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
.
- A hospital group based in McAllen, Texas, has agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between 1999 and 2006, by paying illegal compensation to doctors in order to induce them to refer patients to hospitals within the group. McAllen Hospitals L.P., d/b/a/ South Texas Health System, is a subsidiary of Universal Health Services Inc., a company based in Pennsylvania that owns hospitals and other health care centers around the country.
False patent marking
It is an offense under (the "False Marking Statute") to falsely mark goods as "Patented." Before the enactment of the America Invents Act, any person could sue for breach, and the penalty of up to $500 was shared between the government and the person suing. Frequently, patentees fail to remove patent markings from their products following the expiration date of their patents and continue to mark goods sold after that date as patented. This behavior was largely overlooked until a court held that a separate penalty was due for each such article sold. This inspired a host of similar lawsuits.In 2011, the United States District Court for the Northern District of Ohio
United States District Court for the Northern District of Ohio
The U.S. District Court for the Northern District of Ohio is the federal trial court for the northern half of Ohio...
held that the False Marking Statute was unconstitutional. Judge Dan Aaron Polster determined that it violated the Take Care Clause of Article II
Article Two of the United States Constitution
Article Two of the United States Constitution creates the executive branch of the government, consisting of the President and other executive officers.-Clause 1: Executive power:...
of the Constitution, because it represented "a wholesale delegation of criminal law enforcement power to private entities with no control exercised by the Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
".
The America Invents Act made significant changes to false marking laws, which affected all pending and future false marking actions:
- Only the U.S. government can now sue for the civil penalty authorized in § 292.
- Private entities can still sue, but only for compensatory damages. These plaintiffs must prove actual competitive injury from the false marking.
- It is no longer a violation to mark a product with an expired patent, as long as that patent once covered the product.