The History of Qui Tam Actions
Qui tam actions were first used in 13th-century England as a way to enforce the king’s laws and enable private citizens to gain access to royal courts. These measures were later embraced by the first United States Congress as a means for ensuring observance of the law when the new federal government had virtually no law enforcement officers.
The first qui tam case in the United States was prosecuted by the Continental Congress in 1778. An important provision of this law was the protection it offered whistleblowers against retaliation. An evolution of the whistleblower law, the Civil False Claims Act, was passed in 1863 during the U.S. Civil War at the urging of Abraham Lincoln. During the war, unscrupulous contractors sold the Union Army decrepit horses, mules in ill health, faulty rifles and ammunition, and rancid rations and provisions. The False Claims Act, passed by Congress on March 2, 1863, was an effort by the government to respond to this procurement fraud. Importantly, the law was designed with a “qui tam” provision to entice “relators,” or persons with knowledge of fraud, to come forward by offering them a share of the money recovered.
Even though the law was enacted to combat military contractor fraud, it was applicable to all government contractors, federal programs, and any other transaction involving federal monies. The law’s mechanism permitted private citizens with knowledge of fraud to sue on behalf of the government.
Between 1863 and 1986, few people took advantage of the law, primarily because of obstacles whistleblowers had to overcome in order to be successful and because of judicial rulings making it difficult to enforce the law. The whistleblower was required to bear all the costs of the lawsuit, and the government could take over the suit at any time. However, if successful, the 1863 act allowed the whistleblower to recover up to 50 percent of any amount recovered.
The False Claims Act was weakened during World War II while the government rushed to sign large military procurement contracts. One amendment provided that if the government had prior knowledge of the allegations, the relator had no jurisdiction over the lawsuit, even if the relator brought forward independent and direct knowledge. Another amendment reduced the maximum award to the relator from 50 percent to 25 percent if the government did not take over the case, and a maximum of 10 percent if it did.
In 1986, again as a result of concern over rampant procurement fraud during a period of military expansion, inadequate efforts of regular law enforcement to control the fraud, and the obstacles making it difficult for whistleblowers to bring qui tam actions, Congress passed amendments to the act increasing the whistleblower’s share of the recovery to a maximum of 30 percent, expanding the powers of relators in bringing qui tam lawsuits and augmenting the damages and penalties that could be imposed on defendants. Important to relators, the 1986 amendment provides that even if the government joins the lawsuit and has “primary responsibility for prosecuting the action,” the relator “shall have the right to continue as a party to the action.” Also, prior government knowledge of the allegations does not automatically prevent a relator from filing a qui tam action.
As a result of the 1986 amendments, qui tam actions have increased dramatically, becoming the most effective and successful means of combating procurement and program fraud and helping recover more than $28 billion in taxpayer money.
Qui tam actions under the False Claims Act are complex and confusing. An experience attorney can assist you if you believe you have whistleblower information.