Qui Tam Litigation: How It Works
James G. Rosenberg · Defense Counsel Journal · 1998
Writing in the February newsletter of the Business Litigation Committee, James G. Rosenberg of Philadelphia's Saul, Ewing, Remick & Saul discusses qui tam suits under the federal False Claims Act. The qui tam provisions of the Federal False Claims Act provide an opportunity for a private person, called the to initiate litigation on behalf of himself and the United States government. The law, as amended in 1986, enables private parties to file cases in which it believes fraud on the government has been committed. Filed under seal The action is filed under seal and the government is provided with substantially all material evidence and information the person possesses. 31 U.S.C. 3730(b)(2). The defendant is not initially served with the complaint. The government, after reviewing the information and meeting with counsel, has 60 days in which to decide whether or not to intervene in the case. In practice, that time period is extended numerous times, so that the government may evaluate the case in its own way. If interested, the government may open its own preliminary investigation and use its wide range of investigatory tools to examine the case. This can involve subpoenaing documents, assigning federal agents to the case and interviewing witnesses, including the relator, who, with counsel, may be involved significantly or not at all at this stage. This will depend in large part on the assistant U.S. attorney and his or her interest in involving outside counsel. The government may ask the relator during this period to assist by providing expert assistance, such as a forensic accountant. The expert may work with government agents and/or statisticians in analyzing data collected by the government. All of this can all be done without the government ever disclosing the existence of the qui tam claim. Government intervention infrequent Of 2,013 cases filed since 1986 until a recent date, the government intervened in 267, declined to prosecute in 1,009, and was investigating the remainder. The government's recovery in 1997 totaled $625 million. In 1986, $2 million of taxpayer losses were recovered. Since 1986, the government has recovered $1.8 billion through qui tam litigation. In fiscal 1987, 33 suits were filed; in 1997, 278 cases were filed. While health care and defense fraud constitute most cases, there have been an increasing number of cases brought in areas including construction and housing, scientific research, environmental compliance, agricultural subsidiaries, telecommunications and banking. The relator must be the original source of the alleged fraud. It must not be already in the public domain. Original source is defined by the statute as an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the government before filing an action under this section which is based on the information. 31 U.S.C. 3730(c)(4)(B). …