An Introduction to Whistleblower/qui Tam Claims

• Citation: Vol. 20 No. 2
• Publication year: 2014
• Author: By Shauna Itri

An Introduction to Whistleblower/Qui Tam Claims

By Shauna Itri

Shauna Itri represents whistleblowers in cases involving fraud against the government and with claims brought under the SEC and IRS whistleblower reward programs. Ms. Itri has successfully represented whistleblowers in qui tam or False Claims Act law suits in state and federal courts throughout the United States, including series of cases against large drug companies for fraudulent Medicare and Medicaid drug pricing. This litigation has returned well over $1 billion to state and federal governments.

A whistleblower or qui tam action can provide financial rewards to individuals who suffer retaliation for providing information that a company or an individual has defrauded the government. The primary statutes are the federal and state False Claims Acts ("FCAs"), including California False Claims Act, Ca. Gov't Code §§ 12650-12656. The FCAs are not specific to any particular type of fraud, but there are federal statutes that apply specifically to tax fraud and securities fraud. This Article briefly summarizes the statutes and types of fraud that can be pursued under these laws.

I. FEDERAL AND STATE FALSE CLAIMS ACTS

The federal False Claims Act is codified at 31 U.S.C. 3729, et seq. As of 2013, the District of Columbia and 29 states have passed similar state-specific FCAs as well. The state and federal FCAs place power within the hands of private citizens, allowing them to become "private attorney generals" and, with the assistance of an attorney usually paid on a contingent fee basis, file a lawsuit if they have knowledge of fraud or dishonesty in certain transactions with the government. The citizens who bring a case on behalf of the government ("qui tam lawsuits"), are called whistleblowers. Whistleblowers (employees, former employees, or competitors) are provided with a financial reward if the suit is successful. The reward to the whistleblower is normally between 15% and 25% of the amount recovered. 31 U.S.C. § 3730(d). Any persons or entities with evidence of fraud against federal programs or contracts may file a qui tam lawsuit. The following actions are considered violations under the FCAs:

• Knowingly presenting (or causing to be presented) to the federal government a false or fraudulent claim for payment. 31 U.S.C. § 3729(1)(A);
• Knowingly using (or causing to be used) a false record or statement to get a claim paid by the federal government; 31 U.S.C. § 3729(1)(B);
• Conspiring with others to get a false or fraudulent claim paid by the federal government; 31 U.S.C. § 3729(1)(C); and
• Knowingly using (or causing to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the...