Rewards in Qui Tam Suits

A relator is another name used to describe the whistleblower in a False Claims case. Once the case is filed, the person is referred to as the plaintiff-relator. It means that the plaintiff is not suing by themself, but is relating facts and talking about facts for which the government can recover and acting on behalf of the government in the suit. If you are a relator and have questions regarding rewards in Qui Tam Suits, reach out to an experienced lawyer today.

Parties of Interests in Qui Tam Suits

The real party in interest in these cases is the government. It is the government that has suffered damages under a False Claims Act case. It is important for people to remember when they are thinking about filing a False Claims Act case that a False Claims Act case has to involve some level of injury to the government.

If a person believes that it is the government that is doing something that it should not be doing, that is not a False Claims Act case. It has to be the government is harmed. That is what generates liability under the Act, which is why it is called the real party in interest. That has some other implications since many jurisdictions will not allow individuals to act on their own without counsel in handling False Claims Act allegations for example, because it is not their own claim. It is a claim on behalf of the government. That might be different with respect to retaliation claims committed directly against the whistleblower.

Recovering Reward

Liability at trial for a False Claims Act case is three-time damages plus civil fines per violation of the act. Civil fines now have been increased because of inflation. They were statutorily much lower than this, so if a person looks at it the act itself they will not see it, but they are now over $20,000 maximum per violation. This is the maximum liability. If the case is settled, it tends to settle for less than those amounts, but that is the exposure to a defendant who loses at trial for violating the False Claims Act. The whistleblower is entitled to a share of that. Since the government is the party that is been harmed, they are entitled to the majority. The amount that the relator can obtain is from 15 to 25% of a case if the government intervenes on the case and from 25 to 30% if the government does not intervene under the federal law. Some states have different percentage of rewards in Qui Tam Suits than the federal law.

The government wants to be sure that the claims they are pursuing are strong, and that the defendant cannot successfully dispute the claims against it. The relator, on the other hand, when initially filing the case, may have a more extensive view of the matter.

Negotiating the Claim

There are many moving parts to a False Claims Act settlement because, in addition to being the government’s claims of fraud, the claims the government settles may or may not include all the claims the whistleblower filed. Also, a claim by the relator for retaliation is owned by the relator, not the government, and that has to be negotiated by the relator’s counsel separately from what the government’s counsel is negotiating. The government is in the driver’s seat in terms of negotiation for a claim against a defendant for fraud against the government. If it is attempting to settle the claim, they negotiate with the defendant and, just as with any other negotiation, the government says it thinks the claim is worth a certain amount and the defendant may say it is worth nothing. They then fight about the money until an agreement is reached.

There is a provision that allows the False Claims Act relator to protest to the court if they do not agree the government settlement is adequate, but that is not likely to carry much weight with the judge who reviews it.

Whistleblower Incentives

The government provides real financial rewards to whistleblowers who might otherwise not be able to go forward. It is not easy to be a whistleblower, and whistleblowers should be compensated for their willingness to come forward and tell the truth about difficult facts that defraud the government.

When the law was first enacted in the 1860s to fight government contracting fraud against the Union army, the legislative history shows that the Senate was much more willing to share the proceeds with whistleblowers than under the current law. They were willing to provide half of the amount collected to the whistleblower. Also, it was specifically discussed that they needed a very high amount to attract the people to come forward against co-conspirators.

The law is still supposed to encourage people to come forward and to do so whistleblowers need to have legitimate, real and concrete incentives to offset the many risks and the many realities of the difficulty of being a whistleblower. It is worth remembering the whistleblower reward only happens upon success. The incentive is only earned when the whistleblower obtains a result for the government. Therefore, that incentive must be strong and clear to have the desired effect of encouraging whistleblowers.

Common Causes Leading to Rewards

Health care and defense contracting are the most common areas of defrauding the government. Currently, health care has become the leading area by far for whistleblower reward law. The government spends hundreds of billions of dollars on health care a year between Medicare, Medicaid and TRICARE, and its own employees’ healthcare.

Defense contracting is common due to the size of the contracts and amounts of money involved. There are also other government contracting issues such as USAID projects, grant funding for the NIH, and/or many agencies that provide grants, all contribute to potentially successful cases under the law.

For more information about rewards in Qui Tam Suits, contact a dedicated attorney today.