False Claims Act (Qui tam Law) under Review, Congress to Expand Whistleblower Incentives in Fed Fraud Lawsuits

To ensure stimulus package moneys are properly used, the False Claims Act may see its greatest expansion since the False Claims Act Amendments of 1986.

The False Claims Act, also known as Lincoln’s Law for the laws established to reduce the rampant fraudulent billing during the Civil War, was created to punish misuse of government funds and recover lost government moneys by establishing a financial incentive for whistleblowers. These whistleblowers, known as relators, receive special protections under the False Claims Act and are allowed up to 30% of government recoveries under what is known as qui tam provisions.

Qui tam is short for a Latin legal phrase meaning “the person who sues for the king as well as him or herself” (the king being the government agency, such as Medicare or emergency aid moneys, defrauded). Having a qui tam provision in the False Claims Act provides a carrot incentive to the whistleblower. The fines facing a company who misuses government funds are the stick.

Companies found guilty of defrauding the government must pay three times the amount misused, plus a $5,500 – $11K fine for each violation. Of this recovered amount, the qui tam whistleblower receives 15% – 25% (or up to 30% if working under special conditions with a qui tam attorney).

Since the increase to the qui tam whistleblower provision in the False Claims Act Amendment of 1986, the government has received $22 billion in awards from companies defrauding federal programs or other federal moneys. In over 8 out of 10 cases, these False Claims lawsuits were initiated by whistleblowers.

In recent decades, court rulings have limited the False Claims Act and qui tam whistleblower actions. It is likely Congress in the coming sessions will remove the “presentment” requirement allowing government contractors to blow the whistle on a subcontractors and receive a False Claims lawsuit’s qui tam benefits. Presently, subcontractors are protected from False Claims lawsuits when they misuse government funds received from a contractor. Removing presentment will allow the qui tam incentives of the False Claims Act to apply to federal money misused no matter who knowingly misuses it. Also, and long pushed for by lawyers representing TN whistleblowers and federal False Claims whistleblower attorneys and long overdue, amendments may be introduced to allow government employees to file a False Claims Act after one year from when they have reported a misuse of government funds if no action subsequent action against the fraud is taken.

Last Thursday, and after seven years, an engineer formerly employed by Northrop Grumman Corp. was rewarded for his whistleblowing. In what may be the largest Pentagon whistleblower lawsuit to date, weapons manufacturer TRW (acquired by Northrop Grumman) allegedly sold the government electronics parts for a spy satellite, parts TRW knew would fail. By doing the right thing, this electrical engineer will receive $48.7 million of the $325 million Northrop Grumman has agreed to pay the government.

If you believe your employer has been misappropriating Tennessee government or federal government funds and would like to know more about False Claims lawsuits, contact Higgins Firm to speak with me or another qui tam attorney. Various federal and TN privacy and employment protections apply to qui tam whistleblowers, and all information provided remains confidential.