Qui Tam Actions

Qui Tam Actions

Civil actions maintained by private persons on behalf of both themselves and the government to recover damages or to enforce penalties available under a statute prohibiting specified conduct. The term qui tam is short for the Latin qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means "who brings the action for the king as well as for himself."

Qui tam actions are unusual in that the plaintiffs do not allege injuries to themselves but rather claim injuries to the government. In a successful qui tam action, the plaintiff, who is known as a relator or informer, shares any monetary recovery with the sovereign (the government).

Qui tam actions are created solely by statute. Legislatures authorize qui tam actions to encourage private citizens to assist the government in enforcing its statutes. By authorizing a qui tam action, the legislature creates a dual enforcement scheme where both private citizens and the Executive Branch may redress violations of the statute creating the action. In some respects a qui tam action is similar to the more common citizens' suit, which allows a private citizen to sue to redress injuries to the public. For example, environmental statutes often authorize citizens' suits as a means for members of the public to redress injuries to the environment. In a citizens' suit, however, the plaintiff citizen alleges an injury to herself as a member of the public at large, whereas a plaintiff in a qui tam action alleges a specific injury to the government.

Although qui tam actions are relatively unknown, they have existed in England for hundreds of years and in the United States since the foundation of the government. And although qui tam actions were authorized by the very first Congress, the most important statute creating qui tam actions was the False Claims Act of 1863. During the Civil War, defense contractors frequently defrauded the Union government. In response, Congress enacted the False Claims Act, which sought to encourage private citizens who had information concerning corrupt defense contractors to come forward.

Under the original False Claims Act, a successful relator in a qui tam action was entitled to one-half of the damages and forfeitures recovered and collected from the defendant, while the other half went to the federal treasury. This procedure was frequently abused, however, as plaintiffs brought qui tam actions when the government had already instituted criminal investigations against defense contractors. Thus, private citizens profited from the government's efforts to stop Fraud by defense contractors. In response, Congress barred qui tam actions based on information already known to the government at the time the civil suit was filed, even if the government had taken no action on the information. Because of this restriction and the repeal of many qui tam statutes, the qui tam action was almost extinct until 1986.

In 1986 Congress revitalized qui tam actions under the False Claims Act in response to the widespread procurement abuses by defense contractors during President Ronald Reagan's defense buildup. The 1986 amendments to the False Claims Act (31 U.S.C.A. §§ 3729 et seq.) increased the financial incentives for bringing a qui tam action while easing the jurisdictional requirements for instituting a suit. Specifically the 1986 amendments permit relators to bring qui tam actions even if the government is aware of the information on which the action is based, unless the relator obtained the information from public disclosures by the government. As a result of the amendments, the number of companies sued in qui tam actions under the False Claims Act has greatly increased. In addition to defense contractors, Medicare and Medicaid providers have frequently been the target of qui tam actions. The False Claims Act is currently the only widely used statute authorizing qui tam actions.

The 1986 amendments to the False Claims Act have been challenged by defendants and other critics who assert that qui tam actions unconstitutionally delegate the executive branch's obligation to enforce statutes to unaccountable and self-interested citizens. In addition, defendants have argued that relators in qui tam actions lack legal standing to bring a lawsuit. The U.S. Constitution requires a plaintiff in a lawsuit to allege a distinct injury to himself; when a plaintiff fails to allege such an injury, he lacks standing to sue. Critics of qui tam actions point out that qui tam relators are alleging an injury to the government rather than themselves.

Despite these challenges, no court has held the qui tam provisions of the False Claims Act unconstitutional. In early 1997 the Supreme Court agreed to hear an appeal of a qui tam action under the False Claims Act but declined to review the Ninth Circuit's determination that the act's qui tam provisions are constitutional (Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 117 S. Ct. 1871, 138 L. Ed. 2d 135 [1997]). Defenders of qui tam actions point out that the individual members of the public are, at least indirectly, hurt by fraud against the government because the government is financially supported by the public. The courts have also repeatedly recognized Congress's authority to legislate the means for implementing its policy objectives. By authorizing qui tam actions, Congress has determined that allowing citizens to sue on behalf of the government is a valid and effective means for enforcing statutes. Thus, the qui tam action remains an important weapon in redressing fraud against the government. In 1996 qui tam actions led to nearly $1.5 billion in recoveries.

Further readings

Boese, John T. 2000. Civil False Claims and Qui Tam Actions. 2d ed. New York: Aspen.

Cahoy, James. 1996. "U.S. Supreme Court to Review Scope of Qui Tam Lawsuits Under Federal False Claims Act." West's Legal News (October 17).

McGreal, Paul E., and DeeDee Baba. 2001. "Applying Coase to Qui Tam Actions Against the States." Notre Dame Law Review 77 (November).

Shane, Peter M. 2000. "Returning Separation-of-Powers Analysis to its Normative Roots: The Constitutionality of Qui Tam Actions and Other Private Suits to Enforce Civil Fines." Environmental Law Reporter 30 (December).

West, Robin Page. 2001. Advising the Qui Tam Whistleblower: From Identifying a Case to Filing Under the False Claims Act. Chicago: General Practice, Solo, and Small Firm Section, Tort and Insurance Practice Section, ABA.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Relators arguably serve as "officers" or "inferior officers" of the United States when they file qui tam actions and prosecute them on behalf of the federal government.
"As a result, the majority effectively limits qui tam actions to whistleblowers in 'white collar' position with access to financial and other business records."
The settlement arises, in part, from allegations in three distinct qui tam actions - two filed in the United States District Court for the Eastern District of New York, and one filed initially in the United States District Court for the Eastern District of Michigan and then transferred to the United States District Court for the Eastern District of New York.
The factors include curbing meritless qui tam cases, preventing parasitic or opportunistic qui tam actions, avoiding interference with federal agency policies and programs, controlling litigation brought on behalf of the United States, safeguarding classified information and national security interests, preserving government resources, and addressing egregious procedural errors.<br />Granston's memo goes on to analyze the current split in the federal circuits regarding the deference that courts should give to DOJ motions for dismissal pursuant to 3730(C)(2)(A).
(114) The court noted that "qui tam actions exist only to vindicate the public interest" (115) and that courts should not enforce a release that was entered into before the filing of a complaint and without the knowledge or consent of the United States.
(12) Qui tam is Latin for "who as well" and short for the Latin phrase "qui tam pro domino rege quam pro se ipso in hac parte sequitur" which means, "[w]ho as well for the king as for himself sues in this matter." (13) Qui tam actions existed before the FCA codified the provision.
Though most states have False Claims Act provisions, many of these states explicitly bar qui tam actions related to most state taxes.
Amici maintain that while qui tam actions can serve an important purpose, they have long been subject to abuse.
Qui tam actions are often brought by disgruntled current or former employees who are aware of the company's business practices in performing its government contracts.
555 (1992) (expounding Article III standing requirements); Evan Caminker, Comment, The Constitutionality of Qui Tam Actions, 99 Yale L.J.
The False Claims Act can be enforced via litigation brought by the federal government or through civil qui tam actions that are filed by private parties, called relators, "in the name of the government."