Qui tam relators, or whistleblowers who file claims under the False Claim Act alleging fraud against the federal government, are highly important members of society, those whose daring actions help uncover often fraudulent or illegal activity perpetrated by individuals or organizations. And, in return for their disclosure of the fraudulent activity, they are rewarded by the federal government with monetary compensation, depending on any amount reached in a settlement with the defendant.
Of course, in order to file a successful qui tam claim, the relator must qualify based on specific guidelines, one of which, until recently, may have acted as a significant bar to many potential whistleblowers speaking out. Now, however, with a ruling from the Ninth Circuit Court of Appeals, qui tam relators will find it easier to file a claim and help quell any fraud perpetrated against the government.
Basis of a Qui Tam Lawsuit
In order to file a qui tam lawsuit, the relator, an individual who is filing the lawsuit on behalf of the federal government as the plaintiff, must have evidence of fraudulent claims made against the federal government by a third party. The relator must do so before any other party files a claim utilizing similar evidence; if this happens, the potential relator may lose his or her right to file.
In addition to this, pursuant to the 1992 case of Wang ex rel. United States v. FMC, if the information had already been publicly aired, the relator must have specifically played a part in the disclosure of the fraud to the public. Of course, this additional requirement barred potential whistleblowers from filing suit based on information they retained if they had taken no action to expose the fraud.
A recent decision set forth by the Ninth Circuit Court of Appeals, however, removes this extra requirement. In its decision, the court proposed that a two-factor guideline should be used to determine whether an individual may file a claim under the False Claims Act if the fraud is already public knowledge; specifically, the relator must, "before filing the action...voluntarily inform the government of the facts" on which the claim is based, and he or she must also "have direct and independent knowledge of the allegations underlying the complaint." This two-pronged approach leaves out entirely any mention of public disclosure required by the relator.
Effects on Future Whistleblower Lawsuits
What, if any, effect will this have on future whistleblower lawsuits brought under the False Claims Act? Naturally, in order to successfully file, the qui tam relator must still have information regarding the alleged fraud, and must bring it to the attention of the government. Now, however, individuals are free to file such claims even in situations in which they took no part in the exposure of the fraud. Hopefully, as a result, this will allow for a greater number of whistleblowers to step forward and speak in favor of the government to eliminate the alleged commitment of fraud.
Source:
Circuit Junks Qui Tam Precedent After 23 Years, by Ross Todd, published by The Recorder on July 7, 2015.
