Should Employers Avoid Qui Tam Plaintiffs? | DCR Workforce Blog

Should Employers Avoid Qui Tam Plaintiffs?

In a 1983 survey of 5000 federal government employees – 69% revealed that they had knowledge of illegal acts, which they had never reported mainly because they believed that such an effort would result in no action/punishment whatsoever. As a direct outcome of this, the 1986 False Claims Act amendments were enacted to encourage government employees to voluntarily disclose fraudulent actions by giving them ‘an opportunity to speak up and take action without fear and with some assurance that their disclosures will lead to results’.

Many frauds and misdemeanors leading to the wastage of taxpayers’ money could occur, as detailed below:

  • Charging for services not provided as specified in the contract,
  • Negotiate inflated prices when bidding for a contract,
  • Benefits are claimed using false certificates,
  • Services are provided – but not at the quality claimed or required by the contract,

Such frauds are the result of collusion among the different players, but what if one of them refused to join in and decided to put a stop to the fraud, by reporting it? The stipulation that only persons who are the original source of information can file qui tam suits under False Claims Act makes it almost predominantly the task of an existing employee – to act in their individual capacity, risking retaliation as a whistleblower – to voluntarily appraise the government of the false claims and await action for some while before filing a suit on their own.

Why distrust qui tam relators?:

There is a concern expressed even within the government circles that the False Claims Act is encouraging individuals to rush to the courthouse as soon as they have any information about a criminal or civil investigation involving a loss to the Treasury. It is a difficult matter to distinguish between individuals with the spirit of public service and persons motivated by the pot at the end of the rainbow!

In most cases, the person bringing the qui tam suit can be suspected of or charged with any of the following:

  • For withholding information about the fraud while in government employment and disclosing it afterwards t cash in on their access to insider information.
  • For actually initiating a fraudulent scheme and then reporting it for more personal gain.
  • For an attempt to profit from their access to insider information.
  • When there is a conflict of interest to be found with a person’s current or past US employment.

But the law provides that any or all of such fraudulent acts in filing a qui tam suit can be dealt with by reducing or denying any share in the final damages recovered and also by subjecting them to fines up to $10000 and/or imprisonment for 5 years.

The Challenge:

The qui tam action brought by the whistleblower has to prove the accusation of fraudulent acts – beyond the possibility of a doubt – by producing documentary evidence collected. This may have been collected during the course of their employment without attracting liability and inviting any adverse action for stealing classified documentation or confidential information. The qui tam relators may also need to prove that they were in no way involved in the perpetration of the fraud. They need to avoid any possible charges of tardiness in bringing the suit while the quantum of amount defrauded increases significantly – so as to derive a higher pay out of final damages. They also have to face any retaliatory actions from their employer and withstand other pressures and also consider the prohibitive costs of litigation in our country.

In 2010 alone, the health care dollars recovered from Medicaid fraudsters amounted to 1.84 billion and interesting, a clear correlation has been established in higher recoveries (per employee – not by the size of the state’s budget) from states where the False Claims Act was invoked. By invoking the Act, a whistleblower initiates a mechanism which enforces investigative efforts from the government. All whistleblower may not be disgruntled employees suffering from a persecution syndrome. Some of them accomplish, through a spirit of public service, what a posse of law-enforcing public servants fails to!

Need to take a call:

While discussing the issue of background checks recently, we have mentioned that the background check helps to verify the history of litigations in a person’s background and that we could learn about any qui tam suits filed by that person. Then it is up to the employer to make no assumptions and make an informed decision on whether they are people with the strength of character and moral fiber who can be entrusted with tasks of high importance and work at the top level of management in industry as well as government or, they are the type to fish in troubled waters.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.