Laws that protect, and in some cases reward, people who report fraud against the government or other violations, including private qui tam suits under the False Claims Act.
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The False Claims Act makes anyone who knowingly submits a false claim for payment to the federal government, or knowingly causes one to be submitted, liable for three times the government's damages plus a civil penalty for each claim. Common examples are billing Medicare or Medicaid for services not provided, overcharging on a government contract, and misrepresenting compliance to obtain a grant. The Act's distinctive feature is the qui tam action: a private person, called the relator, may file suit on the government's behalf.
A qui tam complaint is filed under seal and served on the government, not the defendant, so the government can investigate before anyone else learns of it. The government then decides whether to take over the case. If the case succeeds, the relator receives a share of what is recovered: generally between 15 and 25 percent when the government intervenes, and between 25 and 30 percent when the relator goes forward alone. Two rules can defeat a claim. Only the first relator to file on a given fraud may proceed. And a claim based on information already publicly disclosed is barred unless the relator is an original source of it.
The Act also protects employees, contractors and agents who are fired, demoted, threatened or harassed for trying to stop a violation, with remedies that include reinstatement, double back pay and attorney's fees. Other whistleblower laws work differently. The SEC and the CFTC pay awards for original information about securities or commodities violations that leads to large enough sanctions. Sarbanes-Oxley protects employees of public companies who report fraud, through a complaint filed with OSHA. Many states have their own false claims acts covering fraud on state programs.
Talk to a lawyer before you report outside your company or take any documents. A qui tam case has to be filed under seal in a particular form, the first-to-file rule rewards speed, and taking records the wrong way can create problems of its own. Most qui tam lawyers work on a contingency fee drawn from the relator's share.
Worried about the cost? A lawyer can be hired for one part of a case only (limited-scope representation), may be paid from what a claim recovers (contingency fee), or may be free through a pro bono program or legal aid; a court can also waive its own filing fees.
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