Fraud against the government is rampant.
In fact, some estimates have suggested that approximately 10% of the entire annual United States budget is lost to companies or individuals who are defrauding the government.
The United States Federal budget for 2010 was $3.456 billion, meaning around $345.6 million was wrongfully wasted on fraud.
The entities defrauding the government do so in a variety of ways: Medicare or Medicaid fraud whereby they bill the government for services which they never provided or overbill for services that were provided; SEC Trading; Tax Fraud; TARP Fraud; Military/Defense contract fraud; Pharmaceutical Manufacturing; contract fraud involving any number of large government spending programs; or other types public benefit fraud.
To combat fraud committed against the government, Congress passed the False Claims Act. The False Claims Act, a federal statute, may be found at 31 U.S.C. §§ 3729–3733. The act is also referred to as the "Lincoln Law", because Lincoln was responsible for the enactment of the 1863 act, which allows individuals who are not associated with the federal government to institute lawsuits against those committing fraud against the government. The person instituting the action is known as the “Relator” or the “Whistleblower.”
A writ of qui tam is a legal action that allows a private individual who assists in the prosecution of a wrongdoer to receive part of any penalty or recovery collected. Qui Tam is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, or, "he who sues for the king as well for himself."
The reason for the act is to provide those who have inside information regarding instances of fraud perpetrated against the government to come forward and report the wrongdoer in exchange for the opportunity to receive a portion of any recovery. The Relator need not be personally harmed by the fraud but rather is recognized as having legal standing to sue by way of the fraud perpetrated upon the government.
The Relator must be an "original source" for the information. In other words, the information must not be known by or available to the public.
Almost any situation in which the government has been defrauded or cheated could give rise to an action under the False Claims Act. The most common situations that could form the basis of a Qui Tam action include:
- Submitting a false or fraudulent record, bill or statement to the government in order to fraudulently obtain money;
- Conspiring with a third party to submit or present have a false or fraudulent claim to the government;
- Withholding property of the government with the intent to defraud or conceal the property from the government;
- Fraudulently buying property of the government from someone not authorized to sell that property; and
- Making a false statement to fraudulently avoid paying money to the government or to avoid delivering property to the government.
An individual who knows of some type of fraud that has been perpetrated against the government must retain a lawyer and file a claim -- false claims act suits cannot be brought without legal assistance by statute. The initial stage of the case is filed under seal without it being made known to the public in a United States District Court against the company or person alleged to have committed the fraud against the government.
Once the case is filed, a United States Attorney investigates the lawsuit and underlying allegations of fraud for an initial period of 60 days.
If after investigating the claim the U.S. Attorney believes the allegations of fraud are meritorious, the United States Government takes over the case and either enters into a settlement or continues the lawsuit against the wrongdoer. The Relator would then be entitled to a portion of the recovery despite the fact that the government has taken over the case.
The amount that the Relator would be entitled to receive would be approximately 15 percent to 25 percent of the decision. It is estimated that the government intervenes and takes over a case approximately 30 percent of the time.
If the government decides not to take over the case by intervening, the Relator, through the lawyers he or she has retained, may settle or pursue the lawsuit without the assistance of the U.S. Attorney’s office.
If the Relator’s lawyers are successful in establishing fraud against the government, in addition to the monies recovered through the fraud, the law also requires the defendant to pay substantial penalties, which can be assessed at up to three times the amount that the wrongdoer fraudulently stole from the government. Thereafter the Relator can recover up to 30 percent of the lawsuit proceeds.
Richard P. Hastings is a Connecticut personal injury lawyer at Hastings, Cohan & Walsh, LLP, with offices throughout the state. A graduate of Fordham Law School, he has been named a Connecticut Super Lawyer and is the author of the books: "The Crash Course on Child Injury Claims"; "The Crash Course on Personal Injury Claims in Connecticut" and "The Crash Course on Motorcycle Accidents." He can be reached at 1(888)CTLAW-00 or by visiting www.hcwlaw.com.