To help the government recover money from companies and individuals that have allegedly made false statements in requests for payments made to government agencies, Congress and state legislatures have passed laws that allow private citizens to bring lawsuits against companies and individuals on behalf of the federal government. These lawsuits, known as qui tam actions, can result in substantial civil liability. Companies and individuals that learn they are the defendants to qui tam lawsuits should promptly seek qualified and experienced defense lawyers to help them defend against the allegations. Qui tam lawsuits can seriously threaten businesses and could result in forced closures.

What is a qui tam lawsuit?

Under the federal False Claims Act and analogous state laws, private individuals known as relators who allegedly have inside knowledge about fraud schemes perpetrated against the government have the right to file civil lawsuits on the government’s behalf against the companies or individuals that have allegedly made false claims to defraud the government under 31 U.S.C. § 3729. If the lawsuit is successful and results in the government recovering money, the relator who filed the lawsuit stands to collect a reward ranging from 10% to 30% of the total recovery amount, depending on the help he or she provides. Relators who file qui tam lawsuits are commonly known as whistleblowers. These types of actions pose significant threats to healthcare providers that contract with Medicare and Medicaid to provide services.

How a qui tam lawsuit works

A qui tam lawsuit is initiated when the relator files a civil complaint in federal court on the government’s behalf. One or several defendants can be named in the lawsuit, and they can include individuals and companies. Unlike other types of civil complaints, qui tam complaints are filed under seal and are not a matter of public record. This allows the relators to remain anonymous. Once the complaint is filed, a copy is served to the U.S. Attorney’s Office. Only the U.S. Attorney, certain federal administrators, and the judge handling the claim will have knowledge about the action. The defendant or defendants will not receive copies of the complaint and will not initially know that it has been filed.
The relator must file a disclosure statement with the complaint in which he or she must include a factual basis for the complaint. The disclosure statement is meant to provide a guide for the government to use to initiate an investigation. Since the government will evaluate the disclosure statement to determine the strength of the claim before it expends resources, disclosure statements are frequently detailed and thorough.
The government can decide to intervene in the case and investigate the claim or decline to do so. If the government believes that the factual allegations made in the disclosure statement are strong, it might choose to investigate. Otherwise, the investigation will be conducted by a qui tam plaintiff’s attorney.
If the government chooses to intervene, companies and individuals named as defendants will face the weight of the federal government’s vast resources when the government investigates what happened. The government has the resources of the FBI, DEA, and other federal agencies at its disposal and can use all of the available resources to investigate qui tam claims to gather evidence.
The initial sealing period generally lasts 60 days. However, the government can request an extension, and those requests are almost always granted. This means that companies and individuals that are the subject of qui tam actions frequently will not learn that the lawsuit has been filed for months or years. Defendants normally learn that a qui tam lawsuit has been filed against them through investigatory demands made by federal agencies, limited disclosures from the court for purposes of negotiating settlements, or when they are served with the lawsuit by the relator’s attorney in situations in which the government decides not to intervene.

Civil vs. criminal liability

While qui tam lawsuits are civil lawsuits seeking civil penalties, businesses and individuals accused of engaging in healthcare fraud against the government might also face criminal liability. The government can choose to either pursue monetary penalties in a civil action or a criminal indictment in a criminal case. It might not immediately be apparent whether the government’s investigation is civil or criminal. Determining what the government is pursuing is critical for determining the most effective defense strategies to assert in response.
Once the government investigates the claim, the U.S. Attorney’s Office will decide whether or not to intervene. If the government chooses to intervene, it will step in to the case and take it over from the relator. The U.S. Attorney’s Office will then be in charge of prosecuting the case. If the government intervenes, the complaint will be amended to include additional information it has discovered during the investigation and might also include charges under various federal laws. If the government chooses not to intervene, it might either allow the relator to proceed with the case or ask the court to dismiss it.
In many cases, qui tam lawsuits are settled before the government formally intervenes. After a defendant learns that a qui tam action has been filed, the defendant will normally engage in discussions with the government about settling the case. Resolving a case outside of court is often preferable to waiting for the case to go through the court process and a potential trial.
The civil and criminal penalties for engaging in health care fraud are severe. A business or individual that is found to have filed false claims with the government for Medicare or Medicaid reimbursement can face civil penalties of up to three times the amount of each filed claim plus an additional $11,000. Since most cases involve numerous false claims, the fines and penalties can quickly add up. Businesses can also lose their ability to contract with Medicare or Medicaid, and individuals can lose their medical licenses and face prison time. People and businesses that believe a qui tam action has been filed against them should talk to experienced qui tam and health care fraud defense attorneys as soon as possible. Contact us today to request a confidential consultation.