A whistleblower is private individual who has specific knowledge of fraud being committed against a federal, state or local government. The whistleblower can sue those wrongdoers on behalf of the government in what is referred to as a qui tam lawsuit. ‘Qui Tam’ is a latin phrase meaning “who sues on behalf of the King, as well as for himself”. Virtually every state and the federal government enacted statutes permitting private citizens to sue on behalf of a defrauded government and reward them with 15%-30% of the recovered money.
The federal government enacted the False Claims Act, prohibiting fraud involving government funded contracts or programs, presenting a false claim for payment of government assistance, creating a false record to get a claim paid or approved by the government, creating a false record or statement to avoid an obligation to pay the government. Under this Act, private citizens can sue wrongdoers for fraud including Medicare and Medicaid fraud, defense contractor fraud, and fraud in the financial industry. The New York False Claims Act required defendants to pay up to three times the harm to the State.
In one recent case, the federal government accused New York City of overbilling Medicaid by tens of millions of dollars by approving over-priced 24-hour home care for thousands of patients. The fraud was brought to the federal government’s attention by Dr. Gabriel Feldman, who worked in a private agency under contract with the City that reviews care given to Medicaid claimants. Dr. Feldman discovered that the City was spending $150,000 per year for home health aides that can be purchased elsewhere for $75,000. The City settled the case for $70,000,000, of which Dr. Feldman received $14,700,000. In another qui tam case brought against Hewlett Packard Co. and Agilent Technologies Inc. it was alleged that the companies knowingly sold defective monitoring equipment to federal agencies. This case settled for $7,000,000. Qui tam cases were brought against healthcare providers who bill Medicare and Medicaid for medical devices that haven’t been approved by the FDA.
The amount of the whistleblower’s reward depends on many factors, including the quality of the case presented to the Justice Department and the work of the whistleblower’s attorney to help the case succeed. The whistleblower’s attorney will work with the government to investigate the fraud. If the government decides to intervene and file suit, the whistleblower is entitled to 15% to 25% of the recovery. If the government does not intervene in the case and it is pursued by the whistleblower’s team, the whistleblower reward is between 25% and 30% of the recovery. The whistleblower should provide the government with detailed information about the fraud. The whistleblower must investigate, testify, and file or assist in the lawsuit.
The qui tam lawsuit is filed “under seal”, meaning it is kept secret from everyone except the government who was defrauded. Even the person or entity being accused of the fraud is not told about the case. It also prohibits retaliation by the whistleblower’s employers for filing a claim. Whistleblowing is a protected activity and lawsuits can be brought against employers who retaliate, through termination, demotion, suspension, or harassment against the whistleblower. Such cases must be filed within 3 years of the retaliation. The statute of limitations for filing a qui tam lawsuit is 10 years from the date on which the violation was committed.