A contractor who allegedly attempts to defraud the government by understating the government’s obligation, over-representing the amount for a finished product or billing the government falsely may be subject to civil or criminal penalties under the False Claims Act. There are two ways in which enforcement of the False Claims Act can take place. One is for the Justice Department to enforce it, but with a qui tam action, a private individual may also do so.
“Qui tam” is a Latin phrase meaning “popular action.” A private individual who is aware of an alleged attempt to defraud the government can file a qui tam action under the False Claims Act. The legal term for an individual who takes such action is a relator.
A private party who files under the False Claims Act can receive a portion of the award if the government chooses to settle or takes the case to court and wins. If the relator had any involvement in the activities deemed to be improper, the court may reduce his or her award. The private party’s portion can amount to anywhere from 15 to 25% of the government’s award.
Once the relator files the lawsuit, the Justice Department has the right to decide whether to intervene. In some cases, it chooses not to do so. However, a lack of government intervention does not mean the end of the case. The private party who filed suit initially has the right to continue with it. If successful, the relator could receive a portion of the government’s award up to 30%.
The District Court is the first stop for someone wishing to file a qui tam lawsuit. Initially, only the government and the relator know about the suit because filing takes place under seal.
The local District Attorney will then work with the Justice Department, which must decide whether to intervene in the case. Initially, the Justice Department has 60 days to conduct an investigation and make its decision. However, it has the option to request an extension, which it usually exercises.
In a qui tam action under the False Claims Act, it is not the relator who is the real party in interest. Rather, it is the government.