2 Who is a whistleblower under the False Claims Act? Anyone who sees a Government contractor cheating the United States and wants to do something about it can blow the whistle. If you d like to put a stop to the cheating, you can become a whistleblower under the False Claims Act. And you can receive a substantial reward for doing so. Who are the cheaters? The False Claims Act applies to any Government contractor you catch cheating from construction companies building federally funded highways to collection agencies on defaulted student loans, to providers of low-cost, federally subsidized housing under HUD programs. The cheaters overcharge by certifying testing they didn t perform, by falsifying time cards, by upcoding, by shipping substandard parts, and by any one of a thousand other schemes that result in the United States Government paying more money than it should. The cheater can be a defense contractor, a Medicare provider, a laboratory or hospital participating in Medicare and Medicaid, a scientific researcher or university receiving federal grants, or entities that are reimbursed for participating in federal social welfare programs such as Pell Grants. The False Claims Act applies to thousands of other entities any one of which does business with, or is funded by, the United States Government. And you catch them cheating. How does it work? To win the False Claims Case and collect the reward, two things must happen: 1. As the whistleblower, you have to file a lawsuit, and 2. You and the Government have to win the lawsuit, either at trial or through a negotiated settlement. You have to sue the company that is committing the fraud. You take the place of the Government and you step in the shoes of the United States. You, the whistleblower, bring a lawsuit in the Federal Court on behalf of the United States Government. This type of lawsuit is known as a qui tam case, which comes from an old Latin phrase that means who takes a case (who sues) on behalf of the king. You will be called a Relator rather than a plaintiff, because, on behalf of the United States, you are relating a claim. When John Murphy files the document in the United States District Court where the fraud took place, this paper known as the Complaint will describe in detail everything you know about how the cheater took money that it didn t deserve from the Federal Government. If and when the Government wins the lawsuit that you started and recovers money, you will be paid 15% to 25% and sometimes 30% of the money that you helped the Government recover.
3 The procedure for blowing the whistle on your employer under the False Claims Act involves the filing of a lawsuit by your attorney on behalf of the United States through you as the Relator. The process includes several steps: The investigation The important part of bringing a qui tam case under the False Claims Act involves the details the evidence you are able to provide to Attorney Murphy on how your employer was overcharging, submitting false claims, or was overstating its costs and was getting more money on a Government contract than it deserved. It is quite helpful but not necessary for you to have the facts on paper, in messages, in sales receipts, in vouchers, in invoices, in sales records saved to your computer, or on a CD or in the computer database in which the evidence of fraud is kept and maintained. Attorney Murphy will review all of your information and decide whether there is enough to bring a civil action in the U.S. District Court where the fraud occurred. The important part of any qui tam case under the False Claims Act involves the details you are able to provide your evidence on what the false claims were, who submitted them, and how the false claims for payment were made. At the very outset, he has to have a good set of facts on which to decide whether the case has merit. There s no value to a weak case. He must be able to understand your company s role in the federal procurement process and he must be able to substantiate your allegations. He needs to determine the period of time over which the fraud occurred, when you had direct knowledge of the fraud, the estimated damages or loss to the Government, and whether the fraud is still taking place. What follows are some of the things he has to learn from you: A. Your employer s role in the fraud Your employer doesn t have to deal directly with the Government in order for you to blow the whistle on its fraud. If the Government is the ultimate buyer of the product, that is sufficient. For example, if you work for manufacturer A, which makes bearings and overcharges manufacturer B, and then manufacturer B builds the battleship purchased by the U.S. Navy, the law considers manufacturer A (your employer) to have committed a fraudulent act against the U.S. Government. B. When the Fraud took place The statute of limitations is as follows: A civil action under section 3730 may not be brought a.) more than six years after the date on which the violation of section 3729 is committed, or b.) more than three years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.
4 Therefore, as to each claim, the six-year period of the statute of limitations begins to run on the date the claim is paid. In other words, the payment of the fraudulent amount by the U.S. Government triggers the limitations period, and that is when the time starts to run. If the Government overpaid for a shipment of bearings more than six years after the date you bring the lawsuit, you are barred from bringing a claim on that shipment. The time for doing so has expired. Attorney Murphy will ask if your company was reimbursed by the Government, and how you obtained knowledge of the fraud, and all the facts that will be critical in proving the fraud. He will question you thoroughly about all documents that will prove the fraud occurred. He will want to know whether any of this information has already gotten out to the public, whether you have already spoken to your employer about it, and whether there are any witnesses. He will want to know how many fraudulent acts occurred and what the total amount was, if you know, that the United States paid to your employer and how big the case is going to be. All of this information-gathering will be directed at obtaining a factual basis for determining whether you have a case. It is not OK and not an allegation of fraud with sufficient particularity where the relator (you, the whistleblower) does not allege exact dates of the false claim(s), cannot identify the person or entity making the false representations, or has difficulty identifying the place where the alleged fraud took place. Attorney Murphy has to make certain when he files the lawsuit that the company you worked for was, in effect, cheating the Government. This means that he ll pay very close attention at the very outset to all the evidence you present to him. He must be absolutely certain that it is you, and not someone else, who is the whistleblower providing the information. Drafting the Complaint and the Relator s Statement In order to sue your employer and begin the lawsuit, the facts you provided in the investigation will be used in the written Complaint and in what is known as the Relator s Statement. These documents will be forwarded to the Attorney General and the United States Attorney when the Complaint is filed under seal with the court in order to provide the United States Government with ample information concerning the program that is being defrauded. The Complaint and the Relator s Statement will include, at minimum: the name of the suspected party the nature and operation of the fraud, including the time and place it occurred, and the nature of all the physical evidence establishing the fraud. In addition to the formal complaint assertions, all of the information will also be listed in the Relator s Statement when the lawyer is drafting the complaint. The documents are drafted with enough information to give the United States Government an idea of whether it wishes to participate in the lawsuit. Attorney Murphy will draft these documents with an eye toward convincing the Federal Government that this case is worth getting the United States involved.
5 Filing the Complaint After the Complaint and Relator s Statement are drafted and after they are put in final form, the Complaint is filed with the U.S. District Court. A copy of the Complaint and the Relator s Statement that sets forth substantially all material evidence and information in the Relator s possession also are served on the Attorney General of the United States and the United States Attorney in the District Court where the Complaint is filed. The Complaint must be filed in camera (a Latin term which means with the judge) and under seal. The filing is confidential and cannot be made public. The Complaint is not served on the Defendant (your employer, the company that is defrauding the Government) at this time. This is because the Government is conducting its investigation in order to decide whether it will intervene. And this means that the Defendant will not know, at this stage, that it has been sued or that it is being investigated. Not yet. The Government Investigation Your case will remain under seal (i.e., in strict confidence without the Defendant knowing it has been sued) for at least 60 days. The copy of the Complaint that you have forwarded to the Attorney General of the United States will alert the Federal Government of the lawsuit, and this will trigger, during the 60-day period, a Justice Department investigation of the accusations you have made. The Justice Department will make a decision whether the case has sufficient merit for them to join the case and take over the lawsuit, or not to intervene. The 60- day seal period is routinely extended upon request by the Government, and often the period can go for as long as a year, two years, or three years while the Government is deciding whether it wants to join the case. If the Government decides to join the case, it takes over the case completely and conducts its own investigation, usually on a broader scale than you know about. If the Government does intervene, the Justice Department will be primarily responsible for prosecuting the case. You, the Relator, have the right to continue as a party in the action, and you (and your lawyer) may participate in the litigation, subject to certain limitations. The Government may dismiss or settle the action, notwithstanding your objections, but only if after a hearing the court allows the proposed dismissal or settlement. Whether or not the Attorney General s office takes over the claim, the United States is always the real party in interest. If the Government decides not to intervene, you have the right to conduct the action on your own still on behalf of the United States. After the Government decides whether to intervene and the seal period ends, the Complaint is then, finally, served on your employer. The lawsuit then proceeds generally in the same manner as any other federal civil litigation. If the Government does not join, or become part of the case or take over the action against your employer, you can still pursue the case, but it is much more difficult for you, although your percentage of recovery and reward is higher. In the cases where the Government enters and decides to take over the prosecution of the case, the whistleblower remains as a coplaintiff.
6 When the Justice Department elects not to pursue the case, the whistleblower can proceed alone, but is still working for the United States Government in claiming fraud. The End Game The final requirement, the most difficult prerequisite, and the most challenging qualification for becoming a qui tam whistleblower is patience. After the lawsuit is filed and placed under seal (which again means that the company that has been sued does not yet know that it is a defendant in a federal case), the Government investigators begin their information based on the information we have provided. Usually there is a conference in the offices of the U.S. Attorney, and then the Government requests and receives from the court a six-month extension in order to give it time to complete its investigation and make its decision on whether it s going to intervene. These routinely granted series of six-month extensions often add up to a two-, three-, or four-year wait while the Government is deciding whether it is going to intervene. And when there is a retaliation component to the claim, it becomes rather difficult to tell a client to have patience when he or she is made the object of harassment and retaliation on a daily basis. In the Cartwright case against Balfour Beatty, Ian Cartwright filed his qui tam lawsuit in 2001, and it wasn t until 2006 that the matter was settled. The five years in U.S. ex rel Cartwright v. Balfour Beatty et al is a positive example of how patience can pay off and be well worth the wait.