Q: Can I sue my State under the False Claims Act? The State where I live has been misallocating millions of dollars in Federal funds by rerouting grants intended for needy children in urban areas to schools in the suburbs. As a retired school administrator, I noticed that the state has been falsely certifying compliance with Federal law as it misallocated these grants to school systems in the suburbs. Can I blow the whistle on the state and bring a qui tam case against it?
A: No. Because you are suing on behalf of the United States, you can’t sue the state or state agencies under the False Claims Act. The U.S. Supreme Court has ruled against this. Even if the state clearly violated the law, under no circumstances can you sue the state or local government entities under the False Claims Act. Because you are suing on behalf of the United States Government, the Separation of Powers doctrine in the U.S. Constitution prohibits the United States from suing states or municipal entities.
Q: Do all types of whistleblowing come under the False Claims Act? I would like to “blow the whistle” on the nuclear power facility where I work because of illegal emissions of radiation that have been covered up.
A: No. Although you are a “whistleblower” you do not qualify as the type of whistleblower that I would represent under the False Claims Act. All sorts of caring, courageous and committed citizens are known as “whistleblowers” – people who see that the company they work for is violating disclosure rules of the SEC, people who work at a corporation that is cheating on its income taxes, or people who notice illegal emissions from a nuclear power plant. All of these citizens want to take action that will put a stop to the cheating, and all these persons are correctly called “whistleblowers.” The violations of the law they have observed are very real, often even involving criminal conduct, but none of these admirable citizens are Whistleblowers under the False Claims Act. The False Claims Act was created for a more narrow range of Whistleblowers – persons who blow the whistle on a company that
1. has a Contract with the United States Government, and then
2. cheats the Federal Government when it submits a claim that is false, and then
3. gets paid by the Government after submitting the False Claim.
And the “whistleblowers” in this (rather narrow) range are the whistleblowers that the law office of John F. Murphy is involved with.
Q: Can I bring a qui tam action if I’m a Federal Employee?
A: No. You cannot bring a Qui Tam action if you yourself are an employee of the Federal Government.
Q: What about Tax Fraud or Fraud under the SEC?
A: No. The False Claims Act explicitly excludes tax fraud. Section 3729(e) states that the Act “does not apply to claims, records, or statements made under the Internal Revenue Code.”
Q: How long does a qui tam action take?
A: The time varies greatly from case to case, but you as the whistleblower should be prepared for the ‘long haul,’ as more often than not a qui tam action takes several years to be resolved.
The qui tam action begins with the filing of the complaint in the U.S. District Court. The complaint is placed under seal, which is a unique procedure in the American court system, because it means that the defendant does not know anything about the fact that it has been sued. This is done so that, while the case is under seal, the government can conduct its investigation. The investigation is made to determine whether 1. The Government feels there is a case, and 2. Whether the Government will intervene – that is, take over the case.
The seal period – the time period during which the Government investigates and decides whether to join the action – is 60 days. In other words, by statute, the Government has 60 days in which to decide whether it wants to intervene and take over the case. But realistically, the Government never makes up its mind on whether to intervene in those sixty days, and the seal period is routinely extended by the Government. It is not unusual for the investigation to last more than one year, or two years, or three years, or even four or more years – to the point where you find yourself asking, what on earth are they doing that’s taking so long. And finally, is it worth it. The bottom line is this: If you as the whistleblower file the False Claims case expecting immediate action on the part of the Justice Department, forget about it.
To add to the passage of time and the delay: after the seal is lifted – that is, after the Government makes its decision on whether it will intervene, (after all the passage of time noted above) the qui tam complaint then served on the Defendant. What this means is that you virtually are starting over, because, after the Government makes up its mind to intervene, and after the Complaint is unsealed and after it is served on the Defendant, the action will be delayed further by scheduling conferences, motions to dismiss, depositions, interrogatories, requests for production and discovery.
The bottom line to all of this is that you, as the relator, should be prepared – not for instant gratification, but to be in it for the long haul.
Q: To receive the reward, do I have to file a False Claims Act lawsuit?
A: Yes. In order to be eligible to recover money under the False Claims Act, you must file a qui tam lawsuit. Merely informing the Government about the False Claims Act violation is not enough.
As we’ve mentioned already – a Relator (the whistleblower filing a False Claims Act suit) receives an award only when the Government recovers money from the Defendant as a result of the lawsuit.
It is only by filing of a qui tam lawsuit and a subsequent settlement or favorable judgment for the United States – in which the Government is awarded damages – that enables you, the whistleblower, to receive a monetary payment from the Government under the False Claims Act.
Q: How do I qualify as an “original source?” I read in the newspaper about some of the overcharging that’s going on at our local hospital, and I see Medicare fraud all over the place. Can I blow the whistle if there is no other whistleblower case going on, and then collect the reward?
A: No. You are not the original source.
The claim is barred when there is evidence that you learned of the claims from public disclosure. The information about your company’s overcharge must come from you and not be known already. (This makes sense, because if the information does not come from you, you are not a whistle blower – you are telling the Government something it already knows.) The law says that if the civil action you bring is based on information already known to the Government, then you as the employee are not entitled to get anything for the recovery. When you fail to show that you are the original source of the information relating to the fraud, the courts have created a legal fiction to throw you out of court: public disclosure of the allegations divests the court of jurisdiction, and where the plaintiff is not the original source of the information, he or she is out of luck.
When the information did not come from you, you aren’t the- therefore there is no claim, and – therefore you – the whistle blower wanna-be – shouldn’t be rewarded and allowed to keep 15% to 25% (or 30%) of the amount the Government has collected. In fact… – you are not entitled to anything at all.
You read about it in the newspaper. The claim is barred when there is evidence that you learned about the fraud from public disclosure. The information about the overcharging must come from you and not be known already. (This makes sense, because if the information does not come from you, you are not a whistle blower – you are telling the Government something it already knows. You are “blowing a whistle” on something the “whistle” has already been “blown” on) The Judge in the District Court will conclude that the Court “lacks jurisdiction” when you fail to show that you are the original source of the information about the fraud. The law says that if the civil action you bring is based on information already known to the Government, then you as the employee are not entitled to get anything for the recovery.
Q: Will my employer find out that I’m the one who has blown the whistle?
A: Eventually, but not right away. The case will remain under seal while the Government decides whether this is a case that it wants to get involved with – whether it’s worth committing the Government’s resources to the case. While the case is under seal, your employer will not even know that it has been sued. This usually takes a great deal of time, depending on the complexity of the accusations you’ve made, and your employer will not know that you are the whistleblower while the investigation is going on. The law says that the Government has two months to make its investigation and to decide, but the Government routinely is granted extensions in the time periods, often more than several years. So your employer will not know for months, even for years, that you have blown the whistle. Your employer won’t know about your whistleblowing during the time the case is under seal, at least not through any public disclosure of the papers that have been filed.
This is the technical answer. Now the ‘common sense’ approach: If for years you were complaining to your supervisors about the defective tires at the plant where you work that are being sent to the Army for the Humvee, and then you are fired, and then you bring a False Claims action, and then, suddenly, someone from the Office of the Inspector General of the Army arrives at the plant and begins to ask questions about defective tires, your employer (sorry, your former employer) (with any common sense) will probably put two and two together and figure out that you are the one who has blown the whistle.
Q: Does the Whistleblower Law give any protection to the Whistleblower?
A: Yes. First of all, your identity is a secret from your employer while the case is under seal, because no one has yet officially informed your employer that you’ve brought the lawsuit. But you will not keep your identity a secret for long, because after the seal period ends – and the case is no longer ‘under seal’ after the Government makes its decision on intervening – your name will be disclosed to the Defendant. During the seal period, the defendant is not supposed to find out that you blew the whistle by filing the lawsuit. When there is a Government investigation, however, the defendant sometimes is able to figure it out.
You as a whistle blower have statutory protection. Section 3730 (h) of the False Claims Act gives all relief necessary to make the employee whole. And this protection is afforded to any employee who is discharged, demoted, harassed, or otherwise discriminated against because of lawful acts by the employee in furtherance of an action under the False Claims Act.
The key words here are “in furtherance of an action under the Act.” What this means is that you can’t get fired as a trouble maker and then afterwards, decide that you are going to become a whistleblower and claim that you got fired because you went to the government. You have to prove, in order to gain the protection under the Act, that your firing is directly connected to and the result of your whistleblowing activities.
Such relief may include reinstatement, double back pay, and compensation for any special damages, including litigation costs and reasonable attorneys’ fees. What this means is that any whistle blowers who lose their jobs or suffer career discrimination as a result of bringing a suit, can sue for damages.
The protection is given not only to those who bring the action in exposing fraud, but those involved in the investigation for fraud, in the initiation of testimony, or for any assistance to the Government in an action filed under this act. It includes “make whole” relief for anyone who in good faith assists the U.S. Government in exposing fraud. This provision is designed to halt the threat of economic retaliation against those who have helped expose wrongdoing and prevent harassment, demotion or loss of employment.
Q: The fraud took place fourteen years ago. Can I still bring a case?
A: No. Not if it happened more than 6 years ago. A civil action under section 3730 may not be brought – “…More than six years after the date on which the violation of section 3729 is committed.”
Q: But the company is still cheating.
A: Oh, that’s different. 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. But you can bring a case for all the cheating and all the fraud that has taken place within the time span of the past 6 years (if the government still is paying for those bearings). As to each claim, the 6 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.
Q: Does bribery of a foreign government fall within the False Claims Act?For as long as I can remember, my employer has been bribing the defense minister of a middle eastern country in order to sell military aircraft. Does this type of activity fall under the False Claims Act?
A: It might. The bribery payment is criminal conduct but is itself not something that is prohibited under the False Claims Act. However, if somehow the bribery payment is part of the claim to the United States Government, for example, and is listed under advertising as “a cost of doing business” in a sole source contract, and if, somehow, the United States Government is funding portions of the contract, then yes, False Claims are being submitted to the United States for payment. See the answer above about the need for a contract with the United States Government.
Q: If as a whistleblower I get a reward of 15 to 25% of any recovery, how is this determined?
A: Usually, the figure is negotiated with the United States Government. What this means is that both your attorney and the United States Attorney, or someone from the Office of the Attorney General of the United States, will come up with a figure representing the percentage of the recovery (the reward) that they agree is appropriate. The percentage usually is derived from your strength as a witness, your involvement as an original source, and your cooperation in putting the case together. If your attorney and the United States Attorney cannot agree – on a figure between the 15 and the 25% – you as the whistleblower are entitled to have a hearing before a Judge of the United States District Court. For this reason, it is important that you as the whistleblower keep a record of the times you cooperated, the time you went to the restaurant and worked as an informant wearing a wire, the times you contacted the U.S. Attorney with new information and helped with certain accounting tips that might not have been readily apparent to the Government’s investigators. All this information would be brought out in the hearing before the Judge as you attempt to be rewarded a figure that is closer to 25%.
At the end of the case, very often the United States Government, through its attorneys because the range is from 15 to 25% of the recovery, will turn into your adversary. In other words, in spite of the fact that for the past three and one half years you have been helping the United States with inside information relating to the cheating, and, finally, the United States through its attorneys has brought the case to a satisfactory conclusion and gotten a sizable settlement or verdict, the United States Attorney or someone from the office of the Attorney General will try to get you to accept a percentage in the range that is closer to the 15% statutory amount – in order to maximize the amount that is going to the Government – rather than a figure that is closer to the maximum of 25%. So you shouldn’t be surprised when, after all these years, after you’ve been fired and after you have endured considerable personal financial risk, the United States Government suddenly is saying, “Well, he didn’t really help us that much.”
Q: If I take over the case after the Government decides not to intervene, do I have more authority to settle the case than I would have had if the Government had intervened?
A: No. Remember – you still are bringing the case on behalf of the United States. It’s still “not about you.” Thus, even though you’ve done all the work for the past several years, the United States still has the final say on any amounts that are recovered.
Q: I called the Medicare Fraud unit and “blew the whistle,” then I started a lawsuit. Then I got fired. After the seal was lifted, the public relations people at the plant where I used to work told the newspapers that I’m a “disgruntled former employee.” Can they do this?
A: Sure they can. Once the file is unsealed and it is known that you are the one who has blown the whistle, the public relations people from the company, because it’s their job, will assure the press and the shareholders that the company didn’t do anything wrong, that the claims have no merit whatsoever, and that the lawsuit has been brought by a “disgruntled former employee.” You might be amazed at the number of cases that begin with a press release from the employer saying the allegations are “without merit” that they come from “disgruntled former employees.” You also might be amazed at the number of cases”without merit” where “disgruntled former employees” have been awarded millions of dollars.