The qui tam "whistleblower" law is a federal law that applies nationally. A number of state governments also have adopted their own versions of the law. The qui tam law is designed to protect against the fraudulent use of public funds by encouraging people with knowledge of fraud on the government to blow the whistle on the wrongdoers. The law provides for whistleblowers to receive a reward in the form of a share of the recovery.
The qui tam law is contained in the federal False Claims Act, 31 U.S.C. Section 3729 et seq., which provides for treble damages and penalties of $11,000 per violation for virtually any kind of fraud on federally funded programs. The qui tam provisions of the statute permit a private citizen (individual or corporation) to bring a lawsuit under the Act on behalf of the government and to receive up to 30% of the recovery. The average share is around 17%.
The Department of Justice (DOJ) is a big supporter of the qui tam law. In 1995, the DOJ marked the recovery of its first billion dollars under the qui tam provisions of the amended 1986 False Claims Act with a press release. The DOJ praised the bipartisan efforts of the bill's sponsors, Senator Grassley and Congressman Berman, as a work of "leadership and vision." The recovery of over $1 billion, the DOJ declared, "demonstrates that the public-private partnership encouraged by the statute works and is an effective tool in our continuing fight against the fraudulent use of public funds."
At the end of 2002, when qui tam recoveries under the amended False Claims Act had grown to $6 billion, the DOJ issued a press release again attributing the success of the statute to "the vision of its sponsors . . . as well as the thousands of private citizens who have reported fraud by filing suit under the Act."
False Claims Act recoveries far exceed the cost of prosecuting fraud. For every dollar the federal government invests in investigating and prosecuting these cases, it receives $15 dollars back. As of the end of FY 2006, the DOJ had recovered more than $18.1 billion under the False Claims Act since the 1986 amendments, roughly $11 billion of which resulted from cases which were initiated by whistleblowers. Of the $3.1 billion recovered by the federal government under the False Claims Act in FY 2006, $1.3 billion resulted from suits initiated by whistleblowers. During the course of the same year, relators received nearly $200 million in qui tam awards.
These figures demonstrate why the
qui tam law is now the weapon of choice for federal (and an increasing number of state) prosecutors seeking to recover defrauded taxpayer funds. The qui tam law has become in practice what it was intended to be in theory -- a "public-private partnership" of the government and the people.
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