Demystifying The Qui Tam Process

By the Time Defendants Learn About a Lawsuit, a Lot Has Already Happened

by R. Scott Oswald

Defendants in Qui Tam lawsuits – in which a whistleblower accuses someone, usually a corporation, of fraud against the government – often don’t realize they’ve been targeted until months, or sometimes years, past the original filing date.

This is deliberate: The federal False Claims Act (FCA) requires whistleblowers to file complaints under seal so that they don’t jeopardize an ongoing criminal investigation, and also so that prosecutors can decide
whether to intervene and throw their weight behind the civil complaint. the initial seal period is 60 days, but it’s often extended at the government’s request: Few U.S. Attorney’s offices are ready to act on cases –especially meritorious cases – after a scant two months.

As a result, defendants tend to learn about qui tam suits in three main ways:

• Via investigatory demands in a civil or criminal investigation, which may
tip a savvy defendant to an underlying whistleblower action; or

• Via a limited, court-authorized disclosure for the purpose of settlement
discussions after the government has reviewed significant evidence; or

• Via service of an unsealed complaint, often after the government has decided to let the whistleblower proceed without further assistance. By the time any of these things happen, much legal maneuvering has likely occurred outside the view of defendants – and even of the judge assigned to the case. As CLE Chair of the Qui Tam Section of the Federal Bar Association (FBA), my mission is to demystify this maneuvering so that all parties can act from a shared understanding of the process.

The observations in this article are drawn from my organizing work on the False Claims Act Today, a series of educational seminars sponsored by the FBA’s Qui Tam Section in cooperation with local FBA chapters.

Obviously there’s no such thing as an average FCA case; defendants range from modest dental practices to huge defense contractors…

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