Qui tam is believed to be the single most powerful legal tool the U.S. government has to disclose and recover the billions of dollars stolen through fraud every year. The qui tam action, borrowed from the 13th century common law tradition, is currently mandated by the False Claims Act, 31 U.S.C. 3729-3733.

Under this act, citizens with evidence of fraud are allowed to sue on behalf of the government to recover the stolen funds. Moreover, those who submit the false claims for payment of government funds are liable for three times the government’s damages plus civil penalties of US$5,500 to US$11,000.

According to the U.S. Department of Justice’s statistics, this unique mechanism has helped the U.S. government disclose the cases of fraud from 31 in 1987 up to 5,813 in total in 2007. In addition, the Federal recoveries from false claims have gone up from US$86 million in 1987 to more than US$12 billion in 2007.

The qui tam action is informally called “whistle-blowing.” In order to compensate for the risk and effort of filing a qui tam case, the citizen whistle-blower or “relator” may be awarded 15 to 25 percent of the government recovered damages. The False Claims Act also provides an anti-retaliation clause to prevent any whistle-blower from being discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by the employer.

After so many years of practice, the qui tam action means more than the money. It creates a new government-citizen partnership and changes the culture of fraud. The U.S. Congress’s original intent was based on the recognition that the government alone, with its limited resources, was overmatched in the fight against widespread fraud.

The qui tam mechanism helps create strong financial incentives to bring in private citizens with evidence of fraud to commit their time and resources to supplement the government’s efforts. In doing so, it puts into play a powerful government-citizen partnership for uncovering fraud against the government and obtaining the maximum recovery for taxpayers.

Moreover, the qui tam action also discourages fraud and changes the corporate culture of fraud. Now the U.S. corporations have to spend substantial efforts to comply with all legal requirements while doing business with the government. That change in the corporate culture has become the False Claims Act’s most durable legacy.

Subscribe to The China Post and save.  Click hereSharePrintEmail

Write a Comment

Enter your comments - 800 characters max

Receive China Post promos

Respond to this email