What is a qui tam lawsuit?
Qui tam lawsuits allow whistleblowers to pursue justice on behalf of the public against fraudsters who cheat the government.
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North & South Carolina Whistleblower Attorneys
What Is a Qui Tam Lawsuit?
When a company cheats the U.S. government, they are stealing from every American taxpayer. This fraud can take many forms — from a hospital overbilling Medicare for millions of dollars to a defense contractor supplying defective parts for our military. It often happens behind closed doors, hidden in complex billing codes or falsified reports.
But what if you knew about it? What if you had the proof?
You have more power than you might think. A powerful federal law gives private citizens the ability to take action, try to hold wrongdoers accountable, and help stop the theft of taxpayer money. This action is known as a qui tam lawsuit, and it is the single most effective tool in fighting fraud against the government.
The term qui tam comes from a Latin phrase meaning, “he who brings an action for the king as well as for himself.” In a modern context, you, the private citizen, can act on behalf of the government (and by extension, all taxpayers) to expose fraud. Individuals who take this courageous step are known as “whistleblowers” or “relators.” And for doing so, they might be eligible for a significant financial reward.
Key Takeaways
- A qui tam lawsuit allows a private citizen, or “relator,” to file a lawsuit against a fraudulent entity on behalf of the U.S. government.
- These lawsuits are based on the federal False Claims Act (FCA), a law originally enacted during the Civil War to combat government contractor fraud.
- Qui tam cases are initially filed “under seal,” keeping the case confidential while the Department of Justice investigates the whistleblower’s claims.
- Successful relators may be eligible for a reward, up to 30% of the funds the government recovers as a result of the case.
- The FCA includes strong anti-retaliation provisions to help protect whistleblowers from being fired, demoted, or harassed by their employers.
The Lincoln Law: A history of empowering citizens
To understand the power of qui tam, it helps to look at its origins. The foundation for these lawsuits is the False Claims Act (FCA), a law with a storied history dating back to the Civil War.
During the war, unscrupulous contractors saw the conflict as a chance for a quick profit. They sold the military sick mules, faulty rifles, and spoiled food. This rampant fraud not only wasted precious government funds but also endangered the lives of soldiers.
In response, President Abraham Lincoln signed the False Claims Act into law in 1863. It was nicknamed “Lincoln’s Law,” and its purpose was clear: to create a way for the government to fight back against this deceit.
The most innovative part of the law was its qui tam provision, which empowered private citizens with inside knowledge to sue the fraudulent contractors on the government’s behalf. It recognized that the government can’t be everywhere at once and often relies on honest individuals to shine a light on wrongdoing.
“History has shown us over and over again how much our country needs whistleblowers. Going after waste, fraud, and abuse without whistleblowers is about as useful as harvesting acres of corn with a pair of rusty old scissors.” – Senator Chuck Grassley
Over the next century, the law was weakened by various amendments. However, in 1986, facing new waves of massive fraud in the defense and healthcare industries, Congress passed sweeping amendments that revitalized the False Claims Act. These changes significantly increased the financial rewards for whistleblowers and, just as importantly, added strong anti-retaliation protections for those who came forward.
Since the 1986 amendments, the False Claims Act has become the government’s primary weapon against fraud, recovering tens of billions of dollars for American taxpayers. The vast majority of these recoveries have come from whistleblower lawsuits initiated by brave individuals.
The qui tam process: A step-by-step guide
Filing a qui tam lawsuit is a highly focused legal process. It’s not like a standard civil lawsuit and must follow a precise set of rules to be effective and to help protect whistleblowers. Here’s a general overview of the steps involved.
Step 1: Suspecting fraud and consulting an attorney
It all begins when an individual — often an employee or industry insider — discovers what they believe to be fraud against the government. These suspicions may be supported by internal emails, billing records, testing data, firsthand witness accounts of wrongdoing, or other evidence.
The first step is to speak with an experienced qui tam attorney. Reporting the fraud to your company’s compliance department or to a government agency directly could jeopardize your ability to file a qui tam claim and receive a potential award. An experienced attorney can evaluate your case, explain your rights, and guide you on how to proceed. This initial consultation is free and confidential.
Step 2: Building your case
The next important step, building the formal case to present to the government, occurs if you and your attorney agree that you have a strong case and you decide to move forward. Together, you and your legal team will create the Relator’s Disclosure Statement which will describe the fraud scheme in detail, identify the defendants, present the evidence, and serve as a roadmap for government investigators.
Step 3: Filing the complaint “under seal”
The complaint is then filed “under seal” with a federal court. This is a critical and unique feature of qui tam cases. Filing under seal means the lawsuit is kept secret from the public and, most importantly, from the defendant. The case is not listed on any public docket.
This confidentiality is designed to give the government time to conduct its own investigation without tipping off the suspected fraudsters, which could lead them to destroy evidence or hide assets. The seal typically lasts for at least 60 days but is often extended for longer while the investigation proceeds.
Step 4: The government investigation
The U.S. Department of Justice (DOJ) will then launch their own investigation into your allegations. They may issue requests for documents, interview witnesses, and work with federal agencies like the FBI or the Office of Inspector General.
During this period, you and your attorney are a critical resource for the government. You may be asked to provide more information, explain complex industry practices, and help investigators understand the evidence. Your cooperation is key to building a strong case.
Step 5: The government’s decision — To intervene or decline
After its investigation, the government must make a crucial decision. It will either:
- Intervene: If the government believes your case has merit, it will “intervene” and essentially join the lawsuit. The government’s attorneys will take the lead in prosecuting the case from this point forward, though you and your attorney remain involved. The vast majority of FCA cases in which the government intervenes are successful.
- Decline: The government may decide not to intervene. This is called a “declination.” This is not the end of the road, depending on your circumstances. You and your attorney now have the option to pursue the lawsuit on your own, on behalf of the government. Declined cases can still be successful and can lead to a higher percentage of the recovery for the whistleblower.
Step 6: Resolution and whistleblower rewards
Most resolved False Claims Act cases end through a settlement. In some instances, cases may proceed to trial. If the case is successful and the government recovers money from the defendant, the whistleblower is eligible for a reward, known as the potential “relator’s share.”
- If the government intervenes in the case, the relator’s share is typically 15% to 25% of the total recovery in a successful case.
- If the government declines and the relator pursues the case successfully on their own, the potential reward is higher, typically 25% to 30% of the recovery.
Given that the False Claims Act allows the government to recover up to three times its actual damages (treble damages) plus additional penalties, these rewards can be substantial, often reaching millions of dollars.
Who can be a whistleblower?
You don’t need to be a high-level executive to be a whistleblower. The False Claims Act allows nearly anyone with original, non-public knowledge of fraud that was not previously known to file a qui tam lawsuit. Common relators are:
- Current and Former Employees: People who work or worked inside the fraudulent company, such as billing specialists, sales representatives, nurses, doctors, project managers, and executives
- Industry Insiders: Competitors who are aware of a rival’s fraudulent practices
- Subcontractors: Companies or individuals who have worked with a primary contractor and witnessed them defraud the government
- Consultants: Professionals who have been hired by a company and discover fraud during their work
The most important requirement is that you have “original information” that is not previously known and not known to the public.
It’s also critical to understand the “first-to-file” rule. The False Claims Act generally only allows the first person who files a qui tam action based on a particular fraudulent scheme to proceed with the case. If another person tries to file a lawsuit based on the same facts later, their case will likely be barred. This rule creates a sense of urgency for whistleblowers to act once they have decided to come forward.
Common types of fraud that lead to qui tam lawsuits
Fraud against the government can occur in any industry that involves federal funding. However, some very common qui tam cases involve healthcare, defense contracting, and more.
Healthcare fraud (Medicare and Medicaid)
Because of the size and complexity of programs like Medicare and Medicaid, healthcare is an enormous area for fraud. Common schemes include:
- Billing for services not rendered: A provider bills Medicare for appointments, procedures, or tests that never happened. This is sometimes called “phantom billing.”
- Upcoding and unbundling: A provider inflates bills by using a billing code for a more expensive procedure than the one that was actually performed (upcoding) or by billing separately for services that should be bundled into a single, lower-priced charge (unbundling).
- Illegal kickbacks: A laboratory, pharmaceutical company, or medical device maker pays a doctor or hospital for referring their products. This violates the Anti-Kickback Statute and can be the basis for a False Claims Act case.
- Off-label marketing: A pharmaceutical company encourages doctors to prescribe a drug for a use that has not been approved by the FDA. Since government programs like Medicare generally only cover FDA-approved uses, this practice can lead to false claims.
- Medical necessity fraud: A provider performs and bills for tests or procedures that are not medically necessary for the patient’s condition.
Defense contractor fraud
Just as in Lincoln’s day, the defense industry remains a common source of False Claims Act cases. Modern defense fraud schemes include:
- Overbilling: Charging the government for more hours or more expensive materials than were actually used.
- Providing substandard products: Knowingly supplying the military with parts, materials, or technology that do not meet contract specifications.
- Falsifying test results: Lying about the performance or quality of a product to ensure it gets accepted and paid for under a government contract.
Other forms of government fraud
While healthcare and defense are among the most common, qui tam lawsuits can address fraud in many other areas, including:
- Government-backed mortgage and student loan programs
- Federal construction projects
- Grants for scientific research and education
- Tariffs and customs
Your protections: The FCA’s anti-retaliation shield
The decision to blow the whistle takes immense courage. Many potential whistleblowers fear for their careers. They worry about being fired, demoted, or blacklisted in their industry.
The law recognizes this risk. The False Claims Act includes a powerful anti-retaliation provision that makes it illegal for an employer to fire, demote, suspend, threaten, harass, or in any other way discriminate against an employee for taking lawful actions in furtherance of an FCA case.
If an employer violates this provision, the whistleblower can file a separate claim for retaliation and may be eligible for remedies including:
- Reinstatement to their job
- Double the amount of back pay owed
- Other compensation including litigation costs and attorney’s fees
These protections, combined with the confidentiality of the “under seal” filing period, are designed to make it safer for honest people to do the right thing.
You have the information. An experienced team can help you take action.
If you have witnessed or suspect fraud against the government, you are in a unique position to make a difference. You have the power to try to stop companies from stealing from taxpayers, protect others from harm, and hold wrongdoers accountable. But you don’t have to — and shouldn’t — do it alone.
Handling a qui tam lawsuit in full requires deep knowledge of a complex and highly focused area of law. This is where an experienced legal team experienced in whistleblower cases can become your critical ally.
At Carolina Whistleblower Attorneys, we are dedicated to helping courageous individuals stand up to corporate greed. Our whistleblower team is led by a former U.S. Attorney who helped lead the nation in whistleblower recoveries.1,4 We understand what makes a strong case, and we know how to navigate the system to help protect our clients while we fight for justice.
We’ve represented dozens of qui tam whistleblowers, with tens of millions of dollars in total settlements.1 Our lead attorney, Bill Nettles, is responsible for helping the government recover over $307 million in fraudulently-obtained funds during his tenure leading the U.S. Attorney’s Office.1,4 And we have the commitment and the experience to see these cases through to the end.
If you suspect fraud against the government, you have the power to do something about it. Contact Carolina Whistleblower Attorneys today at 1-888-292-8852 or through our online form for a free, 100% confidential case evaluation. Our experienced team can help you understand your rights and protections under the False Claims Act.
“Bill has the ability to ‘think outside the box’…which makes him extremely effective as an advocate for his clients.” 1 — Attorney who previously worked with Bill
Awards we’ve won
For standards of inclusion for awards listed, visit bestlawyers.com, thenationaltriallawyers.org, superlawyers.com, farrin.com/business-nc-power-list, and millondollaradvocates.com. National Trial Lawyers Top 100 designation is for 2025. Regarding the Million Dollar Advocates Forum, we do not represent that similar results will be achieved in your case. Each case is different and must be evaluated separately. Firm award is for the Law Offices of James Scott Farrin. Attorney awards are for attorneys with the Law Offices of James Scott Farrin.
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Whistleblower Attorneys
If you’re wondering if it’s a good idea to speak with a whistleblower lawyer about what you know, let us set the record straight.
- Corporate ethics hotlines can be risky and may lead to termination. If you’ve already done this, call us immediately.
- Your coworkers could be aware of the fraud – or complicit in it – and you should not talk to them about it.
- The first claim to be filed under the False Claims Act can proceed – if you’re not first, you’re at a serious disadvantage and may get nothing (another reason not to speak to your coworkers about it).
- A confidential discussion costs you a few minutes, but could save you time, stress, and money.
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