Whistleblower lawsuits, also known as "qui tam" actions, are civil suits brought by private individuals under the federal False Claims Act. The False Claims Act allows private citizens to sue an individual or a business that is defrauding the government and recover funds on the government's behalf, making qui tam lawsuits a potent tool in assisting the government in combating fraud perpetrated against it.
Among the most common types of qui tam actions include failing to comply with Medicare or Medicaid reimbursement rules (i.e., healthcare fraud); billing the government for defective products or services never rendered; obtaining a government contract through kickbacks or bribes; schemes to avoid paying significant federal taxes; and profiting from drugs outside of FDA approved uses.
Once the qui tam lawsuit is filed, the government will investigate the allegations and decide whether it will join, or "intervene," in the case. Such an investigation will typically include interview(s) with the person(s) who blew the whistle and filed the qui tam (referred to as the "relator(s)"). The qui tam lawsuit is filed "under seal," meaning that it is initially kept secret from the public so that the Justice Department may have time to investigate the allegations.
The trend in whistleblower lawsuits and recoveries in recent years is astounding: nearly $6 billion was recovered in civil cases brought under the False Claims Act in the 2014 fiscal year alone. Recoveries in qui tam cases during fiscal year 2014 totaled nearly $3 billion, with whistleblowers receiving a whopping $435 million. The potential financial benefit to the individual whistleblower(s) is huge: if the government intervenes in the case and recovers funds, the whistleblower is entitled to 15-25 percent of the recovery. Even if the government doesn't intervene in the case and it is pursued solely by the whistleblower and his or her attorneys, the whistleblower's reward is between 25-30 percent of the recovery.