The False Claims Act (FCA) allows private persons who want to report fraud against the United States government to bring a civil action on behalf of the federal government. This type of action is known as a “qui tam” action and the private person bringing the suit is known as the “relator.” Filing a qui tam lawsuit is not the same as filing an average civil claim. The process is complex and includes the following steps.
Gathering material evidence
Suspecting or even knowing of fraud and proving fraud are two different things. FCA claims must satisfy Federal Rule 9(b), which requires that the fraud to be pled with “particularity.” This means that, the relator must provide the government, through counsel, specific evidence of: 1.) what the fraud is; 2.) when the fraud occurred; 3.) how long has the fraud been going on and when the government was invoiced; 4.) who is involved in the fraud; and 5.) approximately how much has the government been defrauded.
In order to meet this requirement, the relator must gather information and documents that is material to the case, while adhering to certain legal requirements and restrictions. For example, the relator can only gather and render to his/her counsel documents within the purview of his/her daily job functions. This means that the relator cannot enter someone’s office or computer and collect documents they think are relevant. However, if during a staff meeting, the relator is present during a conversation that is important to the case, rendering a summary of this conversation to his/her counsel is fair game.
Evidence can include 1.) descriptions of situations observed and/or conversations overheard; 2.) documents, including but not limited to: emails, text messages, or other forms of written communication; meeting minutes; company handbook regulations; and other notes or written records.
Presenting Information to the Government
Counsel will compile all the material evidence that the relator has collected and prepare two documents: a disclosure statement and a complaint. A disclosure statement is a summary which discloses to the government all the material information and evidence that support the relator’s allegations. Accompanying the disclosure statement are the documentary evidence in the relator’s possession. The disclosure is issued to the Department of Justice in the U.S. Attorney where the case will be filed.
Filing the Complaint
Next, the relator’s counsel will file a complaint with the court. This is essentially the same information as in the disclosure statement, but laid out in a different format. A qui tam complaint is filed under seal, which means that it is not available to the public and it cannot be unsealed until a Judge orders it to be unsealed. A copy of the Complaint is also served on the Attorney General of the United States and the United States Attorney in the District Court where the Complaint is filed.
Upon receipt of the complaint under seal, government lawyers review the materials and starts an investigation of the fraud allegations set forth in the complaint. This can take several months or even years (click here to learn more about a lengthy case). Once the government finishes its investigation, it decides whether to “intervene” in, or join, the case. If the government intervenes, it takes over control of the matter. However, because the federal government’s resources are limited, it only intervenes in about 21% of all qui tam cases filed each year.
If the government does not intervene and a settlement is not reached, the relator and his/her counsel must then jointly decide whether or not they wish to litigate and potentially take the case to trial.