6 Things Contractors Should Be Aware of in Qui Tam Lawsuits & False Claims Act LawsuitsBy Theodore P Watson, Esq– Government Contract Whistleblower Attorney (Defense). Qui Tam Lawsuits can ruin a federal contractor’s future and shut companies down if not defended correctly. The Qui Tam defense attorneys at Watson & Associates, LLC aggressively defend small businesses and large DOD contractors doing business with the federal government that is charged with filing a false or fraudulent claim with the agency. The following information provides the basics of a Qui Tam Case involving false claims allegations and 6 things that federal contractors should be aware of in federal Qui Tam False Claims litigation.

1. The Purpose of the Federal False Claims Act and Qui Tam Whistleblower Litigation in Government Contracting

What is a Qui Tam Lawsuit? A Qui Tam action is a lawsuit brought by an individual, known as the “relator,” on behalf of the government against someone who has allegedly violated the False Claims Act. The relator stands to receive a share of any financial recovery and maybe with damages for their part in fraud or violations of law experienced qui tam defense lawyers can help individuals and entities accused of such fraud understand their rights and obligations under these laws. A successful defense is essential for those facing potential legal liability.

The False Claims Act was initially enacted in 1863 to prevent unscrupulous contractors from defrauding the federal government during the Civil War. Since then, it has been used as an effective tool to protect taxpayers’ money from false claims, including those of medical providers and pharmaceutical companies.

When a relator brings a qui tam action, the defendant generally faces two charges: A violation of the False Claims Act for making false or fraudulent claims to the government for payment; and another violation for retaliating against the relator. If successful in their case, the relator can be awarded up to 30% of any financial damages recovered as well as other compensatory damages.

It is important that anyone accused of fraud or violations of law understands their rights and obligations under these laws. A qui tam defense lawyer can help individuals and entities facing potential legal liability protect themselves and understand their options when responding to accusations. It is essential to seek qualified legal representation if you are facing a qui tam action. With an experienced qui tam defense lawyer by your side, you can rest assured that your rights and interests will be protected.

As with any legal matter, it is important to have the assistance of a knowledgeable and experienced Qui Tam defense attorney who understands the law behind Qui Tam actions and False Claims Act violations. An experienced qui tam defense lawyer will help you understand your rights under the law and develop an effective strategy for defending yourself against allegations of fraud or other violations. When faced with such serious accusations, having skilled legal counsel can make all the difference in protecting your future. Contact an experienced qui tam defense lawyer today for more information about your options.

The laws create an incentive for Relators to bring qui tam lawsuits. In exchange for alerting the government of the alleged fraud, the Qui Tam whistleblower can receive a portion of any financial recovery from the government in a civil case. The Relator’s Qui Tam lawyers have to provide the information in a way that convinces the government that there are in fact fraudulent schemes and violations of procurement law in government contracting cases.

Although Qui Tam whistleblowers and their attorneys both bring critical information and industry experience, having the right Qui Tam defense strategies can make the government’s case more difficult to prove. There are many law firms and attorneys that exclusively file Qui Tam False Claims Act cases. However, many of those attorneys are former DOJ attorneys and have vast litigation experience but may not have the substantive and deep experience needed with the underlying laws and regulations.

Probable defense: When bringing a Qui Tam claim against a government contractor, a solid defense will more than likely come from a False Claims Act defense or Qui Tam defense attorney that also understands the underlying allegations and procurement rules that govern them. For example, the Relator’s attorney will allege a violation of SBA regulations but may have no detailed experience with SBA small business programs or regulations. This can put the defendant contractor in a better position to fight the case. The same is true for allegations of False Claims Act provisions stemming from Buy American Act violations. See information about False Claims Acts defenses for contractors in litigation.

2. Your Former Employee or Relator, and the Qui Tam Attorney Provide the Government With Details

This is what makes the Qui Tam False Claims Act lawsuit difficult to defend. The lawyers and your former or current employee work with the government to get every single detail there is to help the federal investigators to conduct their investigations and the federal prosecutors file cases or indict in criminal cases.

Nevertheless, a solid defense can be in place if the facts presented by the Relator and the Qui Tam attorney still do not amount to a violation of the underlying laws. A common situation occurs when the federal prosecutor or DOJ attorneys allege that the contractor has violated SBA affiliation regulations, or SDVOSB business control laws.
There are separate courts that litigate these very issues every day. Yet, in many cases, neither the SBA or the agency has conducted an investigation before the charges or brought. Instead, many federal agencies only act when the US attorney’s office comes to the table.

As government contractors, understand and appreciate that having a former or current employee file federal False Claims Act and qui tam litigation becomes a very complex situation if you do not promptly look to defend the case early to develop a solid legal foundation to fight the charges.

3. The False Claims Act Qui Tam Lawsuit is Filed on Behalf of the Government

The whole idea of a Qui Tam Action is for the whistleblower to file a lawsuit. Unless a lawsuit is filed, there is no Qui Tam Action. Filing a complaint may still cause a government investigation. However, if there is no Qui Tam lawsuit, the relator may not have any ability to collect from the proceeds.
As discussed later, once the case is filed, the Government has to make a decision whether or not to ‘intervene’ and take over.
If the government chooses to intervene, this is good for the Relator and his attorney since they will take a back seat and wait for the results – and a check.
The Qui Tam false claims provision allowed the Relator to pocket anywhere between 15% and 30 % of the recovery depending on whether or not the government decided to intervene in the case.

Presenting the Information to the Government:  The Relator’s government contract whistleblower attorney first prepares a disclosure statement to the government. This disclosure provides all the adverse details to the government, evidence, and information in the possession of the whistleblower. This is a requirement of the False Claims Act. The government then decides if the contractor has committed fraud against the government or, more importantly, can a fraud case be proven if the matter had to be litigated.

Contractors should be aware that in a Qui Tam False Claims Act Qui Tam lawsuit, the person bringing the lawsuit may have damming evidence such as texts, emails, recordings, and notes that may present what appears to be a bad case at first glance. However, the focus should be on the violation of the enabling statute or regulations. These include the Federal Acquisition Regulations (FAR).

Be aware that information provided to the government to support an investigation in a False Claims Act Qui Tam case is confidential and not part of the public record. Another tip for contractors defending a federal False Claims Act case is the information provided in the Complaint to the Court is not necessarily the same as the confidential documents provided to the government. This puts the contractor at a great disadvantage.

False Claims Qui Tam investigations

 After the preliminary filings are completed, and the government agrees to intervene (take over) the case, the government initiates a False Claims Qui Tam investigation.  The contractor may not be initially contacted by an investigator. However, at some point, the contract will be issued a subpoena and asked to even produce documents or make some of its key personnel available for questioning. This is a critical part of the entire case because what you say, or don’t say, can impact the outcome of the case. This is why having a government contractor qui tam investigations lawyer on your team can be very important.

4. Contractors May Never Know About Qui Tam Lawsuits Being Filed Until Too Late

As stated earlier, Qui Tam False Claims lawsuits. alleging fraud against the government are filed on behalf of the United States Government. Federal government contractors will have a mountain to overcome if they do not have defense lawyers that are also government contracts lawyers. The reason for this is that once the Government intervenes or takes over the Qui Tam case, it comes down to the details and a decision as to whether procurement fraud has been committed and if the law that governs the allegations has been violated. By the time government investigators knock on the contractor’s door

When the False Claims Act lawsuits are filed, they are filed under seal in federal court. This is not good news for the contractor because only the court and the government are aware of the lawsuit. This means that if a current employee is the Relator, that person may be at work every day without the employer having any idea. See How to Defend a Qui Tam Lawsuit Involving Government Contracts?

The cases a filed under seal to give the government the ability to investigate the allegations in secrecy and to have the advantage of the element of surprise.
Government fraud investigations can take a long time. It is not unusual for an investigation to take two to three years. The Relator’s attorney may have to request extensions from the court to keep the case under seal.

5. What Exposure of Liability Does the Contractor Have in a Federal False Claims Act and Qui Tam Litigation?

There is no doubt that false claims statutes are designed to punish federal government contractors for having defrauded the government. If the case is a criminal case, then there may be jail time involved in addition to restitution. There can be both civil and criminal cases going on at the same time for contractors to defend. Contractors should also be aware that any false statements made to the government, even during investigations, could be tacked on as additional violations that warrant additional penalties.

Therefore, having a viable federal False Claims Act and qui tam litigation defense attorney that understands underlying procurement law can be extremely helpful when defending your case(s).
In a Qui Tam case, and in addition to any settlement or rulings during litigation, or paying times the amount (treble) for government losses, the contractor may be liable for the Relator’s attorney’s fees over and beyond any contingency fees to the Relator.

6. Should You Settle or Go to Trial in a Qui Tam Lawsuit?

Every case has a different set of facts. Deciding whether to settle or litigate a Qui Tam False Claims Act case is a difficult decision to make for a federal contractor. It is solely the decision of the contractor/ defendant. At the end of the day, the strength and weakness of the government’s case and or the strength and weakness of any defenses you have, also contribute to the ultimate decision of whether to settle or not.

Whether or not contractors should settle Qui Tam lawsuits depends on the specific circumstances, as each case is unique. Generally speaking, however, it may be wise to consider settling if a defendant believes that they are likely to lose in court or would face a long and costly trial. Settlement of a qui tam case can provide both parties with an advantage. The defendant can avoid additional litigation costs and reputational damage resulting from a public trial, while the plaintiff could potentially receive more money than they would have recovered at trial. Additionally, settlement frees up court time to hear other cases.

Before selecting a settlement option in any qui tam lawsuit, defendants should seek legal advice from experienced attorneys who understand this complex area of law. An experienced attorney can review all available evidence and assess the risks associated with going to trial. Ultimately, the decision of whether or not to settle a qui tam case is up to the defendant. With proper legal counsel and an understanding of the situation, defendants can make more informed decisions about how best to handle their cases.

Can you get a Qui Tam lawsuit dismissed?

Yes, a contractor can potentially get a qui tam lawsuit dismissed under certain circumstances. However, it is important to note that the outcome of a dismissal depends on the specific details of the case, the evidence presented, and the applicable laws and regulations.

Qui tam lawsuits, also known as whistleblower lawsuits, are legal actions brought by private individuals, known as relators, on behalf of the government against individuals or entities that have defrauded the government. These lawsuits are typically filed under the False Claims Act (FCA) in the United States, although other countries may have similar laws.

To get a qui tam case. dismissed, a contractor may employ various strategies, including:

1. Lack of evidence: The contractor can argue that the relator’s claims lack sufficient evidence to support the allegations of fraud or false claims. They may challenge the relator’s credibility, the reliability of the evidence presented, or demonstrate that there is insufficient proof of wrongdoing.

2. Procedural issues: The contractor can seek dismissal based on procedural grounds, such as statute of limitations violations, failure to comply with legal requirements for filing the lawsuit, or failure to meet the pleading standards.

3. Lack of jurisdiction: The contractor may argue that the court lacks jurisdiction over the subject matter of the lawsuit or that the relator does not meet the legal requirements to bring the case.

4. Government intervention: In some cases, the government may choose to intervene in the qui tam lawsuit and take over the prosecution. If the government decides not to intervene, the chances of dismissal may increase, as the burden of proof may be higher for the relator in such cases.

It’s important to note that the decision to dismiss a qui tam lawsuit rests with the court, and the court will evaluate the merits of the case based on the specific circumstances. Qui tam litigation can be complex, and their outcomes depend on various factors, including the strength of the evidence, the arguments presented by both parties, and the interpretation of relevant laws and regulations.

If you are involved in qui tam litigation or need legal advice, it is recommended to consult with an attorney who specializes in whistleblower laws and has expertise in this area. They can provide guidance based on the specific details of your situation and help you understand your rights and legal options.

Bottom line: Settlement may be wise in certain circumstances, but each case is unique and defendants should consult experienced Qui Tam defense attorneys before making any decisions regarding settlement options for a qui tam lawsuit.

Without a deep understanding of the underlying substantive law that drives the allegations, a government’s case going to trial could be risky. It is important to know that the government has to first prove that the underlying regulation(s) were violated (Buy American Act or SBA small business regulations etc.) before invoking the False Claims Act. There are always risks on both the DOJ’s side and the Defendant contractor. This is yet another reason why having the right Qui Tam False Claims Act defense attorney on your team can make the difference.

What are False Claims Penalties? When large businesses or small government contractors violate the FCA, they can be liable for three times the dollar amount that the government is defrauded and civil penalties of $10,781 to $21,563 for each false claim. The relator or qui tam plaintiff can recover between 15 – 30 percent of the total recovery that the government gets regardless of whether the case is settled or went to trial. The Whistleblower cannot recover damages unless he or she files a Qui Tam claim.

What actions are Most Likely Violations of the False Claims Act in Qui Tam Cases? Not all alleged actions violate the law under Qui Tam False Claims Act cases. The following are but a few of the common violations. 

  • Overcharging the government
  • Fraudulently applying for or bidding on federal government contracts;
  • Submitting a false application for a government benefit, money or property;
  • Submitting claims for payment or improper invoices payment for goods or services that do not conform to the contract;
  • Submitting payment of invoices for goods or services that are defective or of lesser quality than were contracted for;
  • Submitting a claim that falsely certifies that the contractor has complied with procurement law, contract terms, or procurement regulations

False Claims Act Qui Tam Attorneys Fees

In addition to a share of the recovery, the Relator, the statutory guidelines provide for whistleblowers to recover Qui Tam attorneys fees, costs, and expenses.  It is the whistleblower that can request fees under the False Claims Act.  It is the Whistleblower that has the right to request attorney fees. A government contracting firm can end up paying out quite a bit of settlement costs.  Regardless of if your company and the agency (DOJ) settle the case, you may still have to deal with the attorney fee and negotiations. If a qui tam lawsuit is not successful, the relator’s attorneys get no legal fees.

False Claims Act Qui Tam Cases can be lucrative. However, when it comes to Qui Tam attorney fees, most law firms take them on a contingency basis. When you company is subject to a Qui Tam lawsuit, it can be also faced with paying the relator’s Qui Tam attorneys fee. In addition, if the feds intervene in the lawsuit, the former employee or whistleblower can get somewhere between 15% and 25% of the amount recouped by the government.  These are all expenses where having the proper Qui Tam defense lawyers can be helpful. 

The False Claims Act also permits a lawyer to seek statutory fees from the defendant: In addition to the contingency fee paid from the client’s recovery, the lawyers representing the whistleblower may also request that the losing defendants pay their hourly fees and costs.

Normally, under the “American Rule,” parties pay their own legal fees no matter who wins the case. However, the winning party may ask the losing party to pay its “costs,” meaning actual out-of-pocket expenses such as filing fees and costs of litigations such as photocopying and depositions.

The False Claims Act is one of several “fee-shifting statutes,” which means that it includes a provision that says a successful whistleblower is entitled to be paid reasonable fees, costs, and expenses from the losing defendant. Both the qui tam (fraud) provision and the anti-retaliation provision of the FCA include this fee-shift.

In some instances, attorneys charge their client on an hourly basis and, if the case is successful, the client recovers the money from the defendants at the end. However, FCA litigation is both risky and expensive (more on this below), and most whistleblowers cannot afford to “front” the cost of the litigation.

Accordingly, many whistleblower lawyers—including Bracker & Marcus LLC—choose to advance their time and recover the money directly from the defendants at the conclusion of a successful case. The Supreme Court blessed this type of agreement in Venegas v. Mitchell, 495 U.S. 82, 110 S. Ct. 1679, 109 L. Ed. 2d 74 (1990).

Statutes of Limitations –  What is the Filing Deadline for a Qui Tam Case? Under the False Claims Act,  a Qui Tam case must be filed within the latter of the following two time periods: 6 years from the date that the violation occurred; or 3 years after the government knew or should have known about the violation. In no situation can a lawsuit be filed later than ten years after the violation occurred. Get Information About Hiring Contractor Defense Attorneys 

Call the False Claims Act Qui Tam Defense Attorneys at Watson & Associates, LLC

If you are involved in a federal false claims act qui tam litigation lawsuit or Federal Government contract fraud investigation, call Watson & Associates, LLC’s Federal False Claims Act and Qui Tam defense litigation lawyers. We offer a free and confidential consultation. Call us Toll-Free at 1.866.601.5518.