Qui tam lawsuits are legal actions filed under the federal False Claims Act that allow whistleblowers or relators to report fraud involving federal funds. These cases typically allege that a company or individual knowingly submitted false claims for payment or avoided paying money owed to the United States.
Whistleblowers file many types of qui tam cases – ranging from healthcare fraud cases to defense fraud cases to other types of fraud – to expose and stop fraud that puts the health and well-being of patients, troops, workers, and others at risk, and that drains billions of dollars of taxpayer money from the US Treasury annually. If a whistleblower’s qui tam lawsuit is successful, the whistleblower can receive rewards of 15% to 30% of the funds recovered as a result of their case. The False Claims Act also offers whistleblowers protections against job retaliation they may experience for reporting fraud against the government
Here are some common types of fraud that whistleblowers report by filing qui tam lawsuits.
Healthcare Fraud Qui Tam Cases
Healthcare fraud consistently accounts for a significant share of False Claims Act recoveries. Because Medicare, Medicaid, TRICARE, and other federal healthcare programs involve substantial public expenditures, they are frequent targets of enforcement.
Common healthcare-related qui tam cases may involve:
- Pharmaceutical company fraud, including unlawful marketing practices and improper claims submitted to federal healthcare programs
- Medical device and implant fraud involving defective products, misrepresentations to federal payers, or improper reimbursement practices
- Upcoding and unbundling or fragmentation schemes that inflate reimbursement by billing for more expensive services or separating services that should be billed together
- Kickbacks and improper financial relationships designed to induce referrals or generate federally reimbursable business
- False certifications and information submitted to Medicare, Medicaid, or other government healthcare programs
- Lack of medical necessity, including billing for procedures or services that are not clinically justified
- Fraudulent cost reports submitted to federal healthcare programs
- Grant or program fraud involving the misuse or misrepresentation of federally funded healthcare grants
- Medicare Advantage risk adjustment fraud, including improper diagnosis coding that increases government payments
- Risk adjustment strategies that may raise False Claims Act concerns under federal program requirements
- Medicare Part D fraud involving prescription drug program billing practices
- Medical loss ratio fraud tied to federal healthcare reimbursement rules
- Telehealth fraud, including improper billing for remote services, misrepresentations of telehealth services provided, or violations of telemedicine program requirements
- Care management and remote patient monitoring program fraud, including improper billing, misrepresentation of services provided, or failures to meet program requirements for federally funded care coordination and monitoring services
Example of a Healthcare Qui Tam Lawsuit
A medical provider knowingly inflates diagnosis codes to increase Medicare reimbursement. Internal communications reflect awareness that the coding practices do not accurately reflect patient conditions. A compliance employee reports the conduct and files a sealed complaint under the False Claims Act alleging that the provider submitted false claims for payment.
Defense Contractor & Government Procurement Fraud
The False Claims Act was originally enacted during the Civil War to combat fraud by military suppliers. Government procurement and defense contracting remain central areas of enforcement.
Common procurement and defense contractor-related qui tam cases may involve:
- Supplying defective or nonconforming products to the federal government
- Product substitution, including providing goods that differ from those required under the contract
- Violations of the Truth in Negotiations Act TINA, such as failing to disclose accurate pricing data during contract negotiations
- Cross-charging costs between contracts in a manner that improperly shifts expenses to federally funded projects
- Improper cost allocation practices that inflate reimbursement or mischarge indirect costs
- Failure to comply with contract specifications, testing requirements, or performance standards
- Contractor fraud in Iraq, Afghanistan, and other overseas operations involving federally funded contracts
- False certifications of compliance submitted in connection with payment requests or contract performance
Example of a Defense Contractor Qui Tam Lawsuit
A contractor supplying equipment to a federal agency becomes aware that certain components fail to meet required specifications. Despite internal knowledge of the deficiencies, the contractor certifies compliance and submits invoices for payment. An employee with knowledge of the issue files a qui tam complaint alleging false certifications tied to payment.
Financial Industry & Mortgage-Related Fraud
Financial institutions and other entities participating in federally backed programs may also face liability under the False Claims Act.
Common financial-related qui tam cases may involve:
- False certifications or underwriting violations tied to FHA mortgages and other federally insured loan programs
- Misrepresentations in municipal transactions involving federally funded bonds or public financing arrangements
- Yield burning schemes in connection with federally funded projects or tax-advantaged municipal securities
- False statements affecting eligibility for federal guarantees, insurance, or participation in government-backed lending programs
- Improper disclosures or misstatements submitted to federal agencies in connection with financial assistance programs
- Overcharging or misrepresenting compliance with contractual pricing terms in government financial agreements
Example of a Financial Fraud Qui Tam Lawsuit
A lender certifies that loans comply with federal underwriting requirements in order to obtain government insurance. Internal audits reveal that the lender knowingly approved loans that failed to meet those standards. A whistleblower alleges that the certifications were false and resulted in government losses.
Federal Revenue & Trade-Related Fraud
The False Claims Act may apply not only when entities improperly receive government funds, but also when they knowingly avoid paying money owed to the United States. These cases are often described as reverse false claims and typically involve duties, taxes, or regulatory payment obligations.
Federal revenue and trade-related qui tam cases may involve:
- Customs fraud involving undervaluation or misclassification of imported goods to reduce tariffs owed to the government
- IRS tax fraud and federal revenue fraud involving false reporting, improper deductions, or fraudulent refund claims
- Carbon offset and environmental program fraud involving inflated credits or false reporting tied to federally supported environmental initiatives
Example of a Federal Revenue Qui Tam Lawsuit
An importer allegedly misclassifies goods under a lower tariff category to reduce customs duties. Internal records suggest awareness that the classification was inaccurate. A whistleblower claims the company knowingly avoided paying money owed to the government.
Government Program & Federally Funded Project Fraud
Federal funds are distributed through a wide range of programs beyond healthcare and defense contracting. Entities participating in disaster relief programs, infrastructure projects, or federal supply schedules must comply with applicable statutory and contractual requirements.
Common cases may involve:
- GSA contract fraud involving pricing misrepresentations or false certifications tied to federal supply schedule contracts
- Construction project fraud involving federally funded infrastructure projects, including mischarging or noncompliance with project requirements
- Disaster relief fraud involving false claims submitted to FEMA, the Small Business Administration, or other federal agencies administering emergency funding
Example of a Government Program Qui Tam Lawsuit
A contractor on a federally funded project certifies compliance with required standards while internal documentation reflects potential deficiencies. A whistleblower alleges that payment requests were supported by materially false statements.
Emerging Technology and Market-Based Fraud
As technology and regulated markets evolve, new compliance obligations arise for entities participating in federal programs or contracts. Misrepresentations tied to these activities may give rise to False Claims Act exposure.
Common cases may involve:
- Cryptocurrency fraud involving misrepresentations connected to federally regulated programs or government funding initiatives
- AI-related whistleblower cases involving false certifications, contract compliance issues, or misstatements affecting federal funding decisions
Example of an Emerging Technology Qui Tam Lawsuit
A company seeking federal funding certifies compliance with required standards despite internal concerns about performance or regulatory compliance. A whistleblower alleges that those certifications were material to the government’s funding decision.
Frequently Asked Questions About Qui Tam Cases
What are the most common types of qui tam cases?
Healthcare fraud, government procurement fraud, and financial program-related fraud are among the most frequently litigated areas under the False Claims Act. However, any situation involving false claims for federal funds may potentially give rise to liability.
What is an example of a qui tam lawsuit?
An example would be a company knowingly submitting invoices to Medicare for services not performed. A whistleblower with knowledge of the conduct files a sealed complaint alleging that the claims were false.
Who can file a qui tam lawsuit?
Generally, a private individual with nonpublic information about fraud against the government may be eligible to file a qui tam action, subject to statutory requirements and procedural rules.
What happens after a qui tam complaint is filed?
The complaint is filed under seal, and the Department of Justice investigates the allegations. The government then determines whether to intervene in the case.
What are the requirements for a qui tam lawsuit?
A qui tam lawsuit must be filed under the federal False Claims Act by a person with nonpublic information that a company or individual knowingly submitted false claims to the government or avoided paying money owed to the United States. The complaint must be filed under seal in federal court and served on the U.S. Department of Justice, not the defendant. The case remains under seal for at least 60 days while the government investigates, and in practice, the seal period is often extended.
How long does a qui tam case take?
Qui tam cases often take several years to resolve. Government investigations commonly extend well beyond the initial seal period and may last multiple years, especially in complex cases. If the case proceeds to litigation, resolution can take even longer. While some matters settle sooner, it is not unusual for a qui tam case to take three years or more.
What proof does a whistleblower need?
A whistleblower must have credible information suggesting that false claims were submitted to the government or that money owed to the United States was knowingly avoided. This may include firsthand knowledge of the conduct or information the whistleblower had lawful access to through their work. If retaliation is alleged, the whistleblower must also show they engaged in protected activity under the False Claims Act and suffered adverse action because of it.
Speak With an Experienced Qui Tam Law Firm
Fraud against the government can take many forms across industries. Understanding whether specific conduct may violate the False Claims Act requires careful analysis of the facts and applicable law.
If you have information about potential fraud involving federal funds and are considering blowing the whistle, speak confidentially with an experienced whistleblower attorney to understand your options.
Contact Phillips and Cohen for a confidential case evaluation.