Qui Tam, or whistleblower, laws have existed in Western cultures for over 600 years. An early example can be traced back to the U.S. Civil War, when Congressional hearings disclosed widespread instances of military contractor fraud that included defective products, substitution of inferior material, and illegal price gouging of the Union Army.
At the urging of Abraham Lincoln, Congress enacted the Civil False Claims Act, including Qui Tam provisions, as a tool to fight fraud. Between 1863 and 1986 the law was seldom used. But as a result of 1986 amendments, Qui Tam actions have increased dramatically and have been the most effective and successful means of combating procurement and program fraud. Since 1986, Qui Tam recoveries have exceeded $1 billion with most of the successes involving fraud in Defense and Health Care programs.
The False Claims Act states that whistleblowers are to be rewarded with a percentage of the money that the government recovers as a result of Qui Tam lawsuits. This provision helps encourage people to assist the government in reducing Medicare fraud, defense fraud and other kinds of fraud, despite the effect whistleblowing might have on their jobs and personal lives.
Under the False Claims Act the government may recover up to three times the amount of money it lost as a result of the defendant’s fraud. The whistleblower’s share is calculated based upon the amount the government recovers, not the actual losses.
A number of factors determine how much money a whistle-blower will receive if the government is able to recover money from the defendant. If the government joins the case, the whistleblower is entitled to at least 15 percent, but not more than 25 percent of what the government recovers.
If the government declines to join the case and the whistleblower continues with a suit against the defendant, the whistleblower is entitled to at least 25 percent, but not more than 30 percent of the money the government recovers.
Affordable Care Act Infuses Qui Tam with New Lifeblood
The Affordable Care Act, passed during President Obama’s administration, has enabled the Centers for Medicare & Medicaid Services (CMS) to expand its efforts to prevent and fight fraud, waste and abuse. Since passage of the act, the CMS has revoked the ability of some 14,663 providers and suppliers to bill Medicare since March 2011; it has also recovered $14.9 billion.
Seniors on Medicare played a large role in helping the government to make that recovery; primarily, they used a Medicare hotline to report instances of fraud they noticed on their statements. As of mid-2013, the government was working on bolstering its efforts to incentivize these Medicare whistleblowers: It has proposed legislation that will enable whistleblowers to collect nearly $10 million in some instances; the previous cap has been about $10,000. Additionally, the CMS will be rolling out redesigned quarterly Medicare statements, which are meant to help seniors more easily notice fraudulent billings.