Qui tam


In common law, a writ of qui tam is a writ through which private individuals who assist a prosecution can receive for themselves all or part of the damages or financial penalties recovered by the government as a result of the prosecution. Its name is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning " who sues in this matter for the king as well as for himself."
The writ fell into disuse in England and Wales following the Common Informers Act 1951 but remains current in the United States under the False Claims Act, et seq., which allows a private individual, or "whistleblower", with knowledge of past or present fraud committed against the federal government to bring suit on its behalf. There are also qui tam provisions in regarding arming vessels against friendly nations; regarding violating Indian protection laws; regarding the removal of undersea treasure from the Florida coast to foreign nations; and regarding false marking. In February 2011, the qui tam provision regarding false marking was held to be unconstitutional by a U.S. District Court, and in September of that year, the enactment of the Leahy–Smith America Invents Act effectively removed qui tam remedies from § 292.

History

England and Wales

The historical antecedents of qui tam statutes lie in Roman and Anglo-Saxon law. Roman criminal prosecutions were typically initiated by private citizens and beginning no later than the Lex Pedia, it became common for Roman criminal statutes to offer a portion of the defendant's property to the initiator of the prosecution as a reward. Forerunners of qui tam actions also occurred in Anglo-Saxon England; in the year 656, Wihtred of Kent issued a decree that a Sabbath-breaker would "forfeit his, and the man who informs against him shall have half the fine, and the labour."
The first qui tam statutes were enacted by the English Parliament in the fourteenth century, some 250 years after the Norman Conquest. Such qui tam enforcement allowed enforcement of the legislative priorities of the king, especially in areas where and at times when such legislation "undermined local officials' interests."
The 1318 Statute of York, which set uniform prices for certain consumer goods, was an early English qui tam provision. The act prohibited city and borough officers from selling the regulated commodities, and provided for forfeiture to the king of any prohibited merchandise. To ensure enforcement, the act provided that one-third of the forfeited merchandise "shall be delivered to the Party that sued the Offender, as the King's Gift. And in such Case he that will sue shall be received."
More qui tam provisions were enacted over the next two centuries, rewarding informers. For example, the 1328 Statute of Northampton penalized the holding of fairs by lords and merchants for longer than the authorized length, and provided that "every man that will sue for our Lord the King, shall be received, and the Fourth Part of that which shall be lost at his Suit." Two Statutes of Labourers, enacted in 1349 and 1350, set wage and price controls and provided for informers to seek forfeiture from the violator, or from mayors or bailiffs who failed to enforce the regulations. A large number of other statutes, mostly affecting commercial regulations, also included qui tam provisions.
Some qui tam statutes were targeted at ensuring the integrity of officials. For example:
During the reign of Henry VII, qui tam enforcement was reformed to avoid abuses, such as collusive suits between defendants and informers meant to avoid punishment. A 1487 statute, among other reforms, made it a crime to collude with a qui tam informer.
The practice fell into disrepute in England in the 19th century by which time it was principally used to enforce laws related to Christian Sunday observance. It was brought to an effective end by the Common Informers Act 1951 but, in 2007, there were proposals to introduce legal provision on the U.S. model back to the United Kingdom.

United States

"Whistleblower" can mean any person who reveals misconduct by his or her employer or another business or entity. The misconduct may be in the form of breaking the law, committing fraud, or corruption. In the United States, that type of fraud may be a violation of the False Claims Act, or similar state and local laws, and a whistleblower who exposes fraud on the government may bring a qui tam lawsuit on behalf of the government and potentially receive a share of the recovery recovered by the government as a reward for bringing that action.
Whistleblower protections have existed in the United States in colonial times, and were embraced by the first U.S. Congress as a way to enforce the laws when the new federal government had virtually no law enforcement officers.
The case of Richard Marven and Samuel Shaw led the Continental Congress to pass the first whistleblower law in the new United States in 1778. The Continental Congress was moved to act after an incident in 1777, when the two blew the whistle and suffered severe retaliation by Esek Hopkins, the commander-in-chief of the Continental Navy. The Continental Congress enacted the whistleblower protection law on July 30, 1778 by a unanimous vote. The Continental Congress declared it the duty of "all persons in the service of the United States, as well as all other the inhabitants thereof" to inform the Continental Congress or proper authorities of "misconduct, frauds or misdemeanors committed by any officers in the service of these states, which may come to their knowledge." Congress declared that the United States would defend the two whistleblowers against a libel suit filed against them by Hopkins, resolving that "the reasonable expences of defending the said suit be defrayed by the United States" and terminated the employment of Hopkins, who had misconducted himself.

False Claims Act

The American Civil War was marked by fraud on all levels, especially with regard to Union War Department contracts. Some say the False Claims Act came about because of bad mules. During the Civil War, unscrupulous contractors sold the Union Army, among other things, decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions.
The False Claims Act is an American federal law that was passed on March 2, 1863 during the American Civil War, that allows people who are not affiliated with the government to file actions against federal contractors claiming fraud against the government. The law represented an effort by the government to respond to entrenched fraud in cases where the official Justice Department was reluctant to prosecute fraud cases. Importantly, a reward was offered in what is called the "qui tam" provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery.
The law was substantially weakened in 1943 during World War II while the government rushed to sign large military procurement contracts. It was strengthened again in 1986 after a period of military expansion at a time when there were many stories of defense contractor price gouging. Since then, qui tam provisions have helped recover more than $48 billion in taxpayer money.
The act of filing such actions is informally called "whistleblowing." Persons filing under the Act stand to receive a portion of any recovered damages. The Act provides a legal tool to counteract fraudulent billings turned in to the federal government. Claims under the law have been filed by persons with insider knowledge of false claims which have typically involved health care, military, or other government spending programs.
The False Claims Act allows a private person, known as a "relator," to bring a lawsuit on behalf of the United States, where the private detective or other person has information that the named defendant has knowingly submitted or caused the submission of false or fraudulent claims to the United States. In order to qualify as a "relator", pursuant to the Supreme Court's decision in Rockwell International Corp. v. United States, in order to bring an action that is based upon publicly disclosed information the person bringing the claim must legally qualify as an "original source."
The relator need not have been personally harmed by the defendant's conduct; instead, the relator is recognized as receiving legal standing to sue by way of a "partial assignment" to the relator of the injury to the government caused by the alleged fraud. The information must not be public knowledge, unless the relator qualifies as an "original source."
The False Claims Act provides incentive to relators by granting them between 15% and 25% of any award or settlement amount. In addition, the statute provides an award of the relator's attorneys' fees, making qui tam actions a popular topic for the plaintiff's bar. An individual bringing suit pro se —that is, without the representation of a lawyer—may not bring a qui tam action under the False Claims Act.
Once a relator brings suit on behalf of the government, the Department of Justice, in conjunction with a U.S. Attorney for the district in which the suit was filed, have the option to intervene in the suit. If the government does intervene, it will notify the company or person being sued that a claim has been filed. Qui tam actions are filed under seal, which has to be partially lifted by the court to allow this type of disclosure. The seal prohibits the defendant from disclosing even the mere existence of the case to anyone, including its shareholders, a fact which may cause conflicts with the defendant's obligation under Securities & Exchange Commission or stock exchange regulations that require it to disclose lawsuits that could materially affect stock prices. The government may subsequently, without disclosing the identity of the plaintiff or any of the facts, begin taking discovery from the defendant.
If the government does not decide to participate in a qui tam action, the relator may proceed alone without the Department of Justice, though such cases historically have a much lower success rate. Relators who do prevail in such cases may potentially receive a higher relator's share, to a maximum of 30%. It is conventionally thought that the government chooses legal matters it would prosecute because the government would only want to get involved in what it believes are winning cases.

False patent marking

It is an offense under to falsely mark goods as "patented" or "patent pending". Before the enactment of the America Invents Act, any person could sue for breach, and the penalty of up to $500 was shared between the government and the person suing. Frequently, patentees fail to remove patent markings from their products following the expiration date of their patents and continue to mark goods sold after that date as patented. This behavior was largely overlooked until a court held that a separate penalty was due for each such article sold.
In 2011, the United States District Court for the Northern District of Ohio held that the False Marking Statute was unconstitutional. Judge Dan Aaron Polster determined that it violated the of Article II of the Constitution, because it represented "a wholesale delegation of criminal law enforcement power to private entities with no control exercised by the Department of Justice".
The America Invents Act made significant changes to false marking laws, that affected all pending and future false marking actions:
In the provinces of Canada that observed the English common law, the qui tam action has had limited scope, although as recently as 1933 the Exchequer Court Act, R.S.C. 1927, c. 34 had language to the effect that qui tam was permitted in "suits for penalties or forfeiture as where the suit is on behalf of the Crown alone.". Lawyers have used the qui tam action to prevent unwarranted intrusion into their domain by unqualified practitioners. In cases like these, it would appear that the Crown is owed a bond from qualified practitioners, and the respondents—since they have not provided such a bond—are penalised by the courts. Allen in this case would seem to gain a fraction of the penalty exacted from Jarvis, the balance to the Crown.

Whistleblowers

'Whistleblower' can mean any person who reveals misconduct by his or her employer or another business or entity. The misconduct may be in the form of breaking the law, committing fraud, or corruption. In the United States, that type of fraud may be a violation of the False Claims Act, or similar state and local laws, and a whistleblower who exposes fraud on the government may bring a qui tam lawsuit on behalf of the government and potentially receive a share of the recovery recovered by the government as a reward for bringing that action.
In order for a whistleblower to bring a qui tam action that is based upon publicly disclosed information, that person must legally qualify as an "original source." See Rockwell International Corp. v. United States.