How To Bring A
False Claims Case

To Win the False Claims Case and collect the reward, two things must happen:

1. As the whistle blower, you have to file a lawsuit, and
2. You and the Government have to win, or settle, the lawsuit.

The important part of bringing a Qui Tam case under the False Claims Act involves the details - the evidence - you are able to provide to the lawyer on how your employer (or former employer) was overcharging, or was overstating its costs and was getting more money on a Government contract than it should have been getting. It is quite helpful if you have the facts on paper, either in sales receipts, in vouchers, in invoices or in sales records, or on a CD or a floppy disk, or if you know in intricate detail where the paper documentation, or the computer database which evidences this fraud is kept and maintained. The procedure for blowing the whistle on your employer under the False Claims Act involves the filing of a lawsuit by your attorney on your behalf and on behalf of the United States. This procedure includes several steps:

The Investigation

Your lawyer (hopefully, John F. Murphy, a trial lawyer with extensive False Claims experience and trial experience in the Federal Court system) will review all of your information and decide whether there is enough to bring a civil action against your employer in the U.S. District Court where the fraud occurred. The important part of any Qui Tam case under the False Claims Act involves the details you are able to provide - your evidence – on what the false claims were, who submitted them, and how the false claims for payment were made. At the very outset your attorney has to have a good set of facts on which to decide whether the case has merit. There's no value to a weak case.

The lawyer cannot file a complaint which is based only on what you say. He must be able to understand your company's role in the federal procurement process and he must be able to substantiate your allegations. He needs to determine the period of time over which the fraud occurred, when you had direct knowledge of the fraud, the estimated damages or loss to the Government, and whether the fraud is still taking place.

What follows are some of the things he has to find out about:

1. Your Employer’s Role in the Fraud

Your employer doesn't have to deal directly with the Government in order for you to blow the whistle on it's fraud. If the Government is the ultimate buyer of the product, that is sufficient. For example, if you work for manufacturer A which makes bearings and overcharges manufacturer B, and then manufacturer B builds the battleship which is purchased by the U.S. Navy, the law considers manufacturer A (your employer) to have committed a fraudulent act against the U.S. Government.

2. If You Are a Federal Employee

You cannot bring a Qui Tam action against your employer if you yourself are an employee of the Government.

3. If It’s Just About Waste and Mismanagement

The False Claims Act does not provide a remedy for waste or mismanagement.

4. If It’s a Tax Fraud

The False Claims Act explicitly excludes tax fraud. Section 3729(e) states that the Act "does not apply to claims, records, or statements made under the Internal Revenue Code."

5. If Your Claims Came from Public Knowledge

The claim is barred when there is evidence that you learned of the claims from public disclosure. The information about your company's overcharge must come from you and not be known already. (This makes sense, because if the information does not come from you, you are not a whistle blower - you are telling the Government something it already knows.) The District Court is said to lack jurisdiction when you fail to show that you are the original source of the information relating to the fraud. The law says that if the civil action you bring is based on information already known to the Government, then you as the employee are not entitled to get anything for the recovery.

The courts have created a legal fiction to throw you out of court: public disclosure of the allegations divests the court of jurisdiction, and where the plaintiff is not the original source of the information, he or she is out of luck.

Many of the decisions in the law books have to do with the Government (whom you want on your side) making an argument that it already knew about the fraud because:
- The fraud was already well-publicized, so
- therefore the information did not come from you, so
- therefore there is no claim, and
- therefore you - the whistle blower wanna-be - shouldn't be rewarded and allowed to keep 15% to 25% (or 30%) of the amount the Government has collected. In fact...
- you are not entitled to anything at all.

6. When the Fraud took place.

The statute of limitations is as follows:
A civil action under section 3730 may not be brought -
• More than six years after the date on which the violation of section 3729 is committed, or
• More than three years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances,
but in no event more than ten years after the date on which the violation is committed, whichever occurs last.

Therefore, as to each claim, the 6 year period of the statute of limitations begins to run on the date the claim is paid. In other words, the payment of the fraudulent amount by the U.S. Government triggers the limitations period, and that is when the time starts to run. If the Government overpaid for a shipment of bearings more than six years after the date you bring the lawsuit, you are barred from bringing a claim on that shipment. The time for doing so has expired.

Summary

All of this information gathering will be directed at obtaining a factual basis for determining whether you have a case. It is not O.K. and not an allegation of fraud with sufficient particularity where the relator (you, the whistle blower) does not allege exact dates of the false claim(s), cannot identify the person or entity making the false representations, and has difficulty identifying the place where the alleged fraud took place. Your attorney has to make certain when he files the lawsuit that the company you worked for was, in effect, cheating the Government.

This means that your lawyer (if your lawyer is John F. Murphy ) will pay very close attention at the very outset to all the evidence you present to him. He must be absolutely certain that it is you, and not someone else, who is the "whistle blower" providing the information.

To complete this investigation, he will ask if your company was reimbursed by the Government, and how you obtained knowledge of the fraud, and all the facts which would be helpful in proving the fraud. He will question you thoroughly about all documents which will prove that the fraud occurred. He will want to know whether any of this information already has gotten out to the public, whether you already have spoken to your employer about it and whether there were any witnesses. He will want to know how many fraudulent acts occurred and what the total amount was, if you know, which the United States paid to your employer based on the fraud.

Drafting the Complaint

In order to sue your employer and begin the lawsuit, the facts you provided in the investigation will be used in the written complaint to see that the United States Government is provided with ample information concerning the program being defrauded. The complaint will include, at the minimum:
• the name of the suspected party
• the nature and operation of the fraud, including the time and place it occurred
• the nature of all the physical evidence establishing the fraud.
In addition to the formal complaint assertions, all of the information also will be listed in the statement of fact section when the lawyer is drafting the complaint. The document is drafted with enough information in it to give the United States Government an idea on whether it wishes to participate in the lawsuit. Your lawyer will draft this document with an eye on convincing the Federal Government that this case is worth getting the United States involved.

Filing the Complaint

After the complaint is drafted and after it is put in final form, it is filed with the U.S. District Court. A copy of the complaint and the written disclosure statement of substantially all material evidence and information in the relator's possession, also is served on the Attorney General of the United States.

The complaint must be filed in camera (a Latin term which means with the judge). The False Claims Act requires that the complaint be kept under seal (and should be marked as such). Under seal means that the filing is confidential and cannot be made public. Until the seal is lifted by the court, the complaint and its contents must be kept strictly confidential. At this time, when the suit is begun, the complaint must not be served on the defendant (your employer, the company which is defrauding the Government). If you violate any of the"kept under seal" provisions of the False Claims Act - if the complaint is not filed with the judge and is not sealed, or if it is made public - then the case can be dismissed and thrown out of court.
In the beginning, when the case is sealed and not made public, your employer doesn't even know about the case. Not yet.

The Government Investigation

Your case will remain under seal (i.e., in strict confidence) for at least 60 days, and the company you have sued will not know anything about your filing the case. The copy of the complaint which was served on the Attorney General of the United States will alert the Federal Government of the lawsuit, and that will trigger, during the 60 day period, a Justice Department investigation of the accusations you have made. The Justice Department will make a decision whether the case has sufficient merit for them to join the case and take over the lawsuit. The Attorney General's office can also decide not to intervene.

The 60-day seal period is routinely extended upon request by the Government, and often the period can go for as long as a year or more while the Government is deciding whether it wants to join the case. If the Government decides to join the case, it takes over the case completely and conducts its own investigation, usually on a broader scale than you know about. If the Government does intervene, the Justice Department will be primarily responsible for prosecuting the case. You, the relator, have the right to continue as a party in the action, and you (and your lawyer) may participate in the litigation subject to certain limitations. The Government may dismiss or settle the action notwithstanding your objections, but only if the court after a hearing allows the proposed dismissal or settlement.

Whether or not the Attorney General's office takes over the claim, the United States is always the real party in interest. If the Government decides not to intervene, you have the right to conduct the action on your own. After the Government decides whether to intervene and the seal period ends, the complaint is then, finally, served on your employer. The lawsuit then proceeds generally in the same manner as any other federal civil litigation, except for the special issues raised by the Qui Tam concept.

If the Government does not join or become part of the case or take over the action against your employer, you can still pursue the case, but it is much more difficult for you, although your percentage of recovery and reward is higher. In the cases where the Government enters and decides to take over the prosecution of the case, the whistleblower remains as a co-plaintiff. When the Justice Department elects not to pursue the case, the whistle blower can proceed alone, but still working for the United States Government in claiming fraud.

Throughout this process, John F. Murphy would like to be your lawyer.