Qui Tam: What It Means and How the Lawsuit Works

Where the term comes from

Qui tam is short for a Latin phrase meaning he who sues for the king as well as for himself. The mechanism is old, and the American version dates to 1863, when Congress passed the False Claims Act to address suppliers cheating the Union Army. The statute is still sometimes called Lincoln’s Law.

The logic has not changed since. Fraud against the government is usually visible only to insiders. The statute pays those insiders to come forward, and lets them use the courts to do it when the government has not acted.

How a qui tam case proceeds

A qui tam case does not begin like an ordinary lawsuit. It is filed under seal, served on the Department of Justice rather than the defendant, and accompanied by a written disclosure of the evidence supporting it.

• The relator and counsel prepare the complaint and the disclosure statement
• The case is filed under seal in federal court and served on the government
• The government investigates, which commonly takes one to three years
• The government decides whether to intervene, meaning take over the case
• If it intervenes, the Department of Justice leads the litigation
• If it declines, the relator may proceed alone and the share rises to 25 to 30 percent
• The case resolves by settlement or judgment and the relator share is determined

Declined cases are still worth bringing

When the government declines to intervene, many firms will not continue. The case becomes harder, longer, and entirely self-funded. That is the moment when the choice of counsel matters most.

Our attorneys obtained a 9 million dollar settlement in a case the government did not join, against a private equity firm, its principals, and its pharmacy companies. Declination is a resourcing decision by the Department of Justice. It is not a verdict on the merits.

Filing a qui tam case in Philadelphia

For relators in the Philadelphia region, a qui tam complaint is filed under seal in the United States District Court for the Eastern District of Pennsylvania, housed in the James A. Byrne United States Courthouse at 601 Market Street. It is served on the United States Attorney for the Eastern District and on the Attorney General in Washington, and it is not served on the defendant.

The Eastern District covers Philadelphia, Bucks, Chester, Delaware, Montgomery, Berks, Lancaster, Lehigh, and Northampton counties. Appeals go to the Third Circuit, also seated in Philadelphia.

You do not need to live in Pennsylvania to file here, and living here does not require filing here. Venue follows the defendant and the conduct. What matters more than geography is that the case is filed correctly and first.

What the seal period is actually like

The statutory seal is 60 days. In practice the government moves for extensions and courts grant them, so a year is ordinary and complex matters run to three.

During that time very little visibly happens. You will likely be interviewed by an Assistant United States Attorney and agents from the relevant inspector general, sometimes more than once, and you may be asked to explain documents or walk through how a billing system worked. Between those contacts there can be long silences that feel like the case has stalled. Usually it has not.

You continue working. You do not tell colleagues. If your employer takes adverse action against you during this period for some other stated reason, that is worth raising with counsel immediately, because a retaliation claim under section 3730(h) runs on its own track and can be resolved long before the fraud case.

The bars that can defeat a qui tam case

Three doctrines end more qui tam cases than any defense on the merits, and all three turn on facts you can assess before filing.

• First-to-file. Only the first relator to file on the same underlying facts may recover. A later case is barred even if it is stronger, and you cannot see the earlier one because it is sealed.
• Public disclosure. If substantially the same allegations already appeared in a federal hearing, a government report or audit, or the news media, the case is barred unless you qualify as an original source with independent knowledge that materially adds to what is public.
• Government action bar. You cannot bring a qui tam claim based on allegations already the subject of a pending civil suit or administrative proceeding in which the government is a party.

What the relator actually does during litigation

People imagine either a starring role or none at all. The reality sits in between and depends on whether the government intervenes.

If the government intervenes, the Department of Justice takes primary responsibility. You remain a party, your counsel stays involved, and you are consulted on settlement, but the government drives strategy. Your obligations are cooperation, availability for interviews and testimony, and preserving what you know.

If the government declines and you proceed, your counsel runs the case. That means discovery against a defendant with resources, expert work on damages, and the real possibility of trial. Your role becomes closer to that of a plaintiff in ordinary litigation, including deposition and, if it goes that far, testimony.

In either posture the statute protects you from retaliation for participating, and in both the case can settle at any point.