“Qui Tam” is the beginning of a Latin phrase which means “he who acts for the king as well as for himself.” In a “False Claims Act” (FCA) or “qui tam” action, the plaintiff brings the action on behalf of the federal or state government (“acting for the king”) and against some person or entity who has allegedly submitted false claims to, or otherwise defrauded, the government. The plaintiff also seeks a bounty (“acting for himself”) in the form of a percentage of the amount recovered.
In a Qui Tam action the plaintiff’s name is styled, or called, “ex rel.” the
government: for example, “John Doe ex rel. the United States of America v. ABC
Corporation.” “Ex rel.” means “on the relation of” or “on behalf of.” As a
result of this convention, the Qui Tam plaintiff is commonly referred to as the
“Relator.”
The basic theory of the FCA action is that it encourages private individuals to ferret out fraud against the government, and to act as “private attorney generals” by bringing an action seeking reimbursement for the government. Frequently the FCA Relator will be a person who actually participated in the alleged misconduct. He or she is then often called a "whistle blower", alerting the government to the fraud of their employer. The Relator’s participation in the alleged misconduct is not a good defense to the action–the legislative history of the Federal FCA explicitly notes that the FCA was designed to “set a rouge to catch a rogue.”
This web discusses the nature of a False Claims Act or “qui tam actions”; the incentives for private individuals to bring such actions on behalf of the government; the unusual procedures involved in a qui tam action; the unique difficulties of the defense of a qui tam action; and some of the tactics and strategy of defending a qui tam action. A complete copy (as of 2004) of the Florida False Claim Act is also included. It is patterned after the federal statute, but there are some important differences. Also mentioned at the end, as you might expect, are the abilities of Ralph Losey's law firm, Akerman Senterfitt to represent litigants in such law suits throughout the state of Florida, or elsewhere in the country with the assistance of local counsel.
RALPH C. LOSEY, J.D., Attorney
at Law
To learn more about Qui Tam actions see:
Incentives for Relators to bring Qui Tam Actions
Unusual Procedures Involved in Qui Tam Actions
Unique Difficulties of Defending Qui Tam Actions
Links to other websites with information relevant to Government Fraud and False Claims Act cases
Florida False Claims Act (2004)
Incentives for Relators to bring Qui Tam Actions
Because of this penalty, Relators have tremendous incentives to file False Claims Act actions, even where the total amount allegedly overpaid by the government is small. For example, suppose that a medical laboratory’s billing software miscoded a test such that the laboratory was overpaid $1.00 per test. After 1000 such billings, a laboratory employee realized the error. Rather than correct the miscoding and report the error to his superiors, the laboratory employee hires a lawyer and files a False Claims Act action. The total amount of damages to the government would be only $1,000. However, the total potential False Claims Act penalty that the laboratory employee can hold over the head of his employer would be $10,000,000, plus treble damages of $3,000. Thirty percent of that total potential penalty would be $3,000,900.00. Of course, the employee would have to prove that this mis-billing was not just an accident, that it was a knowing overcharge. There are, of course, all kinds of additional defenses and nuances, but the monetary risks and rewards here are obvious.
Unusual Procedures Involved in Qui Tam Actions
The procedures for False Claims Act matters are, to say the least, unusual. The Relator must file his complaint “in camera,” or secretly. At the same time, the Relator must serve the Complaint, plus a “written disclosure of substantially all material evidence and information” in the Relator’s possession, upon the Government. However, the Relator does not serve the Complaint upon the defendant. Rather, the Complaint remains under seal for at least 60 days, and may not be served upon the defendant until the Court so orders.
The sealing of the complaint is designed to allow the Government to determine whether it wants to intervene in the action and take over the prosecution of the case. Many Relators, especially those with counsel that cannot finance or staff a large complex matter over a long period of time, actively push the Government to take over the case. While this reduces the Relator’s top potential percentage recovery, it also prevents the Relator and/or the Relator’s counsel from having to finance the prosecution of the action.
Typically the Government does not review the matter within the first 60 days. The statute allows the Government to request extensions of the time in which the complaint is under seal, and the Government generally makes use of this provision. Eventually, however, the Court’s patience with further delay will end, and the Court will unseal the complaint and require the Government to decide whether or not it is intervening.
If the Government intervenes, it then takes over and handles the prosecution of the action. If the Government does not intervene, the Relator and his counsel must then handle the prosecution of the action alone.
Unique Difficulties of Defending Qui Tam Actions
Because of the unusual procedures, and the unusual posture of a private individual bringing an action on behalf of the government, False Claims Act cases pose a unique set of difficulties to any defendant.
This law is highly complicated, and not known by all attorneys or judges. Moreover, these cases are usually very fact intensive and complex. This makes this type of case very difficult to prosecute and defend.
The unusual nature of False Claims Act cases also vastly complicates possible settlement of a False Claims Act action. Settling such an action requires effective negotiation not just with the Relator and his counsel, but also with the appropriate state and federal officials. Furthermore, the settlement must be approved by the Court.
The enormous False Claims Act potential penalties put False Claims Act defendants at risk for extremely large judgments. These sums are frequently disproportionate to the amount of alleged overpayment, especially where the alleged overpayments are small but numerous.
Because of these and other difficulties, False Claims Act actions require an aggressive, well-calculated, and creative defense. Akerman Senterfitt is equipped to handle all aspects of that defense.
Akerman Senterfitt.
Our law firm is experienced in handling large and complex qui tam actions. The defense of these cases requires a unique combination of skills: (a) extensive knowledge and experience with complex litigation, especially fraud, involving up to tens or hundreds of millions of dollars of alleged damages, and hundreds of thousands of separate transactions; (b) the ability to negotiate effectively with the appropriate Florida state agencies and the Florida Attorney General, for cases involving alleged fraud against Florida agencies; and (c) the ability to negotiate effectively with the appropriate federal agencies and the federal Department of Justice, for cases involving alleged fraud against federal agencies. Here our Washington D.C. office can be particularly helpful.
While most False Claims Act cases are based on the federal False Claims Act, 31 U.S.C. § 3729 et seq., Florida also has its own False Claims Act allowing Florida state court actions alleging false claims against a state governmental agency. Fla. Stat. § 68.081 et seq. The Florida Act is patterned on the Federal Act. The considerations involved in the defense of a federal and Florida False Claims Act action are similar, with the exception that in a Florida action there is no involvement of federal officials or agencies.
Where governmental programs are funded both with state and federal funds, a False Claims Act action can involve both state and federal agencies. For example, a recent False Claims Act case successfully resolved by Akerman Senterfitt attorneys involved the Florida Medicaid program. The successful defense of that case required Akerman Senterfitt to interact effectively with the Florida Attorney General’s Office; the Florida Agency for Health Care Administration, which runs the Florida Medicaid program; the federal Health Care Financing Administration; and the federal Department of Justice. Particularly significant to that action was Akerman's success in obtaining a letter from the Florida Medicaid General Counsel, and deposition testimony from Florida Medicaid Program Managers, admitting that the allegedly violated regulation was vague and subject to multiple meanings.
Akerman’s litigation department has significant experience with handling complex fraud and commercial litigation; complex class action litigation; and complex False Claims Act litigation, including the defense of one recent action involving alleged damages exceeding One Billion Dollars. In addition, Akerman’s large lobbying and regulatory departments, and firm members with prior experience in the Florida Attorney General’s office and numerous other Florida state agencies, provide Akerman Senterfitt with the appropriate relationships and experience for negotiating with the Florida Attorney General’s Office and any other Florida state agencies involved.
Akerman attorneys are also experienced in negotiating with the federal Department of Justice in False Claims Act matters. In addition, Ralph losey and Akerman have formed effective relationships with Washington attorneys specializing in False Claims Act cases, as well as former U.S. Attorneys now in private practice in Florida, which enhance Akerman’s ability to effectively negotiate with any federal agencies involved and with the federal Department of Justice.
For more information about Akerman Senterfitt and Qui Tam legal representation, you may send an E-mail to the head of the firm’s False Claims Act Department, Ralph Losey at ralph.losey@akerman.com.
Do not send any information to us regarding any case you may want to have evaluated, either from a defense or plaintiff's perspective. We must first clear all conflict checks before we will hear anything about the facts, and so the first thing is to tell us the adverse parties involved, and nothing else. Only if and when we determine that the firm does not represent any of these adverse parties, or related persons or entities, can we discuss any particular case. Emails with information about a case that go beyond merely identifying yourself and the potential adverse parties will be deleted without reading. Only emails which do not discuss the facts of a case, and provide no information about the alleged wrongs, will be read. Others will be deleted without reading. Please understand that we take great efforts to protect the rights of our existing clients, and our loyalties and duties run to them, and not to any other persons, including the government. If you become a client of the firm we will treat you with the same loyalty and respect. Merely speaking with us by phone or email does not create an attorney client relationship. You will only become a client of the firm if a case is accepted and a written fee agreement is signed by you and the firm.
RALPH C. LOSEY, J.D.
© 1995-2005 - Ralph C. Losey, Attorney at Law