Reporting Fraud by Filing a Qui Tam Case

June 15, 2015 — To commence a qui tam lawsuit, a whistleblower is required to serve a copy of the disclosure statement and file a complaint under seal in court. What does this mean and how does this affect the whistleblower’s decision whether to move forward?
When a whistleblower decides to come forward and file a complaint, there are several important steps to note about a qui tam case that are different than your run of the mill lawsuit.

Provide Disclosure Statement

First, the whistleblower must provide a disclosure statement to the government. This document is prepared by the whistleblower’s attorney, and it has all of the relevant facts and evidence needed for the government to conduct an investigation. It sets forth the wrongful conduct of the defendant(s), whether there are any documents to prove the wrongful conduct, and whether there are any witnesses to whom the government may speak to verify the facts alleged. This document is not filed with the court. Instead, it is sent to United States Attorney General, the local United States Attorney where the case is filed, and the respective State Attorney’s office, if need be.

File Complaint Under Seal

Generally a week or two after the disclosure statement is sent, the complaint is filed in court. This triggers another important step. All qui tam statutes require that the whistleblower file her complaint under seal. This is very important as it requires the whistleblower to refrain from speaking about the case to anyone while it allows for the government to conduct an investigation. The case may remain under seal for years while the government investigates. During the investigation, depending on the type of fraud alleged, the government may interview the whistleblower, who is called a relator, may request documents from government agencies that support the relator’s allegations, and may issue a request for documents from the defendant without revealing the relator’s identity. During this time period, it is imperative that the relator not break the seal by speaking about or announcing the fact that she has filed a qui tam case.

Whistleblowers Must Act Quickly

Lastly, if a whistleblower is interested in filing a qui tam case, she must act quickly to retain an attorney to execute the two requirements described above: serving a disclosure statement and filing a complaint. This is because, unique to qui tam cases, only the “first to file” whistleblower is entitled to a reward from the government. “First to file”  refers to the first person to file the complaint (determined by the date that the complaint is filed) who wins the race to the courthouse. Because all cases are filed under seal, the general public, including qui tam attorneys, are unable to check whether any other whistleblowers have come forward during the seal period to report the same conduct against the same defendant(s). Only the government attorneys are able to determine when multiple whistleblowers have come forward. By the time they inform the whistleblower or her attorneys, it may be too late to make a difference. Therefore, if one is interested in filing a qui tam case, one must do so quickly in order to be considered the first to file.
Louisa Kirakosian is an attorney at Waters Kraus Paul & Siegel, in the firm’s Los Angeles office. She represents whistleblowers who have uncovered fraud against the government in the pharmaceutical, Medicare/Medicaid, and government contracting industries.

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