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What is a "Qui Tam" lawsuit?

If you work for a company that does business for or with the government, you may have heard of a "qui tam" action lawsuit. A qui tam action lawsuit takes place when an employee informs the government that a company is defrauding the government.

Examples could be, but are not limited to: overcharges to the government, selling a product or service without following through on the commitment, creating false reports regarding the quality of a product or any act intended to steal, cheat or defraud the government.

When an employee brings a claim, the action is under seal, meaning that the complaint is entirely confidential for at least 60 days. During this time, the government makes a determination whether to proceed with the claim. If the government does not follow through, the person who initiated the action may proceed without government involvement.

If found guilty, the penalties to the company can be severe. They may be responsible for paying three times the value of the damages, in addition to a $5,000 to $10,000 penalty per claim, as well a paying for the expenses and costs, including attorney fees, associated with the prosecution of the lawsuit.

The False Claims Act also provides an incentive for an employee to report the defrauding to the government. The "whistleblower," or employee who brought the qui tam litigation, may also be rewarded with an award typically between 15 to 30 percent of the recovery, determined by the court. Protecting your employee rights should always be a primary concern for employees who are considering a qui tam action lawsuit.

Source:, "Qui Tam Actions: Overview," Accessed on Sept. 14, 2015

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