Types of Qui Tam Cases
From its 13th-century English origins, qui tam has undergone extensive evolvement throughout its entire history in American jurisprudence. Nevertheless, its core concepts have remained relatively constant.
Most qui tam actions arise from economic gain through fraudulent acts against the government. Any pecuniary benefit accomplished by such unethical or deceptive means falls within the bailiwick of false claims.
Three Main Categories of Qui Tam Cases
Most false claims involve some tangible economic incentive. The majority of these inducements originate from falsified statements, records, or other representations. These deceptive documents are subsequently submitted for government payment.
A second major false claim genre is the avoidance of valid governmental monetary obligation(s). Such fraudulent activities are hereinafter denoted as “reverse” false claims.
The third common scenario that gives frequent rise to qui tam litigation is consumer fraud. In this Article, “consumer fraud” designates noncompliance with any statutory, regulatory, or legal requirement(s) designed to promote public safety or welfare.
Qui Tam Components of the False Claims Act
In 1986, the False Claims Act underwent a major legislative overhaul. Specifically, the Amendment defined false “claims” as
"...any request or demand which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded."
Fraudulent tax returns are conspicuously omitted from the statutory definition. An prominent inclusion, however, is commonly known as “reverse” false claims. Such reverse claims are fraudulent activities or records designed to falsely reduce monetary debts rightfully owed to the government.
Most Common Qui Tam Cases
Although the FCA delineates several false claim categories, certain types of false claims are more common than others. Following are some of the more prevalent circumstances surrounding qui tam suits.
Also known as “overcharging,” mischarging entails filing falsified claims for product or service reimbursements. Medical services and employee labor that were never rendered or performed are common examples. Providing substandard or defective materials or services is another form of mischarging.
Knowingly issuing false certification that products conform to specific standards or misrepresenting the results of mandatory product testing also constitute mischarging. The common motivation underlying all the above examples is unjust economic enrichment. As such, they are “offensive” in the sense of actively seeking to obtain an unjustified tangible financial advantage.
Reverse False Claims
The FCA provides penalties for any person who “knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government.” (31 USC 31 U.S.C. § 3729(a)(7). Misconduct encompassed within this statutory language is commonly known as “reverse” false claims.
An example would be a corporation that knowingly falsifies product classifications to reduce import tariffs. Falsely certifying bulk postage rates, then using a lower rate to generate a profit would also constitute a reverse false claim.
Perhaps the most politically volatile and emotionally sensitive category of false claims stems from noncompliance with consumer protection statutes and regulations. An example of consumer fraud would be misrepresenting or failing to disclose the terms of personal loans or credit card contracts.
Failure to comply with FDA regulations pertaining to the permissible contents of cosmetics or edible products is another common form of consumer fraud. Likewise, so is the failure to install workplace safety devices in industrial settings.
The common characteristics of consumer fraud are avoiding financial expenditures required for compliance and the consequent jeopardy of public health, safety, or welfare.
Any commercial scenario involving government funds inheres a high risk of false claims. Widespread perceptions of “deep pockets” and relative obscurity created by governmental bureaucratic machinery makes it essential for private parties to actively participate in the fight to eradicate fraudulent business practices.