Qui Tam: A Basic Primer
At common law, “qui tam” historically denoted a specialized legal writ through which private parties assisting or cooperating in criminal prosecutions shared liability with culpable party(ies). The full Latin-derived phraseology is “qui tam pro domino rege quam pro se ipso in hac parte sequitur”. The figurative English translation is “[one] suing in this matter for the king as [well as] for oneself.”
History of Qui Tam
Qui tam originated in England during the 13th century. Utilized as a means of private enforcement of the Crown’s laws, European colonists transplanted the concept into US legal lore. Qui tam writs were widely popular during colonial times, as the young nation had a paucity of official enforcement personnel.
Although qui tam is now a dead letter throughout Great Britain, it is active and alive in the United States. Recent legislative revival of the False Claims Act (“FCA”) has reinforced its statutory framework.
False Claims Act
Codified at 31 USC 3729, et seq., the FCA permits private individuals to pursue lawsuits against parties who commit past or present fraud against the US Government. A threshold requirement for initiating an FCA action is personal knowledge of fraud by the plaintiff. Accordingly, such litigants are called “whistleblowers” in common parlance. The formal legal terminology, however, is “relater.”
The relater/plaintiff need not have sustained any direct personal damage to maintain an FCA action.
Common contexts of FCA suits
A “whistleblower” may be anyone disclosing fraudulent acts by commercial organizations. A wide variety of malfeasance is actionable pursuant to FCA provisions. Examples of acts which may trigger FCA suits include: violation of any specific existing law, fraudulent activities, or internal corporate corruption. A very common scenario wherein FCA actions ensue involve employees who inform on their employers.
One high-profile examples of how FCA suits frequently evolve is an action against Pfizer, Inc. in 2004. Brought by a former salesman of the pharmaceutical giant, the suit led to Pfizer’s admission of guilt to numerous civil and criminal accusations. Roughly $2.3 billion USD was eventually paid in fines and other monetary sanctions. In fact, the Pfizer fiasco yielded the biggest criminal fine ever imposed in US history for legal prosecutions of either civil or criminal genre. The suit also resulted in the largest fraud-related civil settlement ever made against any pharmaceutical firm.
The civil portion of the monies Pfizer paid were divided among the six relater/whistleblowers involved. The total sum of the civil fines amounted to $102 million USD. The original complaint alleged systematic violations of the Anti-Kickback Act, and various FDA regulatory policy violations. Further details are available here.
Another common claim brought via FCA suits is patent fraud. Pursuant to 35 USC 292, it is a formal legal offense to falsely represent products as being patented when they are in fact unpatented. Any private party may sustain an action for breach against offending business entities.
Quite frequently, patentees do not delete patent insignias from product labels subsequent to patent expiration. The relevant statue allows prosecuting FCA plaintiffs to share a maximum award of $500 USD with the Government. Such a small sum typically provided little incentive for legal compliance with patent law.
This circumstance has recently changed, however. In September 2010, the US Court of Appeals for the Federal Circuit held that the $500 penalty was applicable to each falsely marked item or article of merchandise sold. This ruling has sparked a rash of similar suits. See here
In conclusion, qui tam actions promote significant public interests in insuring business integrity in product marketing and regulation. The examples highlighted above are stark deterrents to similar misconduct by other commercial concerns. Maintaining an equitable balance between potential abuse deterrence will insure qui tam’s continued beneficence as a legal instrumentality.