Qui tam

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Qui tam is a legal provision in the United States under the False Claims Act (31 U.S.C. § 3729 et seq.), which allows for a private individual, or whistleblower with knowledge of past or present fraud committed against the U.S. federal government to bring suit on its behalf. Its name is an abbreviation of the Latin phrase “qui tam pro domino rege quam pro se ipso in hoc parte sequitur,” meaning “he who [sues] for the king as well as for himself." This provision allows a private person, known as a “relator,” to bring a lawsuit on behalf of the United States, where the private person has information that the named defendant has knowingly submitted or caused the submission of false or fraudulent claims to the United States. The relator need not have been personally harmed by the defendant’s conduct.

The False Claims Act provides incentive to relators by granting them between 15% and 30% of any award or settlement amount. In addition, the statute provides an award of the relator's attorney's fees, making qui tam actions a popular topic for the plaintiff's bar. Indeed, a private [natural] person may not be able to commence a qui tam action "pro se" -- that is, without representation by a lawyer -- since the private person is actually representing/filing the suit on behalf of the government and that may only be done by a lawyer.

Once a relator brings suit on behalf of the government, a U.S. Attorney for the district in which the suit was filed has the option to take over the case. If he or she does so, the government will usually notify the company or person being sued that a claim has been filed. Qui tam actions are filed under seal, which has to be partially lifted by the court to allow this type of disclosure. The seal prohibits the defendant from disclosing even the mere existence of the case to anyone, including its shareholders (a fact which may cause conflicts with the defendant's obligation under SEC or stock exchange regulations that require it to disclose lawsuits that could materially affect stock prices). The government may then, without disclosing the identity of the plaintiff or any of the facts, begin taking discovery from the defendant.

If the government does not decide to participate in a qui tam action, the relator may proceed on his or her own, though such cases classically have a much lower success rate. Conventional wisdom states that this is due in part to the fact that the government will get involved if in what it believes are winning cases, but will avoid losing cases.