When hearing the term “qui tam action,” many business professionals may be wondering what it means and how it relates to their company operations. To grasp the concept fully, it’s important to understand the Latin translation of the two words: “qui tam” or “he who brings a case on behalf of the king as well as for himself.”
Essentially, What Is a Qui Tam Action?
Simply put, a qui tam action is a legal action that a private individual, or “whistleblower” takes on behalf of the government against a company or individual that is believed to have defrauded or acted illegally against the government. It’s also known as a False Claims Act, and the filing generally includes claiming a monetary reward in return. It’s a mechanism that allows one individual to step in and represent the U.S. government when it cannot do so itself.
Modern Examples of Qui Tam Actions
We don’t need to look far to find examples of qui tam actions that have made recent headlines. In the 1990s, pharmaceutical giant Pfizer was sued for billions of dollars by a whistleblower after allegedly defrauding the U.S. government through fraudulent Medicare and Medicaid claims. The whistleblower in this case was given a multi-million dollar award for uncovering the fraud.
More recently, in 2017, financial services company Wells Fargo was sued by a former employee in a qui tam action for allegedly defrauding the government by submitting false claims to the Small Business Administration and charging unfair fees to veterans for their home loans. This lawsuit is still in progress today.
The Significance of Qui Tam Actions in Modern Business
Qui tam actions send a clear message that companies need to be conducting business operations ethically and honestly. Especially in an era where corporate social responsibility is increasingly becoming a focus of modern business, companies need to be aware of the consequences of their actions – both legally and publicly.
Whistleblower lawsuits can be powerful mechanisms to uncover or influence unethical behavior. Companies need to be aware of the implications of possible qui tam actions and ensure they are not engaging in activities that could be considered against the law or that would threaten public trust.