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Employment Law Blog

Thursday, March 17, 2005

Qui Tam is Alive and Well

Northrop Grumman Corporation reported this month that it will pay $62 million to settle all claims in a ?qui tam? lawsuit.  That is a lot of money, and the settlement should serve as a ?heads-up? to all employers who receive payments from the federal government or one of the states that allows for qui tam actions.

So what is this stealth whistleblower law affectionately referred to as ?qui tam??  ?Qui tam? is shorthand for the Latin phrase ?qui tam pro domino rege quam pro sic ipso in hoc parte sequitur? which means (roughly) ?who sues for the king as well as for himself in this matter.?

A federal law called the False Claims Act includes a provision that allows a private citizen (called a ?relator?) to bring a claim that a company or individual is cheating the government, and to share in any recovery.  The law was enacted in 1863 to help identify and address widespread military contractor fraud during the Civil War.  Although this was the original purpose of the Act, it applies to all government contractors, federal programs and allegations that relate to the use of federal revenue.

In 1986, Congress amended the Act, making it easier for private citizens to bring a fraud claim, and also increasing the private citizen?s share of the recovery.  The provisions of the Act have been applied to many types of claims, including over-charging the government for goods or services or charging for goods and services that were not actually provided, fraudulently certifying that goods or services meet specifications when they do not, fraudulently charging or over-charging for medical services paid for by Medicare or Medicaid, and falsely certifying entitlement to federal benefits.

The complaint against Northrop Grumman alleged that the company fraudulently accounted for materials purportedly used in fulfilling defense contracts and inflatied the cost of a device sold under an Air Force Contract.  The Northrop Grumman employees who originally filed the claim in 1989 will receive $12.4 million as their share of the recovery.  (Both of them had been fired and separately settled their claims for employment discrimination.  The False Claims Act includes a provision that prohibits retaliation and provides for full recovery and double back-pay for an employee who has been retaliated against.)

Employers beware:  First, ensure all charges to a government entity are appropriate and accurate.  If in spite of your efforts, an individual (employee or other) raises any claim that suggests that a government entity may have been over-charged, PAY ATTENTION!  Provide for an immediate, thorough, investigation and make sure that the claim is addressed appropriately!  Qui tam is alive and well and making millionaires!

Posted by Patrick Della Valle on 03/17 at 11:38 AM