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Qui Tam: An Ingenious Bulwark Against Fraud

Tavorr Vaxman-Magid186

In 1863, the “Qui Tam” provision was introduced to the United
States (U.S.) in the False Claims Act (FCA) and has since
served as the foundational law of U.S. government fraud
prevention. The FCA set up the consequences for individuals
found to have defrauded the U.S. government. It also
introduced provisions which allowed private citizens to sue a
person or company for defrauding the government.187 In
essence, the FCA allowed private citizens to initiate lawsuits
against other private citizens on the government’s behalf, as if
the government were suing them itself.

Introduction

As one of the most significant nations on the world
stage, the United States has a seemingly endless list of fiscal
obligations. From funding defense, to subsidizing businesses,
to paying the salaries of elected officials and civil servants,
there is an immense variety of government programs into
which the U.S. pours its money. With such extensive fiscal
responsibilities, it is imperative that the U.S. safeguards its
money from misappropriation. After all, it would not be fitting
for a government ‘of, by, and for’ the people to be neglecting
the tax revenue it acquires from the people. To protect
government spending from misappropriation and misuse, the
U.S. has safeguards designed to regulate, protect, and ensure
the proper use of government funding. Of the many safeguards
that exist to regulate government money, perhaps one of the

187 Howard, “False Claims Act,” 1863.
186 Brandeis University Undergraduate, Class of 2025.

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most useful of these defense systems, is the Qui Tam doctrine.
By providing both ‘a will and a way’ to whistleblowers, qui
tam makes for a very effective tool for recovering stolen
government money, and is thus a powerful defense against
fraud.

The Pandemic & Fraud

The Qui Tam doctrine is a legal protocol that allows
citizens to act as whistleblowers against individuals or entities
who have defrauded the U.S. government. It has garnered
increased publicity in recent years due to the COVID-19
pandemic, particularly in relation to loan programs operated by
the U.S. Small Business Administration (SBA). Designed to
help bail out small businesses that struggled financially during
the pandemic, the SBA created the Paycheck Protection
Program (PPP) and the Economic Injury Disaster Loan
Program (EIDL).188 The PPP was hastily administered in
March 2020 by the CARES Act, and operated until May 2021.
During that time, it is estimated that the PPP and EIDL
distributed over 800 billion dollars to various businesses across
the country.189 Part of the programs’ main mission was to
quickly distribute enough money to small businesses to prevent
them from failing during the difficult first year of the
COVID-19 pandemic, and to allow them to keep workers
employed. Because of the time pressure, the PPP and EIDL
sacrificed security for speed, and disbursed 800 billion dollars
over the course of one year, with minimal security or
surveillance. So serious was the lack of security that almost
immediately upon the program’s initiation in 2020, “the SBA’s

189 O’Brien, “Bloomberg - Where, Exactly, Did $800 Billion in PPP Money
Go?,” 2021.

188 “Paycheck Protection Program.”

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inspector general had detected the possibility of ‘widespread
potential fraud’ in the EIDL program.” 190

To lose even a small portion of 800 billion dollars to
fraud would be counter to all the ideals of responsible
governance; as the SBA’s loan programs continued, it became
clear that the level of fraudulent acquisition of loan money was
quite large. According to Bloomberg, “the University of Texas
at Austin noted that $76 billion of a $780 billion pool of PPP
loans it examined involved ‘questionable’ lending.”191 The
scope of fraudulent lending was indicative of a major problem.
However, disbursing loan money to businesses who
legitimately needed it was too important, and implementing the
kinds of security measures necessary to eliminate fraud would
slow the loan process down. As a consequence of these
considerations, the SBA elected to do nothing and leave the
program as it was. Being unable to stop misappropriation of
emergency program funding, the government elected to turn its
attention towards restitution after the fact.

Tracking down $76 billion or more missing loans
would be a daunting task, but U.S. prosecutors and
investigators began immediately at the first sign of widespread
fraud. In May 2020, two individuals from Rhode Island
became the first to be charged with defrauding the Paycheck
Protection Program.192 Over the following months, dozens of
others were charged with defrauding the program. According
to Arnold & Porter, a major multinational law firm, by August
2022, 708 individual cases had been opened investigating
pandemic fraud. These cases concern alleged fraud anywhere

192 Martin, “Guilty Plea in First-In-The-Nation Cares Act Fraud Case,”
2021.

191 O’Brien, “Bloomberg - Where, Exactly, Did $800 Billion in PPP Money
Go?,” 2021.

190 O’Brien, “Bloomberg - Where, Exactly, Did $800 Billion in PPP Money
Go?,” 2021.

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from a $10,000 EIDL grant to millions of dollars of PPP
loans.193

How Does Qui Tam Recover on Fraud?

The 708 cases tracked by Arnold & Porter represent
only a fraction of the total money defrauded in the past year
from the EIDL, PPP, and other pandemic-related loan
programs. Even with U.S. investigators operating at their
maximum efficiency, recovering all estimated 76 billion dollars
lost to fraud is a titanic task. Depending on how well fraudsters
hide their illegal actions, the U.S. government, on its own, may
never recover all of the money lost to fraud. It is here that the
qui tam doctrine is especially important. The qui tam provision
was introduced in the False Claims Act (FCA) of 1863 and
gave U.S. citizens the ability to sue somebody, on the
government’s behalf, if they suspected that that individual had
defrauded the government. If proven correct in court, these
whistleblowers would be entitled to a portion of the settlement.
Citizens’ ability to sue on the government’s behalf, in exchange
for a portion of restitution, gave citizens a means and incentive
to act as whistleblowers.

However, the effectiveness of the Qui Tam provision is
predicated on the assumption that private citizens will actually
use it. In a situation where an individual suspects somebody of
stealing from the U.S. government, there may be little incentive
to file suit against them on the government’s behalf. After all,
the government is perfectly capable of filing its own lawsuits,
so why would anybody want to waste time and money on a
lawsuit where the government, and not them, is eligible for
restitution? Filing a lawsuit can be a very time consuming
procedure, even in the case of qui tam, where in some cases the
original relator/plaintiff does not need to be deeply involved.

193 Green, et al., “CARES Act Fraud Tracker.”

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So, even if, as stated earlier, a financial incentive existed (a
portion of the settlement), how much was that incentive, and
would it be enough to get citizens to sue under qui tam? While
the specific amount of money that a person filing a qui tam suit
can be entitled varies depending on the circumstances, it can be
quite significant.

Once a qui tam suit is filed, there are divergent paths
for the suit before reaching trial. The first step in a qui tam case
is submitting the case and notifying the government. Once a
qui tam suit is filed, the relator must submit a copy of the
complaint and any evidence they have collected against the
accused. The government then has 60 days to respond to the
complaint, during which time the complaint is not yet served
and remains sealed (secret).194 The government may extend the
time during which the complaint is under seal, which it can use
to investigate the complaint and process the evidence submitted
by the relator. Only once this period has elapsed can the case
actually be served upon the respondent. The next step is a
government decision. After it reviews the complaint, the
government has two choices: it can either assume responsibility
for the case, and prosecute it (sidelining the relator), or it can
elect not to pursue the case, in which case the original relator
can choose to either pursue the case alone or drop it. After the
government has responded, the case proceeds as any other civil
action.

Government intervention (or lack thereof) in qui tam
cases is the main factor that determines what percentage of
restitution/settlement the original relator may be entitled to. If
the government chooses to intervene in a qui tam suit and take
over its prosecution, the original relator is entitled to anywhere
from 15-25 percent of the settlement, depending on the
significance of their contribution to the case. For example, if a
relator files a claim that is taken over by the government, but

194 Green, et al., “CARES Act Fraud Tracker.”

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then chooses not to continue as a party to the case, they may be
entitled to a lower reward. However, if a relator continues as a
party, and provides more meaningful evidence, they may
receive up to 25 percent of the settlement.195 However, if the
government chooses not to intervene in a qui tam suit, a relator
who chooses to prosecute the case alone may be entitled to
25-30 percent of the settlement. The justification for this has to
do with personal effort and cost. If an individual prosecutes a
qui tam case alone, without government help, they are solely
responsible for hiring legal counsel, paying the costs of the
suit, and possibly appearing in court. If the government
intervenes, however, a relator may not have to do any of these
things, and so is entitled to a lower reward. Remember, a qui
tam action is, by definition, an action taken on the
government’s behalf in response to fraudulent acquisition of
government money, so regardless of whether or not the
government intervenes in a case, it always is entitled to the
restitution from the action.

The FCA allows the government to intervene in any qui
tam suit that it originally chose not to if it is able to show the
relevant court compelling evidence of “good cause.”196 The
“good cause” definition is relatively vague, but is generally
recognized as giving the government the ability to return to a
case it previously passed over, if during the course of that case
information was uncovered relevant to the government’s
prosecutorial priorities.197 If the government intervenes later in
a suit, the relator remains entitled to the 25-30 percent range of
the settlement that they would have been entitled to if they
continued to prosecute the case alone. Despite these general
guidelines, the FCA also lays out certain circumstantial
restrictions on the percentage of a settlement that the relator
can claim. For example, under certain conditions, a court may

197 LII / Legal Information Institute (Cornell), “Good Cause.”
196 Green, et al., “CARES Act Fraud Tracker.”
195 Green, et al., “CARES Act Fraud Tracker.”

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be able to reduce the claim of a relator down to less than 10
percent - namely in cases where the relator’s evidence against
the respondent came from mainly public sources.198 Finally, to
close a loophole, a relator who planned or participated in the
fraud that the respondent is being accused of may not benefit
from any percentage of the settlement from a qui tam case.199

Ultimately, the goal of the qui tam doctrine is to allow
private citizens to act on cases in which they suspect another
fellow citizen is defrauding the government. If they are correct,
they are entitled to a certain percentage of the overall
settlement.  This allows the government to remove pressure
from its investigators, and enables individuals far removed
from the government to assist in addressing fraudulent actions.
This strategy makes it easier to prosecute individuals
defrauding the U.S. government, because it means that it is
easier for evidence not directly available to investigators to
more easily be brought to their attention by private citizens and
whistleblowers.

Does Qui Tam Work?

The idea that a monetary reward will motivate people to
invoke qui tam more frequently is good in theory, but it begs
the question: is there any data proving whether or not it
actually works? After all, bringing a lawsuit is a time
consuming task for anybody, even if– in the case of many qui
tam suits– the relator does not need to actually prosecute the
case. Is the offer of a percentage of a settlement enough
incentive for individuals to actually bring forward qui tam
cases against others? Does qui tam actually work to recover on
fraud, and if so, how effective is it?

199 “The False Claims Act,” 2010.
198 Howard, “False Claims Act,” 1863.

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Qui tam suits have been remarkably effective at
catching fraud and getting settlements. According to the
Government Accountability Office (GAO), “The False Claims
Act is one of the government's primary weapons to fight fraud
against the government… From fiscal years 1987 through
2005, settlements and judgments for the federal government in
FCA cases have exceeded $15 billion, of which $9.6 billion, or
64 percent, was for cases filed by whistleblowers under FCA's
qui tam provisions.”200 The sheer value of the amount of money
recovered by the government– $9.6 billion, over the course of
only 18 years– shows just how effective the qui tam provisions
are. This money represents nearly ⅔ of all money returned to
the government that was previously misappropriated- money
that otherwise might not have been found. The data from the
GAO demonstrates that a massive majority of money handed to
the federal government in fraud settlements comes from qui
tam suits. Only 36 percent of fraud settlements given to the
government come from cases initiated by the government
itself. The amount of money ‘loses’ in awarding relators, which
according to the GAO is approximately $1.6 billion, is far less
than the amounts recovered by qui tam actions. The prevalence
of qui tam as a share of both volume of FCA suits, and value of
FCA suits, as well as the minimal worth of money lost to
relator payouts, conveys just how effective qui tam suits are in
returning money defrauded from the government.

Although the information provided by the GAO only
covers cases between 1987 and 2005, it provides an important
insight into the more recent past of qui tam cases, as well as its
future. According to the GAO’s report, “[the] DOJ’s Civil
Division received 8,869 FCA cases from fiscal years 1987
through 2005. During this period, the number of qui tam FCA
cases generally increased as a proportion of total FCA

200 U. S. Government Accountability Office, “Information on False Claims
Act Litigation,” 2006.

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cases.”201 Further, the report indicates that the number of qui
tam suits related to health care fraud and procurement fraud
greatly increased over the observed time period. Other
conclusions about data collected from the GAO shows that the
government chose to pursue these cases more frequently, and
also received greater settlements in cases related to health care
and procurement fraud.

Part of the reason health care and procurement fraud
became more common over the period of time observed by the
GAO is because the U.S. government became increasingly
involved in these industries. According to the GAO’s report,
the Department of Health and Human Services and the
Department of Defense were most frequently named in qui tam
suits as having been defrauded.202 Over the same time period,
the U.S. greatly increased funding towards both departments.
In 1987, the U.S. spent a nominal $115.1 billion* on healthcare
outlays, which had increased to $549.2 billion by 2005.*203 On
defense, the U.S. spent $221.6 billion* in 1987, increasing to
$600 billion* in 2005.204,205 More money being spent means
more money possibly exposed to fraud. The presence of
whistleblowers is particularly important in the defense and
healthcare industries due to the understandably private nature
of both industries. This helps explain why qui tam suits have
become a greater share of FCA suits during the monitored
period. Because the U.S. has begun spending more money in
industries that are secretive or private, the qui tam doctrine is

205 Chantrill, “US Federal Budget Actual Spending Breakdown 2000-2005.”
204 Chantrill, “US Federal Budget Actual Spending Breakdown 1982-1987.”

203 Chantrill, “US Federal Budget Actual Spending Breakdown
1982-1987.”; Chantrill, “US Federal Budget Actual Spending Breakdown
2000-2005.”; Note: All values for money spent noted with an asterisk (*)
are in nominal USD and represent spending outlays.

202 U. S. Government Accountability Office, “Information on False Claims
Act Litigation,” 2006.

201 U. S. Government Accountability Office, “Information on False Claims
Act Litigation,” 2006.

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becoming more important than ever in protecting against fraud.
By encouraging whistleblowers to bring suit against those who
defraud the government, the government ensures a greater
recovery of money defrauded from it.

The Future of Qui Tam

The story of qui tam did not end in 2005. Based on the
trends from the GAO’s observed period of 1987-2005, the
volume of money the government loses to fraud has likely also
increased in line with the U.S. budget. Thus, the number and
proportion of FCA suits which are qui tam have most likely
also increased over the last 18 years, and will continue to
increase as the government spends more money. This
prediction is predicated on current trends, including increasing
government budgets, and previous trends from the original
1987-2005 GAO report. However, besides predicting future qui
tam trends, important current events such as the COVID-19
pandemic also highlight the relevance of qui tam today. During
the pandemic, the U.S. distributed vast sums of money to small
businesses with little oversight. Only a small percentage of the
estimated amount of money that was defrauded from these
emergency loans has been located by U.S. investigators. In the
immediate future, qui tam is likely to emerge as more
significant than ever; as investigators struggle to locate large
amounts of money defrauded by the government, the task of
locating these funds is likely to fall on qui tam whistleblowers.

Much of predicting the future of qui tam is just
speculation and extrapolation based on previously recorded
trends for cases. This is because, besides the GAO’s report, it is
difficult to find compiled data regarding qui tam cases. As
such, further research of qui tam cases and the statistics behind
them may be necessary. This fact is not lost on the U.S.
Congress and also has historical precedents. In 1943 and 1986,
Congress commissioned various budget analyses which made it

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clear to U.S. investigators that the government was losing
significant amounts of money to fraud. In response, Congress
amended the False Claims Act to improve qui tam and ease the
burden on investigators.206 In 2021, Congress began the process
to once again amend the FCA.207 Although the amendments
were not as significant as the 1943 and 1986 amendments, the
2021 Year-End FCA Amendment, if passed, could serve to also
ease the burden on investigators by redefining what kinds of
fraud were eligible to be sued for under qui tam suits. This
would have the effect of making it easier for potential relators
to bring suits. The 2021 FCA Amendment would order the
GAO to compile another report on the effectiveness of the
FCA. Similar to the report on FCA actions between 1987-2005,
this report would examine more recent uses and developments
of the FCA.208 The data from this new GAO report, if
commissioned, could be extremely useful in shedding light on
current qui tam trends and would be helpful in predicting the
future volume of qui tam use. Unfortunately, this will only
occur if the U.S. Congress passes the FCA amendment, which
is currently stuck in committee. Although the FCA
Amendment has not yet passed, the U.S. Congress did pass a
law to extend the statute of limitations for defrauding the PPP
and EIDL program to 10 years.209

All of these Congressional actions show that the U.S.
Congress expects the FCA to be invoked at a greater frequency
in the near future, as the scale of COVID-19 relief fraud
becomes evident over the coming months. The government’s
actions serve to make it easier for potential relators to bring
forth qui tam suits and appear to be encouraging them

209 Brewer, “Bills Extend Statute of Limitation for Prosecuting PPP, EIDL
Fraud,” 2022.

208 “False Claims Amendments Act of 2021” (2021).

207 “False Claims Amendments Act of 2021,” S.2428, 117th Congress
(2021-2022), 2021.

206 Whistleblower Law Firm, “False Claims Act History￼.”

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considerably as the government attempts to recover large
amounts of money defrauded during the COVID-19 pandemic.
So, what can be concluded from this? For one, there is not
enough information on the current trends of qui tam suits. The
last GAO report on FCA and qui tam cases recorded cases only
between 1987 and 2005 and is now outdated. The last 18 years
have yet to be compiled. If the GAO were to examine the last
18 years (and especially the time since the COVID-19
pandemic), it would likely find that the usage and settlement
values of qui tam have increased and will continue to increase.
This is not an unreasonable extrapolation of the trends found in
the 1987-2005 report, but to draw any solid conclusions, a new
GAO report (or something similar) examining the total volume
of all qui tam suits is needed. At the very least, we can say with
confidence that a rising importance of qui tam suits is currently
expected by Congress, as evidenced by its moves to enable qui
tam further, and potentially investigate the last two decades of
qui tam cases. Finally, even if all of this turns out to be true,
and the last 18 years do not follow the previous decades’ trends
with qui tam, the fallout from the COVID-19 pandemic is
certain to increase the usage of qui tam- even if just in the short
term.

Conclusion

Qui tam is a very effective protection against fraud. It
gives whistleblowers a way and a will when it comes to
supporting fraud recovery. During extraordinary times, such as
the last three years (2019-2022), even the colossal bureaucracy
of the United States needs a helping hand tracking down
money unlawfully stolen from it. Qui tam grants exactly the
type of help needed. By allowing regular citizens to become
whistleblowers and help return stolen money to its rightful
place, qui tam helps U.S. investigators find the money that
slips between the cracks of the justice system.

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By incentivizing people to act, qui tam ensures that the
U.S government has an effective defense against fraud. The
potential power of millions of citizens willing to become
whistleblowers far outweighs any surveillance or
accountability apparatus the government could devise. It is for
this reason that qui tam is an effective defense against fraud.
Because of its effectiveness, the U.S. Congress has taken action
to revitalize the doctrine as the country faces a great wave of
fraudulent activity, and may soon commission a new GAO
report on qui tam. When tax revenue that people expect to be
invested in their collective prosperity is stolen, justice demands
that such money be returned. Qui tam enables that, in a very
literal sense. As the Latin phrase goes, from which the name of
the doctrine originates, “qui tam pro domino rege quam pro se
ipso in hac parte sequitur,”- who sues on behalf of the King,
sues on behalf of himself. Though the King is now a Congress,
the concept has stood the test of time. Qui tam today remains a
powerful bulwark against fraud.

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