Am I at Risk of a Qui Tam Lawsuit?
Why would someone file a whistleblower lawsuit against a medical practice? And what steps can practices take to avoid qui tam lawsuits? We discuss the most common areas of focus.

In a qui tam (pronounced kee-tam) lawsuit, an individual can sue on behalf of the United States for violations of the False Claims Act (FCA). This individual is called a “relator,” and they are often colloquially described as whistleblowers.
(For more on what constitutes an FCA violation, check out our blog “False Claims Act Allegations: Is Your Practice At Risk?“)
The typical lawsuit goes like this: The relator becomes aware of a medical practice’s FCA violation and hires an attorney. The relator’s attorney files a whistleblower lawsuit against the medical practice, but the lawsuit is filed “under seal,” meaning it remains confidential and non-public for a set period. During that time, the United States Department of Justice (DOJ) investigates the relator’s claims.
If the DOJ chooses, it can assume primary responsibility for the relator’s lawsuit. In this scenario, the relator and their attorney will not be responsible for the bulk of legal work in the case against the medical practice. Instead, the DOJ will use the investigative tools at its disposal—including the FBI—to investigate and prove its case. If the DOJ chooses not to intervene in the case and pursue the relator’s claim, the relator can typically proceed with their lawsuit against the medical practice while bearing costs of litigation themselves.
Why Would Anyone Want to Be a Relator?
Being a relator sounds like a risky endeavor, both personally and professionally. It can mean burning bridges and becoming the “tattletale” at work. It can also reveal the individual’s professional involvement with a practice that embodies dubious ethics. Further, if the relator is unsuccessful, they could find that future employers and colleagues distrust them.
Aware of these deterrents, the government created financial incentives for becoming a whistleblower. When a practice or provider violates the FCA, the government imposes penalties of three times the government’s damages, plus an additional civil penalty for each false claim they submitted to the government.
For example, if a practice submits 100 claims that amount to $20,000 in total false claims, the penalties can be:
$20,000 x 3 = $60,000 (three times the government’s damages), plus
($11,000 to $22,000) x 100 = $1,100,000 to $2,200,000 (civil penalties)
In this example, the government would recover at least $1 million and possibly much more. Of those penalties, the relator will receive up to 25% of the recovery if the government intervened. The relator would receive up to 30% of it if the government didn’t intervene.
Notably, these claims are typically much larger and account for hundreds or thousands of up-coded, fraudulent, or false claims filed with the government. This means significantly higher financial recoveries for the relators, which reinforces the public incentive for other whistleblowers to come forward. This month, the DOJ announced that it had settled an FCA suit in which the relator received $2.3 million.
Each year, the federal government recovers billions of dollars through these FCA suits. As a result, many relators receive multi-million dollar payments.
How Healthcare Practices Can Protect Themselves
Keeping Your Workforce Happy
Disgruntled or wronged current or former employees may become relators. Their grievances may or may not be related to FCA violations. For example, a former employee who believes her employer wrongly dismissed her for becoming pregnant might leverage her awareness of Medicare upcoding. A current employee may decide to file a qui tam action if management ignores complaints about billing discrepancies.
For more on this, see our previous blog titled “An Employee Accused Your Healthcare Practice of Wrongdoing? Here’s What Not to Do“)
Establishing Current, Comprehensive Compliance Policies
Considering that compliance costs <1% of what potential qui tam liability could cost, this is a no-brainer. Furthermore, the DOJ will consider a practice’s lack of a compliance program to reflect “reckless disregard” for the FCA. Many states also have a state version of the FCA. Compliance programs should reflect the practice’s commitment to compliance at the state and federal levels.
Each practice requires a comprehensive compliance program which addresses:
- Individuals’ responsibility to uphold the practice’s compliance standards, including how individual contributions to compliance will be considered at employees’ performance evaluations and in retention/advancement decisions.
- Reporting requirements for suspected FCA violations, including upcoding of claims, unnecessary testing or DME orders, and false or fraudulent claims which exaggerate the number, complexity, or duration of patient visits
- Performing regular and comprehensive audits of claims to verify the accuracy of filed claims
- Disciplining employees for misconduct in a way that is mindful of laws prohibiting retaliation against whistleblowers, discriminatory discipline procedures, union procedures (common in healthcare)
- Creating mechanisms for internally addressing and remedying compliance problems
Can I Make Employees Promise Not to Sue the Practice?
While it is a somewhat controversial topic among healthcare attorneys, some healthcare practices require that terminated employees—in exchange for a severance benefit—execute a complete waiver of claims against the practice, including any potential qui tam claims.
These agreements, however, may not be valid. Courts generally refuse to enforce contracts that contravene public policy or pertain to illegal subject matter. Further, if your former employee violated the agreement and filed a qui tam lawsuit anyway, you would likely be entitled to sue that employee for breaching the contract, and you may be able to recover your severance package back. That doesn’t necessarily mean, however, that the court would dismiss their qui tam lawsuit.
How Compliance Pays Off:
- Even a meritless qui tam lawsuit will be expensive for the practice (lawyers, auditors, investigators).
- It’s crucial to protect employees’ rights in the compliance process. A properly drafted compliance program should dovetail with your employment policies. A flawed response to an employee’s complaint of fraud could be costly if the employee sues the practice for retaliatory conduct, violating union rules, or discrimination.
- Non-compliance is terrible PR. The DOJ often publishes press releases when it prevails in an FCA suit or settlement.
- Individual practice owners can also be held liable, depending upon the situation and scope of the wrongdoing. See our previous post, “Why Healthcare Fraud is Landing More Doctors and Execs in Prison,” to learn more about this.
Jackson LLP’s dedicated healthcare attorneys understand the nuances of fraud, waste, and abuse prevention and compliance. Our firm can help identify risks and non-compliant practices, establish your comprehensive compliance program, train your staff, and monitor your ongoing compliance. To learn more, schedule your initial complimentary consultation.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.