Qui tam is short for "qui tam pro domino rege quam pro seipso" "he who as much for the king as for himself." A qui tam lawsuit is usually brought by a whistleblower on behalf of the government, with the whistleblower getting a cut of any damages/fines etc.
Lincoln introduced qui tam actions to the United States in 1863 as part of his False Claims Act (see details at the end of this post) and I know that Charles Ortel is looking very seriously at qui tam actions against the Clinton Foundation and its hangers-on.
I think qui tam actions would be a welcome addition to Australia's justice system. The AWU Scandal would be a prime case study with Thiess and the AWU having cases to answer.
Australian Lesley Ann Skillen is a partner of US law firm, Getnick & Getnick. She heads the firm’s False Claims Act qui tam practice. In 2017 Lesley produced this paper for an Australian parliamentary enquiry "Inquiry into whistleblower protections in the corporate, public and not-for-profit sectors"
The following article is based on an interview with Lesley first published at The Constant Investor website.
A leading authority on qui tam
Qui tam lawsuits are a type of whistleblower lawsuit under the False Claims Act in the US. In this type of legal case, whistleblowers receive a payout if the government successfully recovers funds lost to fraud. New York based Getnick & Getnick focuses on business integrity and anti-fraud litigation, representing the victims of fraud which can be corporations, government or individuals.
“The area that has been my primary area of focus since I’ve been in New York has been the whistleblower law,” says Lesley Ann.
“That allows a private citizen who knows about a fraud on the government to bring a lawsuit in the name of the government and there is a financial reward associated with it. There’s a percentage of up to 30% of the proceeds,” she explains.
Surviving the financial, emotional and career repercussions of publicly calling out corporate criminal conduct can be softened by the whistleblower’s payout.
“Whistleblowers generally are good people and they really just want to fix things; that’s what motivates them.”
“The reward is there so it doesn’t become just a foolhardy exercise in career destruction. It’s intended to provide some compensation to people who do take those risks and lose their careers.”
Lesley Ann worked closely with whistleblower Cheryl Eckard who in 2010 received a $96 million payout, one of the biggest in US history at the time, after an eight-year legal battle with GlaxoSmithKline’s (GSK). Cheryl, previously a global quality assurance manager for the pharmaceutical giant exposed criminal misconduct in manufacturing processes at a GSK factory in Puerto Rico.
The case highlights the incredible amount of work involved in prosecuting large corporations.
“That involved a long effort working alongside the government prosecutors. They had a very large team of investigators, different agencies working on the case. We worked alongside them and reviewed about 1.5 million pages of documents that were produced by the company.”
“The end of it was two years of settlement discussions, it was really pretty harrowing. But the prosecutors were wonderful, they were two women who were just unbelievably brilliant and tenacious and we had a wonderful result in the end.”
Lesley had been involved in efforts to introduce a qui tam type practice to Australia after the success she’s seen in the US.
“There are many benefits. The primary and most obvious benefit is the defrauded funds that are returned to government. In the last 2 decades, that’s amounted to about $50 billion US dollars, from these kinds of whistleblower cases. In addition, it stops the practices because whistleblowers expose corporate fraud and then they can’t do that anymore. Another benefit has been that companies are much more focused on compliance,” she says.
Lesley Ann left her role as Director of Policy and International Relations for the Australian Securities Commission in the 90’s after learning about the racketeering statute in the US. Receiving a distinguished Churchill Fellowship to study in NYC she packed up her life in Australia and headed to the States with a goal to take her career to the next level.
“It was incredibly exciting, I just fell in love with New York at first sight.”
“The reason that I came here was to research, so I met lots of people. I was working with the organised crime task force in NY for a couple of months, I met a lot of prosecutors and I met my current law partner as part of that research. I established a network through doing the research.”
The United States False Claims Act
In the United States, the False Claims Act was introduced in 1863 during the American Civil War to combat the defence contractor fraud rife in both the Union North and Confederate South. Largely dormant and forgotten for hundreds of years, it was revived by major amendments in 1986 which have seen a resurgence in its prominence in the United States.
Contained in § 3729-2733 of the US Code, the Act makes a person or entity improperly receiving payment from or avoiding payment to the US Government (other than via tax fraud) liable to compensate the government. The cornerstone of the US legislation is its qui tam provisions, which allow a private individual (the “relator”) to bring a claim on behalf of the government and claim a percentage of the overall amount recovered if successful – in effect, a reward for whistleblowing. A qui tam claim is established by section 3730, and allows the relator to recover 15-25% of a successful claim where the government regulator decides to join the claim, or 25-30% where the regulator chooses not to be involved.
According to US Department of Justice statistics on litigation under the Actfrom October 1987 to September 2012 , over $35 billion has been recovered through the legislative scheme in the last 25 years. Of that, almost $24 billion was recovered through qui tam claims.