Federal contractors operating in Texas know that they must follow strict rules regarding their business practices to comply with federal law. Accusations of fraud can arise against federal contractors under various circumstances. Your employees represent a primary source of risk because they could file a qui tam lawsit based on their allegations of criminal wrongdoing. This type of legal action allows an individual to initiate an enforcement action against any federal contractor.
Purpose of qui tam lawsuits
During the Civil War, the federal government passed the False Claims Act to combat frauds committed by defense contractors. To this purpose, lawmakers recognized that employees or other individuals close to contractors would have more access to evidence of wrongdoing than federal law enforcement agents. As a result, the law empowered private citizens to file what are called qui tam lawsuits on behalf of the U.S. government if they possessed evidence of fraud.
This process differs from the normal process of alerting authorities to suspected crimes in that a private person can directly approach a U.S. district court with a complaint. Normally, people offer evidence to law enforcement agencies whose agents then, at their discretion, investigate and potentially charge someone.
Qui tam lawsuit process
As part of filing the lawsuit outlining criminal allegations, the private individual, known as the relator, must inform the federal government of the lawsuit and evidence. This information remains under seal for 60 days. During this time, the defendant may not see the evidence while federal authorities investigate the claims made against the contractor.
Federal investigators may ask for more time if they believe that there is good cause that a crime occurred. After completing the investigation, the U.S. government has the option of taking the lead in the case.
Even if the government chooses not to conduct the case, the relator may continue with the lawsuit. Either way, relators have a chance of collecting monetary proceeds should fraud be proven.