False Claims Act

Fraud costs taxpayers billions of dollars each year. In order to encourage people to report fraud against the government, federal law provides (and the laws of several states similarly provide) a financial incentive for people to come forward and report fraud. Under the so-called "Qui Tam" provisions of the federal False Claims Act, individuals who disclose evidence of fraud can share in whatever monies the government recovers as a result.

This reward is paid to the first person to file a lawsuit alleging, on the basis of non-public information, that someone or some company has defrauded the federal government in violation of the Act, if the suit results in a payment to the government. At the conclusion of a Qui Tam action (Qui Tam derives from the Latin for "who sues on behalf of the king as well as himself"), the person who brought the action disclosing the fraud receives from 15 to 35 percent of the amount the wrongdoer pays to the government.