A qui tam (Latin: "who, as well as...") action is a fraud lawsuit brought by a whistleblower (called a "relator") for his own benefit as well as the benefit of the government. In the United States, qui tam actions are governed by the False Claims Act, 31 U.S.C. ยงยง 3729 to 3733.

The False Claims Act dates to 1863, during the Civil War, when war profiteers sold shoddy supplies at inflated prices to the Union army.

The most recent version of the Act was passed in 1986. Under the 1986 Act, violators may be adjudged liable for treble damages -- three (3) times the amount that the government was defrauded. How much the relator can keep depends on how the the government elects to be involved. If the government intervenes, the relator is eligible to receive at least 15 percent, but not more than 25 percent, of the recovery, depending upon the relator's contribution to the prosecution of the action. If the government chooses not to intervene and the relator proceeds with the action "qui tam" --for his own benefit "as well as" the government-- the relator can receive between 25 and 30 percent of the recovery.

A typical qui tam suit is for Medicare/Medicaid fraud. An employee of a hospital or other health care provider dues his employer for the fraudulent billing of the United States' program for paying for health care for the elderly or the poor. The fraud may consist of billing for services, drugs or equipment not provided, or billing twice for the same item, or simply charging the government too much. The United States (the Attorney General or Justice Department) then decides whether it wants to prosecute the action it self, or let the whistleblower (the "relator") control the lawsuit in a qui tam action. In fiscal year 2000 alone, a record $1.5 billion was recovered under the False Claims Act, with $1.2 billion recovered by qui tam cases.

While States are not "persons" under the False Claims Act's definition of potential defendants, local governments are. In Cook County v. United States, 538 U.S. __ (2003) (decided March 10, 2003) the United States Supreme Court held that a qui tam action could be brought against a local government. (Justice Souter wrote the opinion for a unanimous court). The relator argued that Chicago's Cook County Hospital and later an affiliate institute improperly used $5 million received from a federal drug abuse grant between 1989 and 1994. Local officials allegedly lied about the success of a program intended to provide medical services to drug-dependent pregnant women. In U.S. law, "persons" generally includes corporations, and cities are general understood to be "municipal corporations" under the eyes of the law, and this reasoning extends to other quasi-independent political subdivisions created by the States, like Cook County. The rule adopted by the Court is similar to the rule for civil rights lawsuits brought under a federal statute, 42 U.S.C. Section 1983: States and State agencies are immune, cities and counties are not.

The Cook County slip opinion: http://supremecourtus.gov/opinions/02pdf/01-1572.pdf

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