Necessary Evils: How to Stop Worrying and Love Qui Tam

Abstract

In a world of rising government spending, the False Claims Act is becoming an increasingly important enforcement statute for deterring and punishing companies that defraud the government.  The False Claims Act’s power lies in the qui tam provision, which allows private citizens to sue on behalf of the government in exchange for a portion of the reward.  This provision gives the government expensive information at low cost.  However, the qui tam provision and the private citizens who utilize it have been viewed suspiciously by various actors in the regulatory scheme.

This Note examines the economic value provided by the qui tam provision, the role that Congress envisioned it would play, its implementation by the Department of Justice, and its perception in the eyes of the courts.  It uses the current circuit split between the Sixth and D.C. Circuits as a case study to illustrate the conflict between economic principles, congressional intent, utilization by the Department of Justice, and judicial treatment.  The qui tam provision is at its best when used not as a way for the government to gather information but as a way for the government to outsource prosecutorial and investigative duties.  The courts and the Department of Justice, however, have not adhered to this principle and have thus limited the qui tam provision’s potential.  At a time when government spending seems bound to increase, all players need to learn to embrace qui tam.

The author would like to thank Professor Avery Katz for his advice on this Note, and the editorial staff of the Columbia Business Law Review for catching her mistakes.