Qui Tam Actions - Articles

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Posted by: Donald Paine on Jun 1, 2013

Journal Issue Date: Jun 2013

Journal Name: June 2013 - Vol. 49, No. 6

Black’s Ninth defines “qui tam” as “an action brought under a statute that allows a private person to sue for a penalty, part of which the government … shall receive.” The words are Latin for “who as well.”

The best Tennessee example is our False Claims Act, codified at Tenn. Code Ann. §§4-18-101–108. Categories of false claims covered are listed in §103. The heart of the law is §4-18-104(d)(3), which deserves quotation.

(A) No court shall have jurisdiction over an action under this chapter based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in an investigation, report, hearing, or audit conducted by or at the request of the General Assembly, Comptroller of the Treasury, or governing body of a political subdivision, or by the news media, unless the action is brought by the Attorney General and Reporter or the prosecuting authority of a political subdivision or the person bringing the action is an original source of the information.

(B) For purposes of subdivision (d)(3)(A), “original source” means an individual, who has direct and independent knowledge of the information on which the allegations are based, who voluntarily provided the information to the state or political subdivision before filing an action based on that information, and whose information provided the basis or catalyst for the investigation, hearing, audit, or report that led to the public disclosure as described in subdivision (d)(3)(A).

A recent opinion written by Justice Koch illustrates how a qui tam action can be successful. See Knox County ex rel. Environmental Termite & Pest Control, Inc. v. Arrow Exterminators, Inc., 350 S.W.3d 511 (Tenn. 2011). Edward Howard, president of Environmental, suspected that Arrow Exterminators and Allied Pest Control had overbilled Knox County for termite control in public schools. He and his lawyer alerted the county but nothing was done. Consequently a qui tam action was commenced. Result? A settlement of $71,546.46 with 28 percent of the proceeds going to the original source, Mr. Howard.

A separate act governs false Medicaid claims. See Tenn. Code Ann. §§71-5-181–185. Also, there are several antiquated qui tam statutes still on the books. Tenn. Code Ann. §54-13-315 gets your client $125 as an informer against a toll ferry keeper who charges an illegally high price. I doubt that you want to specialize in that field of law.

Don Paine DONALD F. PAINE is a past president of the Tennessee Bar Association and is of counsel to the Knoxville firm of Paine, Tarwater, and Bickers LLP. He lectures for the Tennessee Law Institute.