Qui tam—It’s not a term that many people can confidently pronounce, let alone define. But if Associate Professor David Freeman Engstrom, JD ’02, has his way, the qui tam lawsuit, which has enjoyed a recent renaissance, will soon be a serious topic of academic and policy debate. Engstrom has undertaken a trio of articles on the subject, employing empirical methods to paint a comprehensive portrait of this increasingly controversial type of litigation.
Qui tam (variously pronounced key tam; key tom; kwee tam; and kwee tom) lawsuits originated in England—hence the royal reference in the longer Latin phrase for which it stands—“he who brings an action for the king as well as for himself.” In the United States, it refers to the mechanism in the False Claims Act that authorizes individuals, dubbed “relators,” to sue companies on behalf of the government, alleging fraud in connection with federal programs or expenditures, and to earn a “bounty” equal to roughly one-quarter of any (trebled) recovery.
The resulting payouts, often against health care providers or defense contractors, can be huge. In one recent case, a whistle-blowing relator earned nearly $100 million for her troubles. And big paydays have spurred rapid growth. “The qui tam regime has generated 2,000 lawsuits and more than $12 billion in recoveries in the last five years alone,” Engstrom explains. “These numbers rival securities and antitrust litigation over the same period.”
In order to understand qui tam better, Engstrom built the first comprehensive data set of every unsealed qui tam case filed since Congress created the current regime in 1986. Using Freedom of Information Act requests served on the U.S. Department of Justice (DOJ) and some 5,000 docket sheets downloaded from 90 district court websites, Engstrom assembled information for each case. Stanford Law’s savvy IT group helped in this effort and five energetic 1Ls—“We called ourselves ‘Team Qui Tam,’ ” says Engstrom—further reviewed and coded cases.
This ambitious data effort has begun to bear fruit. In an article to be published in Columbia Law Review this fall, Engstrom evaluates a question that has occupied the U.S. Supreme Court and Congress in recent years: whether the system is dominated by so-called “professional” relators, who file serial qui tam suits not as classic insider whistle-blowers with firsthand knowledge of misconduct but rather as outsider investigators, sometimes using information obtained from the government itself. “My data show that these ‘professional’ relators account for nearly one-fifth of all qui tam filings, which surprised me,” Engstrom explains. “But repeat relators also appear to be more effective at returning funds to the federal fisc than one-shot relators, undermining recent calls to exclude them from the regime.”
A second forthcoming article examines the DOJ’s role in qui tam suits. “The statute authorizes the DOJ to intervene in and take control of qui tam cases or even dismiss them out from under relators entirely,” says Engstrom. “And DOJ involvement is powerful. Roughly 90 percent of cases the DOJ joins are successful, while 90 percent of cases the DOJ rejects are not.”
These numbers have made DOJ decision making a lightning rod. Some say the DOJ chooses cases based on the merits and that declined cases fail because they are weak. Others, however, claim that DOJ decisions are wholly arbitrary or politically motivated, particularly in cases connected to controversial war efforts in Iraq and Afghanistan, and that the DOJ’s litigation leverage, not its selection of stronger cases, drives the system. Engstrom’s statistical analysis rejects the more heated versions of this view. “Yet, I also uncover substantial evidence that DOJ decisions are strategic rather than purely merits-based,” Engstrom notes. “As an example, the DOJ is less likely to join cases against Fortune 100 companies or leading defense contractors. Findings like these call into question the practice by some judges of drawing merits conclusions from DOJ action.”
In a third article, still being written, Engstrom steps back and uses qui tam to ask how delegating enforcement responsibility to profit-motivated “private attorneys general”—as opposed to, say, public prosecutors or administrative agencies—shapes the evolution of legal mandates over time. “I’m trying to understand how making law through private lawsuits differs from making law by other means.”
All this would not be possible, says Engstrom, without Stanford Law’s unique human and technological resources. “And I’m certainly not alone in doing this kind of work,” he adds. “My colleagues, Joe Grundfest, Mike Klausner, and Mark Lemley, have shed similar light on securities and patent law. We’re all trying to bring transparency to litigation regimes so that legislators and judges can make more informed decisions about how, if at all, to use private lawsuits to achieve policy ends.”