Qui Tam Enforcement: A Possible Anti-Corruption Tool in India

I had this op-ed in Mint today on Qui Tam Enforcement. Basically under qui tam enforcement a private citizen can sue on behalf of the state to recoup ill-gotten gains from corruption. If she wins most of the money goes back to the state, but a portion of the money is given to the person who brought the suit as a reward for their efforts and to cover their costs (the op-ed explains what is and is not qui tam enforcement in more detail and to save space here I don’t recap this).

Since I had limited space in the op-ed I wanted to layout on the blog a few additional features of qui tam enforcement in the US that might be of interest to those considering it in the Indian context:
1. Although qui tam enforcement is initiated by a private citizen – usually a whistle blower – the government can join the suit. This is important because in the U.S. the government can cover many of the costs of the litigation (and investigation) if they join a suit. In fact, most successful qui tam suits are eventually joined by the government in the US. 
2. Although qui tam suits are for civil damages this does not preclude the government from bringing criminal charges against those implicated in a qui tam lawsuit.
3. In the U.S. most federal qui tam enforcement is brought under the False Claims Act. Most U.S. states also have enabling legislation for qui tam enforcement. As a result, there have been many different models of qui tam enforcement that have been tried in the US. This might be of interest to Indian policymakers if they want to adapt qui tam enforcement and want to explore the different ways such a law might be written.
4. In the U.S. not only may private citizens bring cases for qui tam enforcement, but also government entities. For example, if a city government discovers corruption being carried out against the state or federal government it can bring a qui tam suit and be similarly rewarded if it won.

One concern about qui tam enforcement in the Indian context would be the ability of the courts to filter (in an efficient manner) meritorious qui tam suits from frivolous ones that are instead aimed at harassment. At one level, one wouldn’t expect too many frivolous cases because it takes money to bring a case and why do so if one knows one will lose. On the other hand, such a case could be used as leverage against a company and a form of extortion could develop (i.e. “I’ll drop the case if you pay me something whether or not you did anything wrong”). To make the system work you need competent judges that can quickly discern legitimate from illegitimate cases and punish those who are clearly bringing cases that are harassment. We might not have full-confidence this is possible on a consistent basis.

In the final analysis I think qui tam enforcement is a powerful idea in the Indian context because it not only allows citizens to bypass the government to fight corruption, but as a result it will egg government on to join these suits and become a collaborator in fighting corruption.  Once someone files a qui tam suit and facts start coming to light in court the media will ask why the government doesn’t join the case or why it doesn’t bring criminal charges against those implicated in the case. Qui tam is no perfect solution, but by creating an open market for the prosecution of corruption it can realign the incentives of a whole range of actors from whistle blowers to government prosecutors. As John Braithwaite puts it in Regulatory Capitalism (from where I got some of the ideas for this op-ed):
tam is a statutory private justice reform that instead of substituting public
with private justice, institutionalizes collaborative networking that enables
more credible regulatory escalation. Mobilizing public virtue to regulate
private vice is not the only path around capacity deficits. Private markets in
virtue can also be mobilized to regulate vice, indeed to flip markets in vice
to markets in virtue.”

Written by
Nick Robinson
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  • Wonderful idea, Prof. Nick.

    I feel the possibility of including criminal charges will widen the scope of harassment. If the government can join in the litigation and bring in criminal charges, there is a real chance of companies and private players being under constant threat and harassment.

  • Yes, I agree. I don't think it's a good idea for an individual citizen to have the power to bring criminal charges – just civil. The civil charges though can pressure the government to bring criminal cases in meritorious instances.

  • I am sceptical for some of the reasons you have already covered in your post. That aside, is there any data on the effectiveness of this provision in the USA? We have lots of ineffective laws on our statutes, as it is. Some laws, introduced with the best intentions, even have quite perverse consequences — see for instance, Madhu Kishwar's article on the misuse of anti-dowry law.

    At the very least, we need, as the Americans say, a ballpark figure on how many new cases this provision is likely to introduce and whether this is acceptable given the already huge backlog.

    PS: Yes, I am aware you are very likely American but that was not why I used "ballpark figure." Some Americanisms are simply more convenient and evocative!

  • Thanks for the comment. I am American, although not an avid baseball fan, but still find the phrase useful and suspect it may outlive the popularity of the game. As for an answer to your question as in most things there is controversy. There have literally been dozens – hundreds – of law review articles written on qui tam enforcement in the U.S. each with its own take on the strengths and weaknesses of the strategy. This is the only real statistical study I found on qui tam enforcement – http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1832934 – but it only covers qui tam enforcement under the False Claims Act (none of the state statutes). The relevant quote on how many of these cases are brought reads:
    "The DOJ Civil Division's Commercial Litigation Branch (Fraud Section) centrally collects data on qui tam cases since 1986. Its officially published statistics show the startlingly poor success rate of non-intervened cases. According to the published figures as of September 20, 2009, only 239 out of 3,920 non-intervened cases resulted in a settlement or judgment in favor of the United States, a 6% success rate. In comparison, of the 1,134 cases in which the DOJ intervened, 1,076 resulted in a settlement or judgment in favor of the United States, a 95% success rate."
    Again, I don't know of anyone who has collected the state level data. This indicates on average 217 cases a year over the last 23 years at the federal level (perhaps double this once you include the state statutes?). Interestingly, this article includes a list of law firms at the end who are most active in bringing these suits and how much they have been a part of collecting over the years.

    And to stress the point of the op-ed. I'm not saying that this would work perfectly in India (or does in the US). I'm not even saying it should necessarily be an adopted strategy in India. I'm just saying that there are many reasons to think it could be an effective strategy in India and it's worth exploring further and having the idea debated and perhaps even undertake a narrower trial. That said, I can appreciate your healthy skepticism about any new legislative proposals given the poor implementation of many of the laws on the books – the benefit of this strategy though is that it could be citizen initiated bypassing many of the usual bottlenecks of government enforcement.

  • Prof. Nick,

    This could be useful:
    107 Colum. L. Rev. 949 (2007)
    Qui Tam Provisions and the Public Interest: An Empirical Analysis, Broderick, Christina Orsini
    [ 53 pages, 949 to 1001 ]

  • Thanks Vasujith. I hadn't come across this. This has some of the federal data that the other article cites, but also some data from several US states that I hadn't seen elsewhere. There's a lot out there on this topic and I haven't done any sort of comprehensive lit review.