The False Claims Act
The federal False Claims Act (31 U.S.C. § 3729 et seq.) is America’s oldest and most successful whistleblower reward program. The law allows individuals to sue government contractors who overcharge or otherwise defraud the government and share in 15-30% of the recovery. Tens of billions of dollars have been recovered under the law.
History of the Program
The False Claims Act (FCA) was first passed in 1862, during the American Civil War. The motivating force for the law was fraud against the Union Army, including passing off glued together rags as uniforms, sawdust as flour, and lame mules as cavalry-charge-ready horses. The law is part of a much older legacy, dating back to 13th century English law that allowed suits against wine merchants avoiding certain tariffs and also provided rewards. That law was called “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means “he who sues on our Lord the King’s behalf as well as his own.” Because of that legacy, whistleblower suits brought under the FCA are still commonly called “qui tams.”
Elements of a False Claims Act case
The key factor in evaluating an FCA case is whether a whistleblower has evidence that fraud or other wrongdoing caused the federal government to suffer a financial loss. In recent decades, that primarily means fraud against the Medicare or Medicaid programs, but would include a loss against any federal program, such as procurement fraud against the Department of Defense, fraud in education that affects government-backed student loans, failing to pay royalties for mining or drilling on federal land, or fraud against various federally-backed insurance programs, including mortgage, crop, and flood insurance. These are just a few examples of affected programs; with federal spending representing nearly a quarter of GDP, the list is endless.
Some common schemes include overcharging the government for a product or service, charging the government for a product or service that was never provided, providing the government with a product or service that is substandard or otherwise different from what the government agreed to pay for, or keeping an overpayment received from the government.
In addition to proving that the government suffered a financial loss, it must be proven that a Defendant’s conduct was “knowing,” including deliberate ignorance or reckless disregard, but not including mere negligence.
The law allows for a recovery of three times the amount of the government’s financial loss, known as “trebling,” as well as additional penalties for each false claim submitted to the government.
The False Claims Whistleblower Process
A case under the FCA is filed “under seal” in a federal district court. That means that only the court and the United States Department of Justice, and not the Defendant, have access to the whistleblower’s complaint. Generally, cases must be initiated within six years of the alleged fraud.
The Department of Justice then conducts an investigation, which almost certainly includes an interview of the whistleblower. During this investigation, the Department of Justice, with court approval, generally extends the period during which the case is under seal. In addition to interviewing the whistleblower, the Department of Justice also uses this time to subpoena and review the Defendant’s documents, interview other witnesses, and consult with personnel at the affected agency and other experts. During this investigative phase of the case, the whistleblower’s identity remains secret.
At the end of the government’s investigation, and the seal period, the Department of Justice must decide whether to seek to intervene in, or join, the case. When the government intervenes in a case initiated by a whistleblower, the government generally takes the lead in the litigation although the whistleblower has the rights and duties of a party to the case. Whistleblower Partners has extensive experience in litigation and represents the client’s interest at every step of that process, including trial and appeal if necessary. If the government does not intervene, the whistleblower has the option of continuing the case on behalf of the government.
False Claims Act Whistleblower Rewards
If money is recovered for the government in a qui tam case, the whistleblower shares in that recovery. If the government intervened in the case, the whistleblower will receive between 15 and 25% of the recovery. If the government did not intervene, the whistleblower will receive between 25 and 30% of the recovery. The actual whistleblower share depends on many factors, including the quality of information provided by the whistleblower, the length of the case, the size of the recovery, and the quality of assistance provided by whistleblower’s counsel. In rare circumstances, such as the whistleblower planning and initiating the fraud, the whistleblower may receive less than 15% of the recovery.
Contact a Whistleblower Attorney
These descriptions of the False Claims Act are general in nature and do not constitute legal advice. Fraud schemes targeting federal dollars are complex and ever-evolving. The attorneys at Whistleblower Partners understand how the detailed legal requirements of the False Claims Act relate to these elaborate scams and are happy to discuss any potential matter further.
If you would like more information or would like to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.