False Claims Act cases have helped the United States government recover billions of taxpayer dollars lost to greed, gift, and fraud in the areas of healthcare, defense contracts, cybersecurity, telecommunications, veterans' funding, and more. The False Claims Act is the most powerful federal law protecting government funds from being lost or misappropriated by bad actors. It not only protects whistleblowers but also rewards them with up to 30% of the funds recovered from a successful settlement. This qui tam law allows businesses and individuals to speak up and do the right thing when it comes to reporting misspent government funds.

What Is the False Claims Act?

The False Claims Act is a qui tam law wherein a person can file a claim on behalf of the federal government (the plaintiff) against a person or organization that has defrauded the government. In this way, employees and companies help the U.S. Department of Justice ("DoJ") enforce fraud collections and potentially recover a percentage of the settlement if successful.

Elements of False Claims Act cases commonly involve overbilling, submitting false records, failing to perform quality work on government contracts, misallocating costs, bribery, kickbacks, and more. A qui tam relator, or whistleblower, who has inside knowledge of any kind of fraud can work with a False Claims Act attorney to disclose their information to the DoJ and relevant government office. The DoJ will investigate the information and decide whether or not to follow up in court. If it does so and is successful, the relator can receive up to 15% of the funds recovered. If the DoJ declines to pursue the matter further after a False Claims Act investigation, a qui tam attorney can represent the case on behalf of the original whistleblower and win them up to 30% of the final settlement.

History of the False Claims Act

The False Claims Act was originally passed by President Lincoln during the Civil War in order to fight defense contractor fraud. At the time, the Union Army received shipments of spoiled food and lame mules, and the "Lincoln Law" was the response to protect government spending as well as the Northern states' military efforts.

The law was amended throughout the years, most notably in 1986 and 2009, in order to strengthen the protections it gives whistleblowers as well as help expand what kinds of fraud can be reported. Today, the law offers strong protections against employer retaliation as well as the opportunity to report reverse false claims, or intentional underpayments, as well as kickbacks, collusion, and cyber fraud.

Who Does the False Claims Act Protect?

The False Claims Act protects and benefits American taxpayers as well as the overall financial infrastructure of the country. False claims on public funds drain the pool of resources available for public works projects like Medicare, Medicaid, Veterans Affairs, educational and grant funding, infrastructure and transportation projects, national security, and more.

Contractor fraud can be difficult to spot for outsiders, and employees are most likely to uncover criminal activity at the source. Employees, as well as other whistleblowers, who report false claims are protected against retaliation by their employers under the False Claims Act. If a whistleblower is discriminated against because of their honesty, they can be awarded damages like double back pay, front pay, and reinstatement at the same seniority level in court. They can also report anonymously, and by doing so become eligible to receive financial rewards from the final settlement.

False Claims Act Violations

Some False Claims Act violation examples include:

• Overbilling or charging more than once

• Unbundling similar services, like testing or treatments, or double-charging the federal government

• Billing for services not rendered or goods not received

• Substituting lower quality goods while charging the same amount as premium

• Violating contract provisions and falsely certifying compliance

• Upcoding, or billing for more expensive services than necessary

• Giving or receiving kickbacks

• Misrepresenting costs or quality

• Misclassifications to receive funds or a contract (i.e., falsely claiming to be minority-owned, veteran-owned, woman-owned, or applying for Small Business Administration funds without the right qualifications)

• Failing to report overpayments

• Performing unnecessary medical procedures

• Submitting false service or examination records

• Failing to report cybersecurity breaches

• Billing for marketing, lobbying, or other inappropriate costs

• Defective testing or certifications

• Billing for branded ones when generic drugs or equipment were provided

• Falsifying natural resource protections or production records

• Shifting expenses between fixed-price contracts

• Misrepresenting tariffs or avoiding import taxes

• Forging signatures or upcoding employee work, such as certifying work was performed by a doctor when it was actually conducted by a nurse or intern

What Is Not a Violation of the False Claims Act?

A False Claims Act violation must take place knowingly but does not have to involve specific intent to defraud. Purposefully reckless actions or certifications in deliberate ignorance may qualify as violations of the False Claims Act. However, actions like honest mistakes, efforts to comply with industry standards, and reporting genuine delays with contracting do not meet the standards for a False Claims Act violation. An experienced qui tam attorney can spot the red flags and help you understand whether there has been a violation of the False Claims Act.

What Is the Penalty For Violating the False Claims Act?

False Claims Act penalties are assessed per each individual instance of fraud. This means that falsely certifying information across several forms or claiming false reimbursements for one patient across multiple tests can incur high penalties very quickly. Penalties for False Claims Act violations include up to treble damages and are linked to the rate of inflation. Criminal penalties are also possible in cases involving intentional fraud, lasting damage, and harm to patients in healthcare.

What Is a Qui Tam Lawsuit?

When a private individual files a lawsuit on behalf of the government to recover damages for fraud, it is known as a "qui tam lawsuit." Depending on certain factors, such as whether the whistleblower was the first to disclose their information, False Claims Act cases may award them anywhere from 15% to 30% of the overall settlement. Because False Claims Act settlements involve up to treble damages per false claim, the final amount can be substantial.

How To File a Qui Tam Lawsuit

Filing a qui tam lawsuit is a complex process. A False Claims Act lawyer can give you specific legal advice if you are prepared to step forward with information or if you suspect a company's actions are not entirely above board. After an initial consultation, the next steps in a False Claims Act complaint are generally to gather evidence, research legal support for the claim, and file the appropriate paperwork with the DoJ. Afterwards, there may be investigation, negotiation, and litigation to seek recovery.

In addition to supporting whistleblowers with the logistics of their claims, a False Claims Act law firm can help whistleblowers remain anonymous and protect them in case of retaliation. Should a whistleblower be retaliated against, they may have grounds to sue their employer for damages, including double back pay and reinstatement.