The False Claims Act

The False Claims Act (“FCA”) empowers private persons having information regarding a false or fraudulent claim against the Government to bring an action on behalf of the Government and to share in any recovery. The Act provides for treble damages, three times the dollar value of the fraud, and allows whistleblowers under the FCA, known as “Relators,” to earn awards for revealing the fraud of between 15% and 30% of the Government’s recovery.The False Claims Act (“FCA”) empowers private persons having information regarding a false or fraudulent claim against the Government to bring an action on behalf of the Government and to share in any recovery. The Act provides for treble damages, three times the dollar value of the fraud, and allows whistleblowers under the FCA, known as “Relators,” to earn awards for revealing the fraud of between 15% and 30% of the Government’s recovery.

WHAT IS A FALSE CLAIM?

A “claim” under the FCA includes any request or demand for payment of money or property from the Government. Accordingly, a false claim under the FCA can be any submission of a false or fraudulent claim for payment from the Government, any use of false statements for payment from the Government, or any use of false statements to avoid an obligation to repay the Government. Significantly, the FCA imposes liability not only for the knowing submission of false claims but also where the submission of the false claim is merely “in reckless disregard of the truth or falsity of the information” and further clarifies that “no proof of specific intent to defraud is required.”

COMMON TYPES OF FRAUD UNDER THE FCA

Some of the most common types of fraud against the Government for which the FCA may apply are:

• Medicare and Medicaid Fraud: including double billing or upcoding for services or goods, billing for services never rendered, billing for services not medically necessary;

• Pharmaceutical Fraud: including billing for non-FDA approved drugs, services, or devices, off label or illegal marketing of drugs for non-approved uses, and payment of kickbacks to medical personnel for the prescriptions of certain drugs;

• Government Contractor and Construction Fraud: including falsely certifying compliance with certain contractual or statutory requirements, payment of kickbacks or bribes for the procurement of Government contracts, sale of defective or substandard goods or services to the Government, failing to report discovered defects on products sold to the Government in order to continue to sell the product to the Government, and failing to give the Government the “best price” under General Services Administration contracts for the sale of goods to Government agencies;

• Defense Contractor Fraud: including cross-charging between fixed-price contracts and cost-plus contracts, substitution of parts for particular products, sale of defective or substandard products, violations of the Truth-In-Negotiations or the Buy American Act, improper cost allocation for services between private and Government contracts, overcharging for products or services;

• Postal Fraud: including submitting false information to get certain rate discounts or to avoid certain postage related payments.

BRINGING AN FCA CASE

Known as a “qui tam,” which is short for the Latin phrase, “qui tam pro domino rege quam pro se ipse hac parte sequitur”  meaning “he who sues in this matter for the king as well as himself,” lawsuits brought under the FCA are initiated by the submission of a disclosure statement to the Government of the underlying allegations of the fraud and by the filing of a complaint in federal or state court under seal. The case remains under seal, meaning only the Court and the Government is aware of its filing, until after the Government has had an opportunity to thoroughly investigate the Relator’s claims.
The Government must decide, following its investigation, whether to intervene, or join, in the case.

If the Government intervenes because it believes the case has merit, the Relator’s attorney continues to work with the Government and proceeds as second chair in the litigation. If the Government declines to intervene, which can happen for a variety of reasons not necessarily because it believes the case lacks merit, the Relator can still proceed with the action on behalf of the Government, or the Government can partially intervene in the case by pursuing certain claims, and the Relator can pursue the non-intervened claims, and receive a greater percentage of the reward if successful.