The False Claims Act (FCA) is a piece of legislation that the US government uses to protect itself from fraud. The FCA empowers individuals and organizations to act as whistleblowers and take legal action against those defrauding government entities. Read on for a comprehensive look at the FCA, including its history, key features, and examples of False Claims Act cases. 

What is the False Claims Act?

The False Claims Act is a law that allows whistleblowers to sue entities that have defrauded the US government. The law outlines when whistleblower action is appropriate and specifies the protections available to whistleblowers.

Definition and Historical Background

The FCA is the first whistleblower law in US history, dating back to March 1863. It is sometimes referred to as the “Lincoln Law” due to its Civil War origins. During the war, many contractors attempted to defraud the Union Army by providing poor-quality supplies. 

To prevent future contractor fraud, the Lincoln administration passed the False Claims Act. This pioneering legislation introduced the concept of whistleblowers, which significantly enhanced the government’s ability to detect and prosecute fraudulent activities.

The US government has expanded the FCA several times since its inception. One of the most significant amendments came in 1986, which increased fines for each false claim, increased financial rewards, and provided employee protections for whistleblowers. 

The law was further expanded in 2009, broadening its scope to better reflect modern instances of fraud. The Affordable Care Act, passed in 2010, also resulted in changes to the FCA. Notably, it imposed false claims liability on medical providers who received overpayments from Medicare or Medicaid and failed to return them. This change also extended false claims liability to anyone who received kickbacks for medical referrals. 

What is a Whistleblower Suit Under the False Claims Act?

A key component of the False Claims Act is whistleblower protection. Rather than the US government filing its own lawsuits against fraudulent actors, the FCA empowers whistleblowers to initiate these cases. 

Definition and Historical Background

Under the FCA, whistleblowers can file lawsuits against individuals or organizations suspected of defrauding the government. These lawsuits are known as qui tam suits, a term derived from an old English legal concept. 

Whistleblowers play a crucial role in reporting and uncovering fraud. Government agencies often have limited resources for detecting and investigating fraud, so collaboration with whistleblowers helps ensure that important cases come to light. Moreover, whistleblowers frequently have access to inside information that strengthens the case. Both individuals and organizations can act as whistleblowers, and organizations can even file suits against competing companies. 

In an FCA suit, the whistleblower works with a lawyer to submit their case to the government. If the government decides to pursue the case, it proceeds to trial, functioning similarly to a standard lawsuit. If the whistleblower wins the lawsuit on behalf of the government, they receive a financial reward. 

Many recent False Claims Act cases have involved healthcare companies that have accepted kickbacks, failed to return overpayments, or illegally marketed pharmaceutical products. One of the most significant False Claims Act examples was a settlement by GlaxoSmithKline in 2012, worth $3 billion, which involved both false claims suits and criminal charges for illegal marketing practices and failure to report safety information appropriately. 

Key Features of the False Claims Act

The False Claims Act is a robust piece of legislation that has evolved over time. Here are some of the key features of this law to be aware of: 

Qui Tam Provisions

The qui tam provision is arguably the most notable feature of the FCA. This provision empowers whistleblowers to file lawsuits on behalf of the government in cases that constitute fraud. Whistleblowers must submit a complaint directly to federal court, which will be investigated and approved before the suit can proceed. 

Anyone with knowledge of fraud against the US government can file a qui tam suit, though it’s important to note that not all cases go to court. The suit must be based on original information that is not already public knowledge. 

Financial Incentives for Whistleblowers

The FCA offers significant financial incentives for whistleblowers. These monetary rewards encourage those with knowledge of fraud to come forward. 

The exact amount whistleblowers receive varies from case to case, depending on the level of government intervention and the specific information the whistleblower contributes. In most cases, whistleblowers can expect to receive between 15% and 30% of the damages recovered. These financial incentives are taxed as standard income. 

Legal Protections for Whistleblowers

If you’re considering filing a whistleblower suit, you should know that the FCA provides extensive legal protections to keep you safe from retaliation. This is particularly important if you’re filing against a former employer or client.

The FCA protects you from employer retaliation for filing a suit, including discrimination, harassment, wrongful termination, and other adverse actions. This protection also extends to those who testify and assist on behalf of the government in the case. If you experience workplace discrimination after filing, you’re entitled to legal relief. 

Types of Fraud Covered

As highlighted above, in the nearly 200 years since its initial passage, the FCA has been expanded several times. It now covers many different types of fraud, including: 

• Defense contractor fraud: The act was initially passed to protect against fraud from defense contractors who provide the military with goods and services 
• Healthcare fraud: Many recent FCA cases focus on healthcare fraud, particularly as it relates to Medicare and Medicaid 
• Mortgage fraud: Lenders working with government housing agencies could be subject to the FCA in cases of mortgage fraud 
• Energy fraud: Many energy companies contracted with the federal government are subject to FCA protections 
• Financial fraud: Financial institutions that receive fraudulent government bailouts could be subject to FCA suits 

If you have knowledge of fraud in any of these areas, you may be eligible to file a qui tam suit under the FCA.

Statute of Limitations

If you’re looking to file a suit under the FCA, you must do so within the statute of limitations. If you wait too long to file, your suit will be rejected.

You must file your case within six years of the original fraud date or within three years of the US Attorney General and Department of Justice learning about the fraud. The maximum statute of limitations is 10 years, regardless of the situation. 

Burden of Proof

When filing a False Claim Act case, the burden of proof falls on you as the whistleblower, your legal team, and the government. Together, you must prove that the defendant knowingly committed fraud against the US government. 

The burden of proof in an FCA case is less stringent than in a criminal case. In a criminal case, the prosecution must provide proof “beyond a reasonable doubt” that the defendant is guilty. In FCA suits, you only need to meet the burden of proof for a civil case, which means showing that the defendant is more likely than not to be guilty. 

Government’s Role in Qui Tam Cases

In some cases, the government will intervene and take over an FCA lawsuit you’ve filed. In other cases, you and your legal team will handle the case with government approval. 

Before your FCA case moves to court, the government will conduct an investigation period, which usually lasts for 60 days. During this time, they will assess the evidence you’ve presented to determine whether or not to intervene. Government intervention is more common in very complex cases or cases that have the potential for a substantial settlement. 

False Claims Act Violation Examples 

Since the False Claims Act is so broad, there are many possible violations that could result in a lawsuit. Any action that defrauds the government, directly or indirectly, could be subject to the False Claims Act. 

Common Types of Fraudulent Activity

Certain types of fraudulent activity are often targeted by the FCA. If you’re aware of any of these activities, you might have a valid FCA case: 

• Overcharging for goods or services: A contractor that consistently charges the government above fair market value for goods and services could be subject to an FCA lawsuit 
• Providing defective products or services: Knowingly supplying the government with products that are unsafe or defective, or failing to provide services as agreed could result in fraud 
• Falsifying official records: Providing incorrect information to the government for personal gain can also constitute an FCA case 
• Receiving fraudulent government payments: Many FCA cases involve organizations receiving bailouts or other payments from the government based on incorrect information or failing to return overpayments made erroneously 

Real-World Illustrations

To help you understand the scope of FCA cases, here are some notable instances of False Claims Act settlements, many of which involve healthcare organizations or defense contractors: 

• Pfizer – $2.3 billion, 2016: This suit focused on kickbacks as well as overcharging Medicare patients 
• Johnson & Johnson – $2.2 billion, 2012: The pharmaceutical company was found guilty of falsely advertising its drugs and faced criminal charges in addition to an FCA suit 
• Tenet Healthcare – $900 million, 2006: The healthcare provider settled over a wide range of violations, including kickbacks and Medicare payment manipulation 
• Maersk – $31.9 million, 2012: The defense contractor was sued for overcharging on shipments to Iran and Afghanistan

These examples illustrate the significant financial impact that FCA cases can have and the diverse range of industries involved.

False Claims Act Penalties and Settlements

False Claims Act settlements and penalties vary between cases. Here are some factors that can affect the overall outcome of the case if you’re considering filing an FCA suit: 

Financial Penalties and Legal Consequences

If you file an FCA suit against a company, they could face significant financial penalties based on the overall impact of the fraud. The exact amount will depend on how much the US government is estimated to have lost in the fraud, both directly and indirectly. 

In some cases, FCA suits can also result in criminal penalties. Individuals convicted of fraud against the government could face jail time, while organizations could be charged additional financial penalties. 

Notable Settlements and Judgments

Settlements for qui tam suits under the FCA can be particularly high if the fraud is widespread and affects a large volume of government beneficiaries. For example, the GlaxoSmithKline, Pfizer, and Johnson & Johnson suits mentioned previously all resulted in extremely high settlements worth billions of dollars due to the number of people they affected. 

False Claims Act: Whistleblower Protections and Rewards 

If you become a whistleblower under the False Claims Act, you’re entitled to both legal protections and financial rewards. Here’s what you can expect: 

Legal Protections for Whistleblowers

The legal protections for those involved in FCA cases are extensive. As a whistleblower, you receive employment protection in cases related to your work. This means you cannot be terminated, discriminated against, or harassed at work based on your involvement in the case. This protection extends to future employment — for example, a potential employer cannot discriminate against you in the hiring process based on your involvement in a past FCA suit. 

These protections are designed to encourage you to come forward with information about fraud without fear of retaliation.

Financial Incentives for Whistleblowers

False Claims Act whistleblower rewards can be quite extensive. These financial incentives serve as compensation from the government for your role in prosecuting those who commit fraud. 

The exact amount you’ll receive will vary depending on the specifics of your case. In cases where the government is more involved, you’ll receive a smaller percentage of the overall settlement, and vice versa. In very large settlements, you could earn more than six figures in incentives, although this is rare. 

False Claims Act Litigation Process 

If you decide to file an FCA case, you should understand that while these cases share some similarities with standard lawsuits, they also have unique aspects. The litigation process for qui tam cases involves several specific steps, each crucial to the success of your claim. Let’s walk through the process you’ll follow when filing a whistleblower claim under the False Claims Act: 

Steps in Filing a Whistleblower Claim

• Select a lawyer who has experience working with FCA whistleblowers and is familiar with the procedure 
• Compile documents, recordings, and other evidence that supports your claim 
• Your lawyer will file a complaint directly with the government through the federal court system 
• The government will investigate the claim during the 60-day review period, during which they will decide whether or not to intervene in the case 
• The case begins with pre-trial hearings, during which many cases are often settled to prevent a full trial 
• If the case is not settled out of court, it will proceed to trial 
• If the prosecution wins the case, you’ll receive your payment after the settlement has been distributed 

Role of Attorneys in FCA Litigation

Attorneys play a vital role in any False Claims Act case. As a whistleblower, your legal team will provide essential guidance as you navigate this complex process. This is why it is so important for you to choose attorneys who are highly familiar with the FCA and have handled qui tam lawsuits in the past. 

Before the lawsuit starts, your attorneys will help you prepare appropriately and handle complex legal filings. They will also create a strategic legal challenge, represent you in court, and collaborate with the US government if needed. 

Hire an Experienced Whistleblower Attorney at Audet & Partners

If you think you have a possible FCA case, it’s important to hire an experienced legal team right away to guide you through the process. At Audet & Partners, we are experienced whistleblower attorneys with a proven track record in FCA cases. Our team is highly familiar with whistleblower laws and will provide essential support throughout the entire process. If you believe you have a whistleblower case, contact us today to schedule a consultation.