False Claims Act
Are you aware of fraud in the workplace? Is that fraud being committed in situations involving the federal government? Is the company you work submitting false or fraudulent claims to the federal government? Have you reported the fraud? Were you terminated after you reported the fraud? If you know of fraud against the federal government and report it, you are a “whistleblower” that may be entitled to monetary recovery under the False Claims Act.
What is Qui Tam?
“Qui tam” is shorthand for the Latin phrase “qui tam pro domino rege quam ro seipse.” Yikes! This translates to, “he who sues for the king as for himself.”
Under the False Claims Act, the whistleblower sues on behalf of him/herself, as well as on behalf of the federal government. Thus, the whistleblower sues for him/herself and the “king.”
What is the False Claims Act & How Does It Work?
The False Claims Act allows an individual (the “whistleblower” or “qui tam plaintiff”), who has knowledge of past or present fraud on the federal government, to file a federal lawsuit on behalf of the government against the person or business committing the fraud (the defendant).
After the federal complaint is filed under seal, but before the defendant is notified of the complaint, the whistleblower must serve the United States Department of Justice with a copy of the complaint and provide it with any and all evidence and information regarding the defendant’s fraudulent activities. The Department of Justice then has the option of intervening in the lawsuit and taking over the prosecution of the case against the defendant. If the Department of Justice does not intervene, the whistleblower can pursue the lawsuit against the defendant and on behalf of the government.
If the lawsuit is successful and fraud is proven, the defendant is generally liable for treble damages (three times the damages sustained by the government because of the fraudulent activity). The defendant is additionally liable for another $5,000 – $10,000 for each false claim it made to the government.
Assuming the lawsuit was successful and that the Department of Justice had intervened, the whistleblower is entitled to between 15% and 25% of the damages recovered. The same applies if the lawsuit was settled.
If the lawsuit was successful and the Department of Justice did not intervene, the whistleblower is entitled to between 25% and 30% of the damages recovered. The same applies if the lawsuit was settled.
What Kind of Fraud is Covered?
The False Claims Act is concerned with any misrepresentation of fact to obtain payments or other benefits from the federal government. The misrepresentation does not have to be made knowingly or have been committed intentionally. It is sufficient that the defendant provided the information either in “deliberate ignorance” of the truth or falsity of the information provided to the government, or in “reckless disregard” of the truth or falsity of the information provided.
The Act covers not only those who provided the false information to the federal government, but also those who “cause” the misrepresentations to be made by others – aka, those who create or provide the false information that is later submitted to the federal government.
It is important to note that the False Claims Act does not cover tax issues.
Who Can Be a Whistleblower or Qui Tam Plaintiff?
Anyone can be a whistleblower or qui tam plaintiff, regardless of whether s/he came to know about the fraud firsthand or not, so long as the fraud has not previously been publicly disclosed. However, if s/he does have firsthand knowledge of the fraud, meaning that s/he personally witnessed or discovered the fraud, the person can still bring a lawsuit if the information has already been publicly disclosed.
For purposes of the False Claim Act, “public disclosure” does not simply mean disclosure to the “general public.” Accordingly, while disclosure through the media constitutes “public disclosure,” the fraud is also publically disclosed if it was included in another lawsuit to which the federal government was a party or in a Government Accounting Office report or hearing.
When Does Fraud Covered Under the False Claims Act Occur?
Fraud covered by the False Claims Act can arise in any situation where money from the federal government is being received or spent. Examples include Medicare or Medicaid fraud, fraud against the Department of Housing and Urban Development by builders of federally subsidized housing, or situations involving government contracts for goods or services.
What Protections for Whistleblowers or Qui Tam Plaintiffs
Under the False Claims Act, whistleblowers are protected from any form of retaliation (termination, demotion, suspension, harassment, etc.) from the company committing the fraud. If it is found that the whistleblower was fired for reporting the fraud, the employee is entitled to reinstatement and monetary damages of double the amount of the employee’s lost wages and any other damages the employee sustained.
For any other form of retaliation, the employee is entitled to double damages as well.