The Federal False Claims Act: A Guide for Whistleblowers

The U.S. Government has paid more than $4 billion to whistleblowers under the False Claims Act since 1986.

The Federal False Claims Act authorizes individuals to bring a cause of action on behalf of the government to recover money lost due to fraud or other misconduct.  Whistleblower lawsuits help our government recover billions every year.  The government rewards successful whistleblowers for bringing fraud to their attention.  In Fiscal Year 2013, whistleblowers across the nation were awarded more than $300 million as a result of their qui tam lawsuits.  If you have evidence of a fraud against the government, contact one of our False Claims Act lawyers.

Cases Typically Involve:

Health Care Fraud – The health care industry is currently the largest source of government fraud litigated under the False Claims Act.  When companies improperly seek reimbursement from Medicare, Medicaid and other government health benefits programs, it will create liability if they do so knowingly or fail to report overpayments they discover.  One of the hottest areas for cases right now is pursuant to the Stark Law and Anti-Kickback Statute.

Government Contracts – The second largest source of False Claims Act claims is generally the defense industry.  The military purchases equipment and services from a variety of businesses.  When a company in the defense industry makes misrepresentations or submits fraudulent bills, it becomes liable to the Federal Government under the False Claims Act.

Mortgage Fraud – Financial institutions have been subject to government investigations and liability recently under the False Claims Act for fraud committed against federal housing programs.

Customs Fraud – Misrepresentations on customs declarations regarding the value of imports or the origin of goods that lead to underpayments of duties create liability.

Small and Disadvantaged Businesses – The U.S. Government gives incentives to small businesses and disadvantaged business owners on government contracts.  Fraudulent statements on the application or certification create liability.

Davis Bacon Act – Federal contractors covered by the law violate the law when they do not pay prevailing wages or submit fraudulent wage statements to the government.

Education Fraud – Certain marketing and recruiting practices by for-profit colleges are prohibited by Title IV of the Higher Education Act.

Federal Crop Insurance Program – The government guarantees crop insurance made by companies.  Fraudulent applications for insurance violate the False Claims Act.

Buy American Act (BAA) / Trade Agreements Act (TAA) – Federal contracts for certain goods place country of origin restrictions on the manufacturing of the final product.  The company is not permitted to fraudulently certify their items are Made in the USA or not made in certain prohibited countries in order to receive government funds.

The Federal False Claims Act Process

A complaint is filed under seal in an appropriate Federal District Court.  The Department of Justice is notified and investigates the allegations in the complaint.  If the Justice Department decides to intervene, they will prepare and file their own complaint.  If they decline, you are entitled to proceed with the litigation on behalf of the government.  A relator is not entitled to bring a lawsuit in several situations.  An attorney at McEldrew Young can help you determine whether one of these exceptions apply to you.

Criminal Conduct – A relator is barred from bringing suit under the False Claims Act if he or she has been criminally convicted for their role in the misconduct at issue.

First to File Bar – A whistleblower cannot proceed with qui tam litigation if another relator has already filed a complaint concerning the fraud.  The lawsuit also can not proceed if there is already a government civil or administrative money proceeding.

Public Disclosure Bar – A False Claims Act lawsuit cannot be based upon information that has already been disclosed to the public unless the relator is the original source of the information.

Retaliation Protections

The Federal False Claims Act offers protection from retaliation to whistleblowers bringing qui tam lawsuits under it.  Section 3730(h) prohibits adverse changes to the terms and conditions of employment as a result of lawful whistleblowing activities to stop violations of the False Claims Act.  If an employee is discriminated against as a result of their whistleblower status, they are entitled to bring a cause of action in federal district court for double back pay, interest and compensation for special damages such as litigation costs and attorneys’ fees.  The anti-retaliation provisions of the False Claims Act are available to whistleblowers within three years of the date of retaliation.  Other laws, including state and local False Claims Act legislation, may provide additional anti-retaliation protections for the relator bringing a qui tam complaint.

Confidentiality under the False Claims Act

Lawsuits under the Federal False Claims Act begin under seal.  The identity of the whistleblower is revealed only to the government investigators and the Court.  The whistleblower must maintain the confidentiality of the lawsuit as well.  After the government has investigated the case and made a decision regarding whether it will intervene, the lawsuit is unsealed and the identity of the whistleblower becomes known to the public.

Frequently Asked Questions

What is a qui tam?

Qui tam is an abbreviation from the Latin phrase “qui tam pro domino rege quam pro sic ipso in hoc parte sequitur”, meaning “who as well for the [lord] king as for himself sues [proceeds] in this matter”. A qui tam action allows private citizens to file a lawsuit in the name of the federal or state governments charging fraud by contractors and others who receive or use government funds.

What is a relator?

A Relator is the name that commonly refers to the whistleblower plaintiff in qui tam action brought under the False Claims Act.

Do I have to be represented by an attorney?

Yes. To bring a qui tam under the False Claims Act the whistleblower, or Relator, must be represented by an attorney. Selecting an attorney that has experience with qui tam whistleblower lawsuits and the False Claims Act is vital to protecting your interest in this complicated area of the law.

What is a disclosure statement?

The Disclosure Statement is the document that must be filed and served upon the Department of Justice (“DOJ”), and contains substantially all the evidence the Relator has in her/his possession about the allegations set forth in the Complaint.

Does it matter if the DOJ intervenes?

Because the success rate of qui tam action where the DOJ decides to intervene is much higher than the success rate for qui tam cases that do not have government intervention. However, lack of government intervention does not necessarily mean the qui tam action will not succeed. Indeed, some of the qui tam cases with the largest settlements have lacked government intervention.

Will the government take my information seriously and investigate it?

Yes, by law under the False Claims Act, the Attorney General or a Department of Justice Attorney must investigate the allegations of violations of the False Claims Act. The investigation usually involves one or more law enforcement agencies, and state attorneys general with expertise and interest.  They will participate in the investigation, and work closely with the federal agencies when state agencies are victims.

What happens at the conclusion of the investigation?

The DOJ will either (1) intervene in one or more counts; (2) the DOJ will decline to intervene in one or all counts; (3) the DOJ will move to dismiss the Relator’s Complaint; (4) the DOJ will settle the qui tam action with the defendant prior to intervention or in conjunction with the intervention; (5) the DOJ will advise the Relator of their intention to decline intervention.

How much money could I get?

If the DOJ intervenes and recovers money through a settlement or trial, the whistleblower is entitled to receive 15-25% of the recovery. If the government does not intervene and the case continues then the whistleblower reward is between 25-30% of the recovery.

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