When it comes to the government’s battle against fraud, no current whistleblower law matches the power of the False Claims Act (FCA). This act is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is the federal government’s primary litigation tool in combating fraud against the government. The law includes a qui tam provision that allows ordinary citizens, known as “relators,” to file actions on behalf of the government. This has come to be known as “whistleblowing.” The FCA prohibits:
• knowingly presenting, or causing to be presented a false claim for payment or approval;
• knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim;
• conspiring to commit any violation of the FCA; falsely certifying the type or amount of property to be used by the government;
• certifying receipt of property on a document without completely knowing that the information is true;
• knowingly buying government property from an unauthorized officer of the government; and knowingly making, using, or causing to be made or used a false record to avoid, or decrease an obligation to pay or transmit property to the government.
The FCA also contains an anti-retaliation provision. This provision allows a relator to recover, in addition to his award for reporting the fraud, double damages plus attorney fees for any acts of retaliation resulting from reporting fraud against the government.
Procedurally, an FCA claim may be brought by the government directly or by a relator pursuant to the FCA’s qui tam provision. In the case of qui tam relators, the FCA requires the relator to follow special filing procedures in initiating a qui tam lawsuit. Prior to filing a qui tam suit, the relator must prepare and serve a copy of the complaint and a written disclosure of all material evidence within his possession on the U.S. Attorney General.
In contrast to the way most civil actions typically proceed, the Defendant is not served with the complaint until the government decides whether to intervene and the court orders service. If the government intervenes in the qui tam action, it is responsible for prosecuting the lawsuit. If, however, the government ultimately declines to intervene, the qui tam Plaintiff may move forward with the lawsuit on his or her own. Some of the most common reasons why the U.S. government may choose not to intervene include: lack of relator credibility; insufficient or immaterial evidence; or limited government resources that are better devoted to larger or stronger cases.
The strength of the FCA lies in the statute’s qui tam and damages provisions. Following the Department of Justice’s issuance of an “Interim Final Rule with Request for Comments” in 2016, FCA penalties have increased to between $10,781.40 and $21,562.80 per claim, plus three times the amount of damages that the government sustains because of the false claim. It should be noted, however, that if the government conducts the action, a relator is entitled to receive no less than 15 percent and no more than 25 percent of the proceeds. If the government does not conduct the action and the relator is successful in obtaining recovery, the relator is then entitled to receive between 25 percent and 30 percent of the recovery.
In fiscal year 2016, the Department of Justice recovered more than $4.7 billion in settlements and judgements through cases brought under the FCA. Despite such massive success, however, as many as 10 cases might fail for every one whistleblower case that succeeds.
If you would like more information on FCA claims, contact Lance Gould, a lawyer in our Consumer Fraud & Commercial Litigation Section, at 800-898-2034 or by email at Lance.Gould@beasleyallen.com. You can order a copy of Lance’s book, Whistleblowers: A Brief History & A Guide to Getting Started. The book is available free to lawyers. For your copy, visit lancegould-law.com/whistleblower-book.
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