Elements of the False Claims Act and Whistleblowers’ Rights • The Havok Journal

The False Claims Act (FCA) is one of the strongest whistleblower laws in the United States. In 2022, the Department of Justice (DoJ) obtained over $2.2 billion from civil cases involving fraud and false claims against the federal government.

This brings the amount recovered since 1986, when Congress increased incentives to FCA’s whistleblowers, to $72 billion.

Most money was recovered from Medicare, Medicaid, and TRICARE healthcare fraud.

What is the False Claims Act?

The False Claims Act, 31 U.S. C. § 3729, et seq., imposes criminal and civil penalties on anyone who knowingly presents or conspires to falsify bills presented to the US government for payment or approval.

The FCA allows the US government to sue anyone who may have defrauded it. It also permits private citizens, known as whistleblowers, to pursue perpetrators of such frauds on behalf of the government. This is called a “qui tam” suit, which is best handled by a false claims act attorney.

Individuals found guilty of fraud offenses against the government are liable for three times the damages in addition to a penalty linked to inflation – usually over $5,000. The whistleblowers are generally entitled to a percentage of the recovered amount, typically between 15% and 25%.

In a qui tam lawsuit, the whistleblower is known as a “relator,” while the government is considered the “plaintiff.” It is usually filed under seal without the knowledge of the defendant.

The Department of Justice (DOJ) will be notified once the suit is filed. The DOJ will conduct an investigation based on the provided evidence to decide whether the case is worth pursuing.

If the DOJ intervenes, it may dismiss the lawsuit by giving the relator notice of a motion to dismiss.

In cases where the DOJ fails to intervene within 60 days, the relator can proceed with the suit against the defendant in federal court. However, there have been instances the DOJ may later intervene even after this time.

The DOJ’s right to intervene or dismiss a suit was questioned by a relator in 2022 in a suit filed at the Supreme Court. However, in an 8-1 decision, the apex court ruled the U.S. government has broad authority to dismiss whistleblower actions over the individual whistleblower’s objections so long as the government intervenes under the False Claims Act (“FCA”) at some point in the case.

Whistleblowers can get 15 to 25 percent of the government’s award in cases where the DOJ intervened. However, if the whistleblower single-handedly pursued the lawsuit in federal court, the reward can be as much as 30 percent and not lesser than 25 percent.

The False Claims Act is essential for ensuring taxpayer dollars are appropriately spent.

History of the False Claims Act

President Abraham Lincoln signed The False Claims Act into law in 1863. This was during the civil war when there were rising concerns that many suppliers were defrauding the Union Army by providing substandard goods and services to the troops.

To counter this dubious act, Congress enacted the FCA to prosecute individuals involved and discourage others from engaging in such practice.

Since then, the FCA has been amended several times. One notable amendment was in 1986 when the damages was increased from double to treble, and the penalties raised from $2,000 to $5,000 and up to $10,000.

The FCA has also been amended at least three times since 1986. The 2023 amendment adjusted the Civil FCA penalties to account for inflation. Violations after January 30, 2023, now attract penalties ranging from $13,508 to $27,018.

Elements of the False Claims Acts

There are seven types of liabilities stated in the False Claims Acts. However, most False Claims Act are cases whereby an individual knowingly presents or causes to be presented a false or fraudulent claim for payment or approval.

To successfully prosecute a defendant, the government must be able to establish the following elements:

Falsity

The plaintiff must prove that the defendant’s billing for goods supplied or services rendered was falsified. This may include the use of false data to calculate service bills.

Scienter

It is not enough to establish there is a false claim. There must be enough evidence linking the defendant to the allegation. The plaintiff must be able to prove that the defendant knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval.

Materiality

The false claim must include material evidence that confirms the defendant’s actions. Also, the material must have played a significant role in influencing the government’s payment decision.