EXAMPLES OF VIOLATIONS AND PENALTIES IN THE FALSE CLAIMS ACT

If you are seeking information about False Claims Act Violations, it will help to have some real-life examples and up-to-date enforcement metrics about these violations and penalties. Before we get into those, let’s get a basic understanding of what the False Claims Act is:

The Act, also known as the Lincoln Law, was created in 1863 under Abraham Lincoln’s administration, to expose fraud and profiteering during the Civil War.

It allowed people to expose others who made a false claim against the government.

The Act provided protection from retaliation actions such as job loss or other damages.

While the original Civil War-era statute laid the groundwork, modern qui tam practice was truly revitalized by Congress via major structural amendments in 1986. This framework allows private citizens to sue on behalf of the US government, keeping a percentage (usually 15-30%) of the recovered money for themselves.

HOW ARE FALSE CLAIMS ACT VIOLATIONS INVESTIGATED?

The Qui Tam Law allows for a private citizen to bring evidence of a violation to the government, to request they investigate the allegation and potentially join the lawsuit. The Qui Tam is a civil suit. The investigation is confidential. When our legal team files a qui tam complaint, it is filed strictly under seal. Not even the person or organization under investigation is informed of the probe initially.

This confidentiality allows the US Justice Department to investigate the allegations with no harm or repercussions to either party while the seal remains active. Once the inquiry is complete, the government decides if they will intervene. If the federal government chooses not to go forward with the action, the private citizen (and their attorney) may continue on their own. In fact, recent Department of Justice statistics show an incredible rise in massive trial verdicts driven entirely by private whistleblowers and their counsel in cases where the government declined to intervene.

WHO ARE THE TOP FALSE CLAIMS ACT VIOLATORS?

Qui Tam Law is used to bring some of the violators to justice, including Medicare and Medicaid Fraud, prescription drug fraud, and defense contractor fraud. These three areas commit the most violations of the False Claims Act. In fact, of the highest paid settlements on record, nine of the top ten involve the health care or prescription drug industries.

According to the Department of Justice’s most recent official enforcement reporting, annual False Claims Act recoveries hit a staggering, historic record of $6.8 billion. Healthcare and life sciences fraud remained the dominant driver, accounting for $5.7 billion—roughly 83%—of the total funds recovered. The Department of Defense also saw a dramatic surge, clawing back $633 million from corrupt contractors.

Some of the largest violations occur in the area of prescription drugs. The FDA authorizes all prescription drugs for specific uses and conditions. A doctor may make a decision to use a drug for a different condition than its original use. This prescribing is known as an off-label use of the medication and does not violate any law.

However, the drug manufacturer may not promote the drug for an off-label use. Doing so is a violation of the False Claims Act. Any kickback or benefit offered to a doctor by a drug manufacturer is considered evidence of the breach.

Drug manufacturers are also in violation if healthcare providers receive kickbacks for prescribing certain drugs. While providing samples or referring patients can be done, doing so to provide a payback for prescribing certain drugs is fraud and is provided for under the False Claims Act and Qui Tam Law.

Other top offenders include government contract workers. Cases of government contractors who fail to fulfill the requirements of the contract yet bill for the fulfillment of the deal are standard. These violations can include substituting lower quality materials than what is required or failing to perform quality assurance checks. Furthermore, under recent federal mandates, contractors face immense scrutiny for misrepresenting domestic supply origins under the Buy American Act or failing to satisfy contractual cybersecurity safeguards.

Government contract violations include the implicit agreement to provide what the contract states, without substitution. Even if the substitution is of equal quality, it is not allowed and is a violation.

Contract violations include actions such as inflating bids with false information, awarding bids based on falsified information, and failing to comply with contracts available only to minority-owned businesses, female-owned businesses, or small businesses.

HOW LARGE CAN THE PENALTIES BE FOR FALSE CLAIMS ACT VIOLATIONS?

Penalties for False Claim Act violations can be astronomical, with historical precedents like pharmaceutical giant GlaxoSmithKline who paid out $3 billion in civil and criminal penalties. Some of this money was then passed onto the whistleblowers in each case. There were several cases involved that included the company pleading guilty to falsifying and fabricating research, bribing doctors with luxury vacations and of providing marketing kits packed with unproven claims, specifically regarding nine different drugs. Additionally, modern enforcement continues to see massive payouts, such as the landmark $556 million resolution with Kaiser Permanente over Medicare Advantage risk-adjustment billing fraud.

False Claims Act violations come from employees working for and with the violators. They have first-hand knowledge. One of the most important reasons to report false claims is for your own protection. All investigations, under the Qui Tam Law, are kept sealed initially. If your place of employment is under scrutiny, your position in the company could make you complicit. By coming forward with the information, you are protecting yourself from being inadvertently charged as part of the fraud. Moreover, consulting with a skilled False Claim Act attorney can provide invaluable guidance and legal support throughout the process, ensuring your rights are protected and your disclosure is handled appropriately.

If you think you have information regarding a False Claims Act violation, the best first step is to call a Qui Tam whistleblower attorney who is informed and experienced in Qui Tam Law cases. These laws and statutory inflation adjustments are in flux on a regular basis, so choose the trial litigators at The McCabe Law Firm who are committed and dedicated to this type of work and up-to-date on any changes. 

Contact The McCabe Law Firm today to explore your options and ensure your rights are protected.