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false claims act primer

false claims act primerA False Claims Act primer explains the purpose of the False Claims Act, as well as how it works and the major components of the law. A potential whistleblower will want to understand what benefits they can obtain from the False Claims Act before deciding to take advantage of it.

False Claims Act Primer Background

The False Claims Act came into being around the time of the Civil War, when businesses that were profiting from the sale of goods to the Union Army were also defrauding the government. Since the False Claims Act is such an old law, it has gone through many revisions. Some of the more significant changes concern added protections for whistleblowers and increased rewards for individuals who serve as whistleblowers by starting a qui tam lawsuit.

Liability Created by the False Claims Act

Any individual or business who knowingly defrauds the government by submitting a false claim will be liable under the False Claims Act. The False Claims Act creates liability when an individual or business submits a false claim to obtain more money from the government than they can rightfully claim. Someone can also be liable under the False Claims Act if they commit fraud to avoid having to pay the government money.

Penalties for Violating the False Claims Act

If someone is liable for submitting a false claim to the government, they must pay anywhere between $5,500 and $11,000 for each false claim and must pay up to three times the damages suffered by the government.

Qui Tam Action under the False Claims Act

The most notable part of the False Claims Act is the qui tam provision. This provision allows an individual not associated with the government to bring a lawsuit on behalf of the government, in an attempt to recover money the government lost due to the fraudulent actions of another party. In other words, the qui tam provisions allow someone to collect a reward for identifying fraudulent activity and helping the government recover damages that occurred because of that fraudulent activity.

The relator is someone who brings a qui tam lawsuit on behalf of the government. Depending on the government’s involvement in the lawsuit, as well as how much work the relator does to recover money on behalf of the government, a relator can expect anywhere between 15% and 30% of the total amount recovered.

This opportunity for reward is crucial since about three-quarters of all lawsuits brought under the False Claims Act begin with a qui tam lawsuit. Without such an incentive, it’s unlikely as many whistleblowers would step forward in an attempt to bring to light fraud against the government.

False Claims Act Primer: Steps in a Qui Tam Lawsuit

A qui tam lawsuit begins when the relator files the complaint. Unlike most civil lawsuits, the complaint is secret, so neither the general public nor the defendant knows a qui tam lawsuit has begun.

The qui tam lawsuit will remain a secret for at least 60 days while the government investigates the alleged fraud and decides what to do next. Most of the time, the government takes much longer than 60 days to investigate and can request extensions to keep the qui tam lawsuit a secret for a longer period, often several months.

After the government investigation, it will decide whether to intervene, or join the case. If the government intervenes, it will take over the lawsuit, with the relator providing assistance and cooperation. If the government does not intervene, the relator may continue with the lawsuit on their own. Regardless of whether the government intervenes, it has the power to dismiss the qui tam action or settle it, even if the relator disagrees with the government decision.

Exceptions to the False Claims Act

There are two notable exceptions to liability under the False Claims Act. First, false claims relating to tax fraud do not fall under the False Claims Act. Second, certain members of the military or government officials are not subject to qui tam lawsuits.

Qui Tam Lawsuit Restrictions

There are four major instances where a relator’s qui tam action may not proceed:

● The qui tam lawsuit begins based on public information.
● The relator received a conviction for their involvement in the fraud they uncovered.
● Another qui tam lawsuit concerning the same fraud is already in motion.
● The government is already involved in a legal proceeding regarding the alleged fraud where the government can recover damages.

Questions about the False Claims Act?

If you think you have evidence concerning a violation of the False Claims Act or believe you may be a potential whistleblower, get more information about the False Claims Act primer by contacting our experienced legal team at Bothwell Law Group now.

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