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US False Claims Act

US False Claims ActThe US False Claims Act is responsible for returning billions of dollars stolen from the US government. When people commit fraud against the government, with the knowledge they are doing so, they violate the US False Claims Act. The law has been on the books since Abe Lincoln was in the White House. It has many different aspects to it and can bring millions of dollars in reward.

What Brought about the False Claims Act in US History?

The US False Claims Act was enacted March 2, 1863, at the request of President Lincoln. The amount of money the government was spending for military needs was skyrocketing from fraud. There were stories of sawdust sold as ammunition. There was fresh paint thrown on old warships that were no longer seaworthy and then sold as new to the Navy. The fraud was hampering the Union war effort and considered as traitorous behavior.

With the US False Claims Act, Lincoln hoped to help root out fraud against the government. He wanted to encourage private citizens who knew about fraud against the government to come forward. This coming forward is called the qui tam or whistleblower part of the act.  Qui tam is a Latin phrase that roughly means to “bring action on behalf of the king”…in other words, bringing the fraud to the court system on behalf of the government. This person, known as the relator, is also in line for a reward.

Back in 1863, the person who knowingly submitted a false claim against the government could be hit with charges equal to double the amount of the damages plus $2,000 for each false claim, as an extra penalty. The person who brought the charges to the government could receive half the amount awarded.

Has the US False Claims Act Stayed the Same?

The law remained unchanged for 80 years. In 1943, Congress took action again. They changed the qui tam, or whistleblower, part of the act. Congress slashed the amount of the relator’s reward. Besides removing the compensation, lawmakers put stipulations on relating the crime to the government if there was any prior knowledge of the fraud. Prior knowledge meant that if any government document alluded to the scam, the relator was cut out of the deal altogether. It’s no surprise that with no real reward for coming forward, the law fell into disuse. Fraud against the government did not.

What Is the Status of the US False Claims Act Today?

The law remained in the weeds until the mid-1980s. Stories of the Navy paying $435 for a hammer and $640 for a toilet seat hit the news. In 1985, we found out nine of the top ten Department of Defense contractors were under investigation for fraud. Congress took action when the government couldn’t stop the abuse. They changed the False Claims Act so relators would again see a significant reward for coming forward. Congress also added provisions to protect the whistleblower from retaliation from his employer for coming forward.

Today, the US False Claims Act allows anyone with knowledge of a fraud against the government to bring the information forward in a qui tam case. The government investigates the claim under a seal, so no one knows the investigation is happening. If the government believes there is a case, they take over from that point. The relator can receive a reward of 15-30% of the amount of the damages.

The penalties for committing fraud against the government have increased a lot. Today, the penalty is three times the amount of the fraud, plus an extra penalty of $5,000 to $10, 000 per instance. The defendant also covers the relator’s legal fees when the case results in a payout.

Also, if the government decides not to intervene in a case and take it on, the whistleblower and their attorney can choose to move forward on their own.

Congress amended the law again in 2006, further defining the terms of liability. There are many different areas the US False Claims Act covers including Medicare, Medicaid, nursing home fraud, government contractor fraud, and misrepresenting the value of imported goods. Other areas covered include billing for brand-name drugs and supplying generic drugs, using wrong coding for billing medical procedures, rebate scams on prescription drugs and more. The key to guilt is committing the fraud knowing it is illegal or acted with reckless disregard for the truth or falsity of a claim.

If you have knowledge of a False Claims Act violation, you need to talk to an attorney who has experience with this type of case. There is there a potential reward of a large sum of money. Also, not coming forward can make you complicit in the fraud if you are aware of it and do not act. Have questions about US False Claims Act violations? Contact the Bothwell Law Group online today.

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