
Violating the False Claims Act can result in severe financial penalties for those who defraud the federal government by submitting a false claim. The exact penalty will depend on several factors, including the amount of money improperly taken from the government and the amount of cooperation, if any, the violator provides to the federal government.
What Is the False Claims Act?
The False Claims Act is a federal law that punishes those who defraud the government. Often, these are federal contractors and other businesses that sell products or services to the government.
There are two major instances where an individual or company can violate the False Claims Act. The first is by defrauding the government. This means doing something fraudulent that results in the federal government paying more money than it should or preventing the federal government from obtaining the full amount of money it’s entitled to collect.
For example, a shipper overcharging the federal government to send military supplies to an overseas war will be guilty of violating the False Claims Act if that shipper falsified documents to get more money from the government. Another example might be a healthcare provider that bills the government for running medical tests of 2,500 federal employees without ever running those tests.
A second way a violation of the False Claims Act can occur is through retaliation. Since many False Claims Act court cases begin with the help of a whistleblower, the federal government realizes the whistleblower is probably going to be subject to revenge by the individual or business that’s now in trouble. To help protect the whistleblower, the False Claims Act has provisions that punish those who retaliate against the whistleblower.
Penalties for Violating the False Claims Act
Violators of the False Claims Act face financial penalties that consist of two components. The first component is the damages penalty, which triples the actual amount of money defrauded from the government. The second is the claim penalty, which provides for a set penalty amount for each claim that violates the False Claims Act. Each claim penalty can range from around $11,000 to $22,000. The exact amount of these claim penalties will vary each year based on several factors, such as inflation.
Depending on the facts surrounding the False Claims Act violations, one type of financial penalty will be more costly to the violator than the other. We can use the two examples mentioned earlier about a shipper and healthcare provider to illustrate.
Let’s say the shipper charged the federal government $500,000 to ship 100 tanks to a particular battlefield. This price of $500,000 included a requirement that the shipper conduct daily inspections of the tanks to make sure no damage occurred during the long voyage. However, the shipper never conducted these daily inspections and instead only inspected the tanks every week, yet still charged $500,000. If the shipper is liable for violating the False Claims Act, it will have to pay between $1,511,000 and $1,522,000.
Now take the healthcare provider who claimed to have 2,500 federal employees medically tested. Imagine the healthcare provider charged the government $500,000 for all 2,500 medical tests or a bill of $200 for each test. Since no testing actually happened, if the court deems the healthcare provider violated the False Claims Act, it could be on the hook for anywhere between $29,000,000 and $56,500,000. Why is this penalty so much higher than the shipper’s penalty? It’s because each false claim of $200 results in a penalty that will range from $11,000 to $22,000. And since there were 2,500 false claims submitted, you have a lot more damages.
If a violator cooperates with the federal government in its investigation into the fraud, they may reduce the damage penalty by only doubling the amount of money taken from the government instead of tripling it. This is a 33% reduction in damage penalties. However, the claim penalties remain the same.
Penalties for Violating the Anti-Retaliation Provisions of the False Claims Act
To protect whistleblowers, the False Claims Act has an anti-retaliation provision. If an employer fires, demotes, suspends, harasses or discriminates against the whistleblower, the whistleblower can receive reinstatement, double the amount of back pay, interest and special damages. These special damages can include attorneys’ fees and court costs.
Concerned about the Penalties for Violating the False Claims Act?
Calculating the total amount of penalties possible for violating the False Claims Act depends on a lot of facts. If you’re aware of a possible False Claims Act violation and concerned about the total amount of penalties possible, please contact the skilled attorneys at Bothwell Law Group by calling 770.643.1606 today.