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The Reality of False Claims Act Criminal Penalties

False Claims Act Criminal Penalties

False Claims Act Criminal PenaltiesAre you wondering about False Claims Act criminal penalties? In life we know actions have consequences. If you work out for the first time, your muscles feel the strain. If you celebrate too much, a headache is in store the next day. What about companies who defraud the government by charging crazy prices for basic items? Or hospitals that bill Medicare for procedures never performed?

False Claims Act criminal penalties include huge fines and even prison terms. Usually, a whistleblower is an employee of the offending company. Even if the whistleblower is not an employee, they can pursue a complaint. This suit is a civil action, and civil penalties will apply. If the government decides to pursue a claim, it’s considered a criminal offense. In reality, civil penalties are usually fines, but criminal penalties can lead to prison.

The process of making a claim under the False Claims Act is quite involved. The whistleblower’s attorney files a complaint with the United States District or Federal Court. The Department of Justice then has 60 days to investigate the claim. The government decides if they are going to prosecute or decline. If they decline, the person who filed the complaint still has the option of going ahead with a civil suit.

False Claims Act Criminal Penalties Through the Years

As with other criminal charges, claiming ignorance is not a defense. The company cannot admit the offense but not claim responsibility for it. “I’m sorry, I got it wrong and I promise not to do it again,” is not acceptable to the United States District Court. Here are examples of False Claims Act criminal penalties that some major companies have had to face:

● The court levied the largest fine ever on the drug manufacturer GlaxoSmithKline. They paid $3 billion in both civil and criminal suits. The cost of penalties can rise in a hurry because each complaint counts as a separate claim. The whistleblowers collected a percentage of this money.
● In Cleveland, a nursing home company paid $145 million in fines for making false claims against the government. The hearing proved the company was claiming that qualified staff provided services to clients. The fact was the staff members providing services were not qualified.
● Trinity Industries paid $663 million when the court found they changed the way they made guardrails. The company contracted with the government, but they did not report the changes they made. This failure to report violated the standard of their government contract and was considered fraud.

Are Criminal Penalties Always Given for Violations of the False Claims Act?

If the government investigates and finds there were no instances of fraud, they drop the criminal complaint. The government has the decision-making power. They can choose to settle the claim or drop the charge, even over the objections of the person who brought the claim to their attention.

The government also has the option of pursuing some claims but not others. If the government investigates a complaint and finds a company defrauded them six times, they can continue all six counts. The court can fine the company for those six counts. But, if the whistleblower stated in his complaint that the company defrauded them eight times, and the government only finds six, the other two charges will not result in criminal penalties.

In addition to massive fines, False Claims Act criminal penalties can also include prison terms. Between the cost of the fines and time served in jail, the ultimate consequences can be intense.

Are There Ever False Claims Act Criminal Penalties for the Whistleblower?

You can see the False Claims Act criminal penalties are enormous. But are there ever any penalties for the whistleblower if they worked for the guilty company? The short answer is usually not. The whistleblower, or relator, finds himself in a tight spot. Often as a condition of his job he has participated in the fraudulent acts. He wants to do the right thing and report the criminal activity. But he doesn’t want to incriminate himself along with his employer.

The good news for whistleblowers is that the government is almost always more interested in prosecuting the bigger fish in the pond. They want to bring the originators and planners of the crime to justice. But prosecutors prefer to interview a whistleblower before they offer them immunity. The problem lies in that the whistleblower may incriminate himself while talking. The responsible thing for the relator, or whistleblower, to do is hire an attorney experienced in filing False Claims Act violations.

Find out more about False Claims Act criminal penalties by contacting the Bothwell Law Group