Explaining the False Claims Act Archives - National Whistleblower & Government Fraud Settlement Attorney

What Are the Activities Covered by the False Claims Act?

Posted on April 10, 2017April 8, 2017 by Mike Bothwell

Activities covered by the False Claims Act include a variety of actions where an individual or organization can take money for themselves that otherwise belongs to the US government. We will provide an overview of the types of activities that typically fall under the False Claims Act.

Activities Specifically Covered by the False Claims Act

The False Claims Act sets out seven specific prohibited activities. Any violation of these activities can result in liability of the wrongdoer. The prohibited activities, as well as examples of each, are below:

● “Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” An example would be a construction contractor submitting an invoice for repairs made to a government building, all while knowing the invoice is incorrect because it lists work that was never actually done.

● “Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” Consider a health care company reimbursed by the US government for each medical test it provides to soldiers during basic training. To show reimbursement costs, the health care company submits a document showing that each test cost $50 when it really only cost $10.

● “Has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property.” This could occur if a shipping company should deliver 100,000 doses of morphine to troops overseas, but only delivers 95,000 doses and keeps 5,000 doses for itself, perhaps to sell on the international black market.

● “Is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true.” This could occur when a defense contractor receives a shipment of raw materials for building a ship. The contractor certifies the receipt showing the delivery of the raw materials is correct without first confirming that it contains all the raw materials detailed in the invoice.

● “Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property.” An example might include a hunting store buying military surplus gear and equipment from an enlisted soldier, but the hunting store knows the soldier stole the items from a military warehouse.

● “Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” An example involves a hospital that receives payments from the US government for treating a certain number of patients throughout the year. But at the end of the year, the hospital submits false documents claiming the cost to treat those patients was more than expected (when it was really less than expected) to avoid submitting a refund check to the government for overpayments received.

● “Conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G).” This means creating an agreement or plan with another to commit one of the above-listed activities prohibited by the False Claims Act.

Penalties for Engaging in Activities Covered by the False Claims Act

The penalties for violating the False Claims Act depend on the number of false claims submitted to the US government. The penalty for each violation ranges between $5,500 and $11,000. This amount changes periodically with inflation. Additionally, the individual or organization that violated the False Claims Act can be liable for up to three times the actual damages suffered by the US government.

The calculation of penalties means many small violations of the False Claims Act can sometimes result in a bigger penalty that a few large violations. This is one reason why activities covered by the False Claims Act violations in the healthcare setting often result in some of the larger penalties imposed on violators.

Wondering What Constitutes a Violation of the False Claims Act?

To learn more about activities covered by the False Claims Act, you should contact the Bothwell Law Group online and set up a time to discuss any questions you may have about the False Claims Act. We are here to help you get the information you need.

A False Claims Act Primer: What You Need to Know

Posted on February 13, 2017February 11, 2017 by Mike Bothwell

A 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.

For the Average Citizen: Let Us Explain the Federal False Claims Act

Posted on December 21, 2016December 20, 2016 by Mike Bothwell

The Federal False Claims Act might seem difficult to figure out, but it’s really not. Let’s break it down and explain the Federal False Claims Act to give you the clear understanding you need.

Let Us Explain the Federal False Claims Act in Simple Terms

The False Claims Act is also known as the Lincoln Law. The law exists as a way to stop people from defrauding the government. The False Claims Act allows for Qui Tam cases, which means citizens can file a lawsuit on behalf of the government. Anyone can file a case, whether they work for the government or not. These people are the whistleblowers.

The Federal False Claims Act began in 1863 during the American Civil War. Both sides in the war were defrauding the government on a regular basis. During the war, the government purchased supplies, including guns, horses, and ammunition. Some of the horses were not fit to work. Often the guns and ammunition didn’t work or were faulty.

President Abraham Lincoln and Congress created a law criminalizing this fraud. The False Claims Act provides a way for individuals to report fraud and even receive a reward for doing so.

What Does the Federal False Claims Act Cover?

The Federal False Claims Act makes cheating the government a crime. It allows for contractors and companies to face charges for fraud. Here are some of the things listed as violations of the FCA that can result in a lawsuit:

● Asking the government for payment of hours you have not worked
● Asking the government to pay for materials you have not used to complete government contracts
● Conspiring or planning to defraud the government
● Stating that you know something about completed or uncompleted work that you don’t know for a fact
● Buying government property from someone who is not allowed to sell it

It is important to note that whistleblowers can get compensation for a successful prosecution. This settlement also includes money to help with any court costs or income they lose because they made a complaint. The payment amounts to a percentage of the money recovered by the government and can reach millions of dollars. However, if the facts prove they participated in the offense, they don’t receive compensation.

Has the Description of the Federal False Claims Act Changed Since 1863?

Changes to the law came in 1986, 2009 and 2010.

In 1986 the government added a provision that meant a contractor had to make sure they knew what the rules meant. A contractor accused under the Federal False Claims Act cannot claim ignorance. They are no longer able to say “but I didn’t know” as their defense.

Also in 1986, the government increased how much reward money whistleblowers receive. In addition, they raised the penalties for offenses against the Federal False Claims Act. Congress added a protection provision so a whistleblower cannot lose their job as a result of coming forward. They have the right to reinstatement without penalty.

In 2009, Congress tightened up the Federal False Claims Act. Lawmakers added legislation clarifying the offenses.

In 2010, Congress made more changes. Now, people would not be able to file a claim for a charge that had already come before the court. This addition prevented whistleblowers from making claims based on the publicity of previous claims. The whistleblower must also have “direct knowledge” of the offense. They cannot make a claim based on what they’ve heard from others.

Other 2010 changes dealt with the overpayment of Medicare and Medicaid. People who defraud these services now have to repay the money within a particular timeframe. The anti-kickback legislation also went into effect; people cannot receive bonuses for using a product or service.

Why Would You Need to Explain the Federal False Claims Act?

Some people may not know what the Federal False Claims Act covers. If they are new to contracting for the government, they may not know what they need to avoid under the law. If you are aware of an offense against the Act, it is your responsibility to report it. New businesses must understand their liability.

With services such as Medicare and Medicaid, people may think there is no harm in exaggerating their expenses or services. But remember, exaggerating is the same as being dishonest. In the long run, it is fraud. People are taking money they do not deserve. This means others who need it will not be able to get it.

If you know of offenses against the Federal False Claims Act, you have a responsibility to report them. Let Bothwell Law Group explain the Federal False Claims Act by calling them at 770.643.1606 .