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

What Is the Penalty for Violating the False Claims Act?

Posted on March 6, 2017March 2, 2017 by Mike Bothwell

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.

What’s the Real Story When It Comes to False Claims Act Civil Penalties?

Posted on January 23, 2017January 19, 2017 by Mike Bothwell

In the last thirty years, there have been many changes to the False Claims Act that have affected the civil penalties for cases tried under this piece of legislation. The significant changes came to pass in 1986 and 2009. The False Claims Act has been around since 1863, but these years saw the first wide-reaching changes to the legislation. Nearly all the changes directly or indirectly affected the False Claims Act civil penalties. Some changes focused on when and what civil penalties may apply, and some directly changed the amount of the penalties.

1986 Changes to the False Claims Act Civil Penalties

The changes enacted by Congress to the False Claims Act in 1986 came as a surprise to most working in this sector. They were very wide-reaching and applied to nearly all aspects of the bill. Arguably the most surprising and drastic change was the removal of the government possession of information barrier for qui tam suits. This significantly changed the way whistleblowers receive civil penalty awards.

Another huge change was the susceptibility of the defendant to possible civil penalties if they are “deliberately ignorant” of the truth or use “reckless disregard” when filing claims. This change was very controversial. Some said it reduced the number of cases filed under the False Claims Act and resulted in considerable civil penalties for the government and the whistleblower.

Another significant and controversial change in 1986 was the restoration of what’s called a “preponderance of evidence” provision for all aspects of the suit, including civil penalties. As with many of the other changes in 1986, many saw this as being too friendly to the corporations often penalized under the Act. This trend continued with the next change, which greatly increased the civil penalties handed down to the whistleblower for false claims made under the Act. They were now liable for triple the damages requested in their suit, and a civil fine of between $5,000 and $10,000 per claim.

However, some changes were beneficial to whistleblowers. For example, the percentage of the civil penalties awarded to the whistleblowers increased from 15% to 30%, which has resulted in more people coming forward to file claims under the Act. In the same vein, a successful plaintiff now has their expenses and legal fees paid by the defendant. As such expenses and fees sometimes ran into the hundreds of thousands of even millions of dollars, this was a milestone change for whistleblowers and the attorneys who represent them. Whistleblowers also gained job protections, a point not previously covered under the Act despite many calls to do so.

2009 Changes to the False Claims Act Civil Penalties

2009 saw the biggest changes to the False Claims Act. Most of these changes were beneficial to whistleblowers, especially those that mandated larger civil penalties for defendants found liable under the Act. As with the changes to the Act passed in 1986, some related directly to civil penalties and some didn’t.

One of the biggest changes greatly increased the potential liability for civil penalties under the Act. The change removed the controversial “presentment” requirement, the result of a contentious Supreme Court decision in 2008. This pleased many whistleblower advocates.

Another important change to the False Claims Act made in 2009 expanded the legal definition of a “claim.” It now applies to many more types of suits related to the willful misuse of government funds or property. Again, this change was a landmark victory for whistleblowers and their advocates.

Another change that directly affected civil penalties was the expansion of liability to people who committed acts of conspiracy to violate the False Claims Act. Many individuals and organizations have had to pay significant civil penalties under this change when they would not have had to pay such penalties before.

While the changes discussed so far were drastic, increased coverage for whistleblowers was arguably the single most influential 2009 change to the False Claims Act. Previously, only employees had protections under the Act when making claims against the companies that employed them. Now, however, contractors and agents have protections as well. Since then, many more people and entities were liable under the Act and forced to pay civil penalties due to this provision than would have been otherwise. Thus, the broadening of protections is one of the biggest successes of the 2009 changes.

Find out more about False Claims Act civil penalties by contacting Bothwell Law Group. At Bothwell, we have years of experience working on similar cases, so you can rest assured we know what we are doing.

The Reality of False Claims Act Criminal Penalties

Posted on November 9, 2016November 2, 2016 by Mike Bothwell

Are 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

Is the False Claims Act of 1986 Still Relevant Today?

Posted on October 17, 2016October 7, 2016 by Mike Bothwell

Are you trying to get your facts straight about the False Claims Act of 1986? Keep reading to get the information you need to know.

The False Claims Act of 1986 is an amendment to the original False Claims Act, which dates back to Civil War days when suppliers to the Union Army were defrauding the US government. The law was created to entice people to bring the criminals to the attention of the government so the prosecution could take place.

In the original writing, the act allowed the person reporting the fraud to receive 50% of the amount recovered. It also permitted anyone to bring a case forward, under what is known as the qui tam provision. Qui tam comes from a Latin term and roughly means to bring a suit on behalf of the king, as well as himself. Any private citizen aware of a fraud could bring a suit. If the fraud was proven, the defendant was required to pay double the amount of the fraud, plus a fine of $2,000 per claim.

Many old laws become obsolete, even though they remain on the books. In Gainesville, Georgia, for example, it is illegal to eat fried chicken in any way other than with your hands. Yes, you read that right! While the original False Claims Act wasn’t so silly, it did become just as ignored and irrelevant. As years went by, the Act remained in effect, but it was mostly ignored.

The first amendment to the law came in 1945, which set up huge barriers for people who wanted to bring a suit, because it eliminated nearly any reward they would receive. This change removed all incentive and ability for a private citizen to bring a whistleblowing suit. The amendment also disallowed anyone from filing qui tam suits if the government had a tip at all about the reported situation, even if it was not under investigation.

The False Claims Act was virtually dead in the water after this change.

How Was the False Claims Act Changed in 1986?

In 1986, it came to light that many defense contractors were bilking the federal government out of millions of dollars through fraudulent billing. It became public knowledge that the government was paying tens of thousands of dollars for mundane items such as light bulbs, hammers, and toilet seats.

Congress responded by revamping the old False Claims Act, once known as the Lincoln Laws, in 1986, bringing the law into current relevancy and increasing protection against retaliation for the people who reported the fraud. Because of these amendments, a resurgence of the law’s use took place.

When Congress amended the False Claims Act in 1986, the main changes involved increasing the penalties against those who commit fraud against the government, as well as raising the amount of the rewards the person reporting the acts could receive. This new award reinstated the incentive for people to report known fraud.

The 1986 amendment also increased the amount of the penalties assessed to those guilty of fraudulent charges. The punishment was increased to three times the amount of the money illegally taken. Also, damages increased to a minimum of $5,000 and a maximum of $10.000 per each separate claim. The reward for the whistleblowers now provides them from 15% to 30% of the recovered money. The defendant also pays the fees for the whistleblower’s attorney, at their regular rate.

The other significant change in the 1986 amendment was that the offenders could be held liable for acting in “reckless disregard” of the truth or in “deliberate ignorance.” This change brought the power of the False Claims Act back into play.

Is the False Claims Act Amendment of 1986 Relevant Today?

Absolutely. In fact, the False Claims Act, with the amendments of 1986, is the single most useful tool the federal government has in the fight against fraud. While further modifications to the act came in 2009 and 2010, these amendments expanded the definitions of liability and also increased the ability of the government to investigate claims.

The government has recovered over $48 billion since the 1986 amendments to the False Claims Act. More than half of that amount has come through whistleblowers’ actions. There has been more than $5.3 billion paid out in rewards to people who have brought qui tam suits to the US District Court.

You need to have a lawyer who understands the complexities of the False Claims Act and its subsequent amendments and protections to present a substantial and qualified case to court. If you are aware of fraud in your workplace or elsewhere, the time to step forward is now.

To learn more about the False Claims Act of 1986, get in touch with our experienced legal team at Bothwell Law Group online.

How Are False Claims Act Violations Handled by the Court System?

Posted on September 19, 2016September 6, 2016 by Mike Bothwell

The idea of filing a case against False Claims Act violations can be pretty intimidating. Worrying about retaliation on the job is frightening. Even though the law protects against retaliation such as job loss or losing a promotion, the fear is real. Retaliation can take place, and you need the law to assert your rights and reverse the discrimination.

One concern can be that you don’t yet know what happens in court in a False Claims Act violation. The court can always be scary if you aren’t used to it. Having a trained, experienced attorney at your side will help. Understanding the process beforehand will also help. It’s just like when you bake a cake. You need the proper ingredients, the order of the process, and knowledge of the waiting time while it bakes. False Claims Act violations are much the same in the process.

Will My False Claims Act Violation Go to Court?

The first step in a False Claims Act is to visit with an attorney with experience in this type of lawsuit. An attorney can tell you exactly what kind of evidence to bring to court. She will tell you how you can document your proof and keep it safe. She can discuss how you can determine if anyone else in the company is friendly to the case. There are many details, but a qualified attorney who has been down this road before knows what is necessary for the government to step in the case.

Once you have the proofs you need, you and your attorney will bring the matter to the Department of Justice. You must be the first person, or original source, to have brought the case to the government. The suit is called a qui tam suit. Qui tam means, “on behalf of the king.” The lawsuit may be brought on a federal level or a state level. It will depend on the state laws where the fraud takes place. When the proofs are brought in, the DOJ will examine the case and then investigate.

What If the Government Intervenes on Your False Claims Act Violations Case?

The government has an initial time frame of 60 days to investigate the company accused of fraud. The case is under seal, which means no one knows except you and the government. The company will not know there is an investigation. You can stay anonymous. If they decide to take the case, they take over and handle it from there. You are known as the relator. If the government wins, your reward is 15-25% of the amount recovered. This award can add up to millions of dollars.

The government can decide on a settlement that you may not agree with, but once they have intervened, you no longer have any say in the matter. The only time you have an option is if the government decides to opt out of the case and does not intervene.

What If the Government Opts out of the False Claims Act Violations Case?

If the DOJ doesn’t intervene, you can decide to continue the case on your own. It is critical to have an attorney who is well versed in False Claims Act cases at this point in the case. If you won, you would be entitled to up to 30% of the government’s award.

How Do I Know What Attorney I Should Use for False Claims Act Violations?

Like every lawsuit, you should find an attorney who is knowledgeable about qui tam cases. Choose a lawyer who has experience fighting for and winning False Claims Act violations. Make sure your attorney is someone you feel comfortable with and trust.

There can be anxiety and even fear involved in whistleblowing cases. Although your employer cannot legally retaliate against you, it doesn’t mean they won’t try. You want a False Claims Act attorney you can count on to make sure your rights are not violated at work. Harassment can be a large part of your experience, so you need to know you have someone you can rely on to get you through it.

Not everyone experiences trouble at work by bringing a suit forward, especially if the government intervenes and handles things. It’s important to be prepared, however, in case things shift against you. Just because your employer has no legal standing to fire you doesn’t mean they won’t try to get away with it.

When you’re looking for experienced attorneys who can walk you through False Claims Act violation case, look to Bothwell Law Group. We’ll walk you through the entire process and do our best to win your reward. To learn more about False Claims Act violations, contact Bothwell Law Group online today.

The Top False Claims Act Penalties of 2015

Posted on November 9, 2015December 7, 2015 by Mike Bothwell

Last year was a record year for False Claims Act penalties, and 2015 is pacing similarly so far. As the year draws to a close, it has become clear how seriously the government is dealing with organizations and corporations who involve themselves in fraudulent activity. In fact, in 2015, we saw two of the largest settlements under the False Claims Act—each one right around $500 million.

In the first six months of the year, approximately $1.96 in government funds was recovered from the healthcare, government contracts, and financial industry.

The Top False Claims Act Penalties of 2015

Daiichi Sankyo Inc., $39 Million Settlement

This global pharmaceutical company agreed to a $39 million False Claims Act settlement after a whistleblower revealed they had been paying kickbacks to physicians who agreed in advance to prescribe the drugs they produce. A part of the False Claims Act is the Anti-Kick Back Statute, which aims to avoid physicians’ recommendations being biased because they have received gifts, monetary or otherwise.

The whistleblower in this case, Kathy Fragoules, received $6.1 million as a reward for filing a complaint against her former employer, Daiichi Sankyo Inc.

Community Health Systems Professional Services Corporation (CHSPSC), $75 Million Settlement

Along with three affiliated hospital in New Mexico, Community Health Systems Professional Services Corporation (CHSPSC), agreed to a $75 million settlement after they were accused of making illegal donations to local governments. These donations were then used as part of the state’s Medicaid payments to the hospitals.

The whistleblower in this case, Robert Baker, was the former CHSPSC revenue manager and he received $18,671,561 as a reward for filing a complaint against his former employer.

DaVita Healthcare Partners, $495 Million Settlement

This national kidney dialysis company announced in May that it would be paying a $495 million settlement as the result of a False Claims Act lawsuit. DaVita was accused of throwing away good medication after billing Medicare for it and are believed to fraudulently received millions of dollars of government funds as a result.

The whistleblowers in this case, Dr. Alon J. Vainer and Nurse Daniel D. Barbir, who were both employed by DaVita, will receive a combined total of $135 million as a reward for filing a complaint against their employer.

Trinity Industries, $663 Million Judgement

This government contractor was order to pay approximately $663 million after a judge deemed them liable for government funds lost as a result of the company’s actions. In the lawsuit against the company, it was revealed that Trinity has made changes to the guardrails they manufacturer without notifying federal regulators.

The whistleblower in this case was a former competitor of the company and they will receive an estimated $200 million dollars as a reward for filing a complaint against Trinity Industries.

If you have reason to believe you have information about fraudulent activity that may lead to False Claim Act penalties, contact a False Claims Act attorney by calling 770.643.1606.