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A False Claims Act Primer: What You Need to Know

false claims act primer

false claims act primerA 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

Explain the Federal False Claims Act

Explain the Federal False Claims ActThe 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  .