What Types of Acts Are Covered by the False Claims Act?
April 17th, 2017 by Mike Bothwell
Knowing which types of acts are covered by the False Claims Act is important. It can determine whether a whistleblower can take advantage of reward and protection provisions under the False Claims Act. While most acts that fall under the False Claims Act revolve around the fraudulent taking of money from the US government, not every instance of fraud will result in a False Claims Act violation.
What Does the False Claims Act Prohibit?
In general, the False Claims Act will outlaw an activity that results in an individual or organization improperly obtaining money or property from the US government. An individual or organization may do this by submitting false documents to the government, obtaining government property from someone who is not allowed to sell or distribute the property or by simply planning with another person or entity to defraud the government.
To help the US government fight fraud, the False Claims Act contains a qui tam provision which allows non-government individuals, called relators, to bring claims on the government’s behalf. The purpose of bringing these claims is to impose penalties on the wrongdoer and recover money lost as a result of the fraud.
Because individuals who act as whistleblowers are at extreme risk of suffering from retaliation, the False Claims Act contains an anti-retaliation provision. This provision prohibits an employer from discharging, demoting, harassing, threatening or in any way discriminating against an employee, contractor or agent who exercises his or her rights under the False Claims Act, including acting as a whistleblower. If the employee, contractor or agent can prove retaliation, they may receive reinstatement (if applicable), double the back pay, interest, special damages and reasonable attorneys’ fees.
What Types of Acts Are Not Covered by the False Claims Act?
There are three main exceptions to the qui tam provision of the False Claims Act. Qui tam actions cannot come from a current or former member of the armed forces against another member of the armed forces when the alleged fraud occurred during the individual’s service in the armed forces.
Another exception exists when a qui tam action is against a member of Congress, the judiciary or a senior executive branch official. In these situations, the qui tam action cannot proceed if the evidence used in the qui tam lawsuit uses information known to the US government when the qui tam action began.
The final primary exception is tax fraud. Instances of tax fraud or any other improper activities that would fall under the Internal Revenue Code of 1986 are not subject to the False Claims Act.
There are also several defenses to certain parts of the False Claims Act that might normally result in liability. The first defense is the lack of knowledge defense. If an alleged wrongdoer didn’t know nor had no reason to know it was committing fraud against the government, they cannot be liable under the False Claims Act.
Another defense is that the US government already knew about the alleged fraud but chose not to take action on it. For example, a contractor knowingly does not conduct testing using methods as required by its contract with the US government. If the government is aware that different testing methods are in place but approves the different testing methods anyway, there can be no False Claims Act violation for knowingly failing to abide by the contract.
What Specific Examples of Acts Are Covered by the False Claims Act?
The False Claims Act covers a broad array of prohibited activities, including:
● Engaging in improper conduct to hold onto an overpayment by the US government.
● Asking the government to pay something the individual or wrongdoer knows it is not entitled to have.
● Providing defective products or services to the government. The False Claims Act will apply even if the seller doesn’t knowingly provide defective products or services, as long as the seller should have known the product or service was defective.
● Planning with others to violate the False Claims Act.
● Purchasing US government property from a government officer or employee that is not allowed to sell the property.
● An employer punishing an employee, agent or contractor for reporting possible False Claims Act violations. Anything significantly detrimental the employer does to the employee, agent or contractor for exercising rights under the False Claims Act will qualify as retaliation. This includes firing, demotions, pay cuts and harassment.
Need More Information?
If you’ve still got questions about what specific types of acts are covered by the False Claims Act, don’t hesitate to contact the Bothwell Law Group.