What is the False Claims Act?
The False Claims Act is the government’s most important tool to uncover and punish fraud against the United States. The key enforcement mechanism in the False Claims Act is its reliance upon “insiders” or whistleblowers to provide credible information documenting fraud against the U.S. government. These whistleblowers assist the government in protecting the public trust and holding accountable those who would defraud the government.
Anyone who has information about fraud against the government is a potential relator. Qui tam relators include employees, patients, vendors, bookkeepers, medical care providers, accountants, auditors, independent contractors, analysts and service providers — if you are aware of fraud against the government at either the federal or state level, you may be able to start a False Claims Act case.
FCA Whistleblowers
The Federal False Claims Act and similar state statutes provide significant financial rewards to whistleblowers who expose fraud against government agencies or programs. It relies on private citizens who have information about fraud to start False Claims Act cases. The False Claims Act also makes it illegal to retaliate against whistleblowers. Conduct that may be the basis of a False Claims Act or Qui Tam claim includes:
Billing the Government for Services Not Actually Provided
Example: A physical therapist bills for a session he never performed, a hospital bills for medical supplies it never ordered or received, or a doctor bills an extra hour for every patient he sees.
Paying Kickbacks to Health Providers or Physicians to Drive Business
Example: A company gives physicians income guarantees, office-rent subsidies, low-interest/no-interest loans, loan forgiveness, or provides staff support in exchange for referrals by the physicians to their company.
Failing to Comply with Contract Specifications
Example: A contractor swaps parts out and includes parts that are not specified in the contract.
Bid Rigging
Example: Two contractors or subcontracts work together to control the pricing submitted to the government for specific goods or services.
Paying Admission Representatives Based on Enrollment
Example: A for-profit school providing bonuses or other compensation to admission reps for securing higher student enrollment.
Falsely Certifying Compliance with Accreditation Requirements
Example: A for-profit school fails to meet the 90/10 Rule or other requirements in its Program Participation Agreement.
Falsifying Data and Research Results
Example: A contractor manipulating data to be used in a clinical trial sponsored by the government, like the National Institute of Health.
Manipulation of Formulas to Calculate Royalties for Gas, Coal, and Oil
Example: A private company changes the royalty calculation to pay the government less royalty money than it is actually owed.
Charging the Government for Inflated Costs
Example: A doctor charges Medicare for sample drugs provided by a pharmaceutical company that were given to patients.
Charging the Government for Ineligible Costs
Example: A hospital charges the government for services provided by personnel not approved to provide the services.
Falsifying a Business Status to Gain Small Business Administration Contracts
Example: A business certifying itself as veteran-owned to obtain set-aside contracts, when control is actually in the hands of a non-veteran.
Misusing Grant Money
Example: A service-provider bills government for time spent on non-government projects.
How It Works
A whistleblower first files a complaint under seal and provides the United States Attorney or the state equivalent with a disclosure statement containing all the information known about the fraud. Then the government investigates the claim and decides whether it will “intervene” in the case. Once that decision is made, either the government litigates the case with varying degrees of involvement by the whistleblower, or the whistleblower may litigate on his or her own if the government does not intervene. The investigation process and litigation can take several years.
Incentives Offered
In a successful case, whistleblowers (called “relators”) are typically entitled to anywhere from 15 to 30 percent of the amount recovered by the government. This amount can be significant because a defendant found guilty of fraud must pay three times the government’s losses, additional penalties, and attorney’s fees for the case. For example, in a case involving false billing for work on helicopters, the federal government recovered $150 million and the relator received $22.5 million.
What Does Qui Tam Mean? How does it relate to the False Claims Act?
The term “qui tam” is often heard in connection with cases under the False Claims Act. ” Qui tam” is shorthand for ” Qui tam pro domino rege quam pro ipso,” which means, “Who sues on behalf of the King, as well as for himself.” A qui tam case is one where a private citizen can sue on behalf of the government, which is what happens when a complaint is filed under the False Claims Act. Based on the qui tam concept, whistleblowers are rewarded by sharing in the proceeds recovered by the government.
The qui tam provision has provided ordinary Americans with essential tools to combat fraud, to help recover damages, and to bring accountability to those who would take advantage of the United States government – and ultimately American taxpayers.
- Types of False Claims Act or Qui Tam Fraud
- State False Claims Acts
- Complementing the Federal False Claims Act, many states have False Claims Acts to fight fraud against state governments. See if your state has a False Claims Act here.