False Claims Act

The federal False Claims Act is a civil statute through which the United States and private whistleblowers can recover damages and penalties from parties who submit false or fraudulent claims to the government.  It was originally enacted in 1863 to combat fraud and price-gouging by government contractors during the Civil War.

The False Claims Act provides that a person who knowingly submits a false or fraudulent claim to the government, or makes a false statement to get such a claim approved, is liable for both damages and penalties.

A defendant is liable for:
 

• three times the damages sustained by the government due to the false claim, plus

• a civil penalty of $5,500 to $11,000 per false claim.

Showing that the defendant intended to defraud the United States is not a requirement of liability.  The statute, instead, uses a “knowing” standard defined as:
 

• actual knowledge that the claim is false,

• deliberate ignorance as to the truth or falsity of the claim, or

• reckless disregard as to the truth or falsity of the claim.

The qui tam provisions of the False Claims Act allow whistleblowers, called “relators,” to bring False Claims actions on behalf of the government and to share in the government’s recovery.  The relator is required to file the lawsuit under seal and to serve the government with the complaint along with disclosure of all material evidence and information in the relator's possession pertaining to the alleged false claims.

The government, usually the U.S. Attorney's Office for the district in which the complaint was filed, has 60 days to investigate the complaint and decide whether it wants to intervene in the case (extensions to the 60-day period can be obtained for good cause shown).  If the government chooses to intervene, it exercises primary responsibility for the action.  If the government declines to intervene, the relator may pursue the action independently.

If the case is successful, the relator is entitled to share in a percentage of the government’s recovery, including the treble damages and penalties.  If the government intervened in the case, the relator is entitled to 15% to 25% of the total recovery, depending on the extent to which the relator substantially contributed to prosecuting the action. If the government did not intervene, the relator is entitled to 25% to 30% of the total recovery.

The information in this website is not intended to be legal advice. We recommend that anyone not currently represented by an attorney who is reading this page to understand the law involved in False Claims Act or other cases seek experienced counsel to evaluate, file and pursue, if appropriate, any potential case on your behalf.