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 It was originally enacted in 1863 to combat fraud and price-gouging by government contractors during the Civil War.
To give private citizens an incentive to uncover and report fraud, Congress decided to award relators with a percentage of the money the government recovers as a result of whistleblower or “qui tam” lawsuits. Since 1986, private citizens acting as whistleblowers have been awarded a total of over $1.6 billion in False Claims Act cases. In fiscal year 2005 alone, qui tam lawsuits resulted in recoveries of $1.1 billion, with the relators’ share totaling $166 million. Whistleblowers’ awards are up nearly 50 percent since fiscal year 2004.
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:
- 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.
More than half of the states have also passed their own False Claims Acts to address false claims submitted to their agencies. While each statute is unique, most were modeled after the federal False Claims Act and impose similar requirements. The award percentages and qualifications vary by jurisdiction.
The Role of the Whistleblower
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 substantially 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.
Retaliation Protections
The federal and many state False Claims Acts include protections for whistleblowers against retaliation by their employers. Generally, any employee who is discharged, demoted, harassed, or otherwise discriminated against because of filing a qui tam complaint, or assisting in another’s qui tam case, is entitled to all relief necessary to make the employee whole, including:
- reinstatement to the same seniority;
- 2 times any back pay lost;
- interest on the back pay;
- compensation for damages sustained; and
- litigation costs and attorney fees.
If you believe your employer has retaliated against you for reporting or opposing fraud on the government, contact our firm to discuss your options.
How do I know if I have a case?
Contact our firm for a free, confidential consultation to evaluate your case. To make the most of your call, have the following information ready, if known:
- Falsity: What misinformation was provided to the government or its representatives?
- Scienter: What evidence is there to show that decision-makers knew that misinformation would be relied upon for claims to the government?
- Materiality: How do you know that the government would not have paid the claims if that misinformation had been revealed?
- Damages: How did the government suffer a financial loss, and how much?
