What Is The False Claims Act?

The False Claims Act is the most significant weapon that a US taxpayer has to help recover the billions of dollars stolen from the Government each and every year through fraud. Good honest people work hard and pay their taxes to the US government and so it is only natural to feel disgust and anger at the unscrupulous and dishonest contractors who defraud the government out of large sums of money, leaving the taxpayer to foot the bill.

A whistleblower receives a substantial share of the recovery

The federal false claims act permits any individual or 'whistleblower' who knows of any past or present fraud being carried out against the federal government, to sue on the government's behalf to recover triple damages and heavy civil penalties. The person filing the lawsuit is formally known as 'the relator.'

If the lawsuit is successful then not only does it stop the fraudulent practice and possibly deter others, but the relator stands to receive up to 30% of the government's ultimate recovery.

Common types of fraud

According to the FCA, fraud means that a contractor is fully aware that he has presented a false claim for payment to the United States. This dishonest act can occur wherever federal or state monies are indirectly or directly used to buy services or goods. Fraud usually occurs in areas where the government is spending the most money and in the late 1980's many cases that were filed for fraud related to defense.

Since the early 1990's however, the majority of cases filed have been in the health care sector, namely fraud involving Medicare, Medicaid and Tri-Care (military).

Types of Medical Fraud

There are several types of medical fraud which include:

• Billing for tests that were never performed
• Carrying out unnecessary medical procedures
• Charging for good or equipment that was never received
• Charging Medicare/Medicaid for new patient equipment but supplying the patient with second hand equipment
• Providing a patient with relatively cheap equipment and billing Medicare/Medicaid for more expensive equipment
• Offering free supplies or services in exchange for a person's Medicare or Medicaid number
• 'Defective testing' - putting in a bill for testing that never occurred because of a technical issue
• 'Reflex testing' - always performing a test when the results of another test fall within a certain range, even though the physician hasn't asked for it
• An equipment or drug supplier filling in a Certificate of Medical Necessity (CMN) instead of the doctor
• Double billing - charging more than once for the same service, by billing with one code and then including the service again in a bundled set of tests
• Billing for employee's hours where the employee does not exist
• Billing for brand named drugs when generic drugs were given

Limitations

Without doubt the False Claims Act is a powerful tool to use against fraud but there are still certain idiosyncrasies that place limits on its use. For example:

• Tax matters are not covered by the False Claims Act
• In order to file a civil case the fraud has to reach a certain amount otherwise it is not worth a relator risking their career to file a suit, nor is it worth a firm of attorneys taking on the case, since they take a long time to go through
• A defendant is likely to need a large wallet since smaller companies that have defrauded the government are likely to declare themselves bankrupt if faced with triple damages
• A law firm must strongly believe it can win in order to proceed. Not only can it cost a firm time and money but if the government does not take the case and the whistleblower decides to go ahead, then he or she can be ordered to pay the defendant's attorney's fees if the court rules that the case was brought for harassment purposes

How do I know If I have A Case?

The simplest answer to this is to contact a firm of lawyers who specialize in this area and have a proven track record in successful suits brought under the False Claims Act. To inform on fraud is not a decision to be taken lightly, since a case can drag on for years, your identity may well be revealed, and you could end up out of pocket and without a job. On the other hand if your attorney successfully defends the case you can not only feel good that you have done the right thing, but can also benefit financially for your troubles.