False Claims Act

Whistleblowers can receive a reward for false claims against the government

The Federal False Claims Act is also known as the 'Lincoln Law' as it was instigated by Abraham Lincoln in 1863. This law holds any person, persons, or company liable who seek to defraud governmental programs. This can range from government contractors to pharmaceutical companies. It also allows any person with knowledge about fraud against the government to sue on the government’s behalf, and this person is then known as the “Relator”. A “claim” is essentially a request for payment or remuneration from the government. There are also 28 States with False Claims Acts that cover areas such as health care and education.

Areas Covered by the False Claims Act

False Claims The False Claim Act has been put into action to thwart cases of fraud against the government in many areas including but not limited to:

  • defense procurement
  • Medicaid/Medicare
  • Housing and Urban Development (HUD) fraud committed by contractors of federally subsidized housing
  • education
  • social security
  • welfare benefits and
  • any procurements made by government departments
  • TARP funds
  • shovel-ready projects
Types of False Claims

There are several types of actions which are covered by the Federal False Claims Act. They include:

  • off label marketing by pharmaceutical companies and reps
  • providing bribes or kickbacks
  • billing for services or goods never provided or altogether fabricated
  • falsifying records to make claims
  • collusive bidding
  • reverse false claims (failure to return money incorrectly paid)
  • best price
  • falsifying certifications of testing and compliance requirements
  • falsified time slips
  • falsifying quality or quantity of goods and services
Qui Tam Provision of False Claims Act

The Federal False Claims Act permits anybody who suspects any type of fraud or has proven knowledge of fraud that has been committed or is in the process of being committed upon the Unites States Government to file a claim. Under the guise of the Qui Tam provision an individual is allowed to file a claim on behalf of the government and in return, if the prosecution is successful, they will receive a percentage of the recovery money. This is usually somewhere between 10% to 30% and the recovery has to be over $1 million. The word 'qui tam' comes from an extended Latin phrase which means 'he who sues for the king, does so also for himself. Therefore under this law anyone who suspects fraud on the government can file a claim. This is a great incentive for any modern day whistleblower. The idea behind this law in the modern age is that a person no matter who they are has the ability to protect the US Treasury from more sophisticated and ever increasing levels of fraud. It creates a solid link between the government law enforcers and the public tax payer and puts them on the same side. Large scale fraud is not something that the government could police on their own and with the introduction of the qui tam provision it means that they have people on the ground who can help them.

Who can be a Whistleblower?

In essence anybody can bring about a Qui Tam lawsuit irrespective of whether or not he/she has first-hand knowledge of the fraud. It may be that the employer has learned of the fraud committed by his/her employer from another colleague, or even another person in another company; they can still bring about a qui tam action. Another point to note is that any person can bring about a qui tam lawsuit even if the information has been publicly disclosed. Clearly when something is publicly disclosed it entails that it has been broadcast through the media. However it may also mean that it has been disclosed in another lawsuit, or governmental financial report which the majority of the public may not have heard about. If you suspect that your employer is in breach of the federal false claims act then an experienced attorney will be able to tell you whether or not you qualify as a Qui Tam plaintiff. Call us at 1-888-204-1014 for a free consultation and talk with one of our experienced attorneys.

Definition of Fraud in the False Claim Act

The average person has his own ideas of what fraud is. When a person or entity falsely uses information to obtain something for a personal gain, whether it be financial or objective, this is fraud as we know it. However under the False Claim Act the term 'fraud' carries a lot more scope.

In the eyes of the government a person need not know that the information that they provided in order to obtain benefits and/or payments was false. If they have mistakenly filled a form in wrongly, or given incorrect information that allows that person to claim benefits which under normal circumstances they shouldn't be entitled to, then under the Federal Claims Act, they are breaking the law. This is known as 'reckless conduct' and the legal term for this is 'constructive fraud'. If a person hasn't bothered to check their facts and it means that their representations to the government are false, then this would constitute a violation of the law. Whether or not a person is knowingly committing the act, the same rewards can be awarded to a qui tam plaintiff if the case is valid.

Protection for the Qui Tam Whistleblower Plaintiff

The Federal False Claims Act can provide protection for any employee who has been retaliated against by their employer, supervisor or work colleague because of their whistleblowing actions. If the employee has their employment terminated or suspended, or are demoted, harassed or threatened in any way then they are entitled to benefits. If they are fired then they can be reinstated with double the amount of wages that they lost whilst they were fired. This also equates to being suspended. If the employee is discriminated against, then they can file for damages against the guilty party to cover any emotional trauma that they may have experienced whilst going through the ordeal.

As you can see, the Qui Tam provision gives people great incentives to report any fraud that has been committed, or is being committed, on the government by an individual or company. While the false claims act comes down hard on individuals who commit an offense, it also makes companies more open and transparent about their dealings.

History of the Federal False Claims Act

It’s interesting to learn how this act arose. During the American Civil war that waged between 1861 and 1865 fraud in both the Union north and the Confederate south was rife. Unscrupulous business owners sold both the Unionists and the Confederates horses and mules that were in bad shape and in ill health, bad ammunition and faulty rifles and rancid provisions. These acts defrauded both parties out of millions of dollars and probably prolonged the war and indeed the suffering by a few years. As a direct response to this fiasco, congress passed the False Claim Act.

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