The False Claims Act harkens back to the Civil War, hence the reason it is sometimes referred to as the Lincoln Law. The FCA is the federal government’s best tool for preventing government waste resulting from fraudulently obtained payment from the government in every conceivable area of business, including health care, housing, and contracting.

These claims usually relate to services that were overpaid, never rendered but for which payment was received, or that were in some way inferior. The FCA can also be implicated if the government is owed money but the violator acts to avoid paying the government (reverse false claims).  Most often, false claims under the FCA are brought by whistleblowers pursuant to the qui tam provision of the statute.

What is a False Claim?

When a business “knowingly” presents, causes to be presented, or conspires with others to present a false or fraudulent claim for payment from the federal government, the business may be liable for submitting a false claim under the FCA.

The government doesn’t have to show that the defendant intended to defraud it, only that it knowingly performed the violating action. Note that states also have their own false claims laws and so a business may potentially be found liable under both federal and state laws.

Among the most popular false claims relate to health care.  For example, if a pharmaceutical company fails to disclose safety data or engaged in illegal off-label promotion, the government may start a false claim investigation against the company.

As another example, a medical office submits claims for Medicare reimbursement for unnecessary procedures or for tests that were never performed. A nurse who is aware of these false submissions may report the case to the government, which may seek to initiate a claim itself. Failing to do so, the nurse may seek to prosecute the false claim personally.

What are the Penalties for a False Claim?

The fines and penalties for filing a false claim can be quite steep for businesses. Some examples of these awards are as follows:

The court may reduce the damages awarded to the government if the violator, subsequent to learning about the false claim, timely presents all information known to them to the government and fully cooperates with the government’s investigation.

Employees are incentivized to bring a whistleblower claim as well because they are best able to bring to light information that the government normally would not be in the position to discover on its own. However, to recover under the whistleblower provisions, it isn’t enough that the employee simply inform the government about the fraudulent submission.

They must present a qui tam lawsuit and will recover to the extent the government is successful in recovering from the violator. Following a trial or settlement with a positive result, the employee may recover between fifteen and thirty percent of the amount recovered by the government, plus attorney fees and costs. (The potential award is 15-25% if the action is litigated by the whistleblower and 25-30% if prosecuted by the government).

A court may reduce any awards to the whistleblower based on the level of wrongdoing of the employee and whether the employee “substantially contributed” to the prosecution of the case.

As a further incentive for bringing such claims, whistleblowers are protected from retaliatory actions by the employer. For example, let’s assume an employee is working on a government contract for construction of helicopters and discovers that the employer has failed to adequately meet testing guidelines and that the helicopters in fact have failed required testing.

The employer submits a claim for payment asserting that the helicopters have passed such testing. If the employee is successful in bring a qui tam claim and played no part in knowingly submitting false documentation, they will recover fully to the extent the government is successful in recovering against the employer.

If the employer then seeks to retaliate against the employee by firing or demoting them, the employee may seek additional damages in the form of the following:

  • Reinstatement to the same senior status;
  • Two times the amount of back pay and compensation for special damages;
  • Interest on the back pay; and/or
  • Compensation for any special damages, including litigation costs and attorney’s fees.

Should I Talk to an Attorney About False Claims Act Penalties?

If you believe you have a False Claim Act violation or are entitled to compensation under the FCA, you should consult with employment lawyer. If you are the subject of a false claim investigation or prosecution or you believe you may have presented a false claim, you should consult with an attorney as well to make sure you fully understand your rights and potential liability.