False Claims Act
"There is no kind of dishonesty into which otherwise good people more easily and more frequently fall than that of defrauding the government." - Ben Franklin
Mr. Franklin's statement recognized a darker side of human nature that was present when our nation was founded, and had grown into a substantial problem at the time of the Civil War. The original False Claims Act, sometimes referred to as the "Lincoln Law," was passed by Congress in 1863 in response to frauds perpetuated by suppliers of the Union Army. These frauds generally involved the provision of substandard or worthless supplies to the government. The original Act authorized "relators" to sue in the name of the government and share in any recovery the government received.
In 1986, Congress amended the False Claims Act following reports of widespread defense contractor fraud, including notorious charges for $400 hammers and $7,000 coffee pots. These amendments strengthened the relator's role in the False Claims Act and encouraged efforts to fight fraud against the government.
Barrett Law Office, PLLC has substantial experience defending the rights of whistleblowers and recovering taxpayer funds under the False Claims Act.
HOW THE FALSE CLAIMS ACT WORKS
The basis of a False Claims Act case is that the government was cheated in one form or another -- the "false claim." This false claim may take many forms, such as overcharging for a product, failing to perform a service, delivering less than the promised amount of goods or services, underpaying money owed to the government, or charging for one thing but delivering another.
The whistleblower (relator) must file a False Claims Act case under seal, and the case remains under seal while the government investigates the allegations in the complaint. A whistleblower lawsuit is also referred to as a "qui tam" action. While the statute provides for a 60 day period for the government to conduct its investigation, this period is routinely extended to ensure that there is enough time for a thorough investigation of the relator's claims.
Following its investigation, the government decides whether to intervene in the lawsuit. If it does join the case, the government takes the lead role and the relator provides assistance. If the government declines to intervene, the whistleblower may go forward with lawsuit and his or her counsel assumes primary responsibility for litigating the case.
The False Claims Act provides that perpetrators of fraud pay three times the government's damages plus a penalty for each false claim. Additionally, they must pay attorneys' fees and case related expenses of the whistleblower's lawyer.
To reward whistleblowers for stepping forward to expose fraudulent conduct, the False Claims Act also provides that whistleblowers are entitled to receive 15-30% of the government's recovery in the lawsuit. Furthermore, the False Claims Act protects whistleblowers from retaliation by their employers, and provides a remedy for whistleblowers who are fired, demoted, suspended or in any other manner discriminated against in connection with their employment.
TYPES OF FRAUD COVERED BY THE FALSE CLAIMS ACT
Virtually any situation in which the federal government is paying or collecting money can give rise to a False Claims Act violation. Activities prohibited by the False Claims Act include:
While initially qui tam actions focused primarily on Department of Defense contracts, in recent years most whistleblower lawsuits have related to healthcare, including Medicare and Medicaid.
Although the types of fraud against the government are only limited by the creativity of the fraudster's mind, fraudulent schemes uncovered to date include:
Other examples of Medicare fraud include:
The federal government has dramatically increased its efforts to combat healthcare fraud, including the creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint effort between the Department of Health and Human Services (HHS) and the Department of Justice (DOJ).
ADDITIONAL WHISTLEBLOWER RESOURCES
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