False Claims Act
- United States
- 04/27/2007
The False Claims Act (31 U.S.C. Sections 3729-33) allows a private individual or “whistleblower”, with knowledge of past or present fraud on the federal government, to sue on behalf of the government to recover stiff civil penalties and triple damages.
The person bringing the suit is formally known as the “Relator.”
If the suit is successful, it not only stops the dishonest conduct, but also deters similar conduct by others and may result in the Relator’s receipt of a substantial share of the government’s ultimate recovery – as much as 30 percent of the total.
The False Claims Act, also called the “Lincoln Act,” “Informer’s Act,” or the “Qui Tam statute,” was enacted during the Civil War. Qui Tam is shorthand for the Latin phrase “qui tam pro domino rege quam pro seipse”, meaning “he who sues for the king as for himself.” The law was targeted at stopping dishonest suppliers to the Union military at a time when the war effort made it all but impossible for the government to investigate and prosecute the fraud itself. Today it serves a similar purpose because of the enormous size of the federal government and the variety or programs under which it expends taxpayer funds.
More than 4,000 Qui Tam suits have been filed since 1986, when the statute was strengthened to make it easier and more rewarding for private citizens to sue. The government has recovered over $6 billion as a result of the suits, of which over $960 million has been paid to Relators/whistleblowers.
Generally, only the Relator who is the first to file a lawsuit can be rewarded for reporting the fraud. Even if one person uncovers the fraud, someone else can file the lawsuit first and bar the first whistleblower from sharing in any recovery.
What Rewards and Protections Does the False Claims Act Give A Whistleblower?
If the whistleblower’s suit is successful, he or she may receive from 15-30 percent of the government’s total recovery. Relator’s awards since 1986 have reached almost $1 Billion.
The False Claims Act also prohibits an employer from harassing or retaliating against an employee for attempting to uncover or report fraud on the federal government. If retaliation does occur, the Relator may be awarded “all relief necessary to make the employee whole,” including reinstatement, back pay, two times the amount of back pay, litigation costs, and attorney fees.
Common Types of Qui Tam fraud
Fraud under the False Claims Act means that a contractor has knowingly presented a false claim for payment to the United States. The fraud can occur wherever federal or state monies are directly or indirectly used to purchase services or goods.
Fraud most often occurs in areas where the United States is spending the most money. In the late 1980s, many cases were brought for fraud in connection with the defense industry.
Since the early 1990s, more Qui Tam cases have been filed as a result of fraud against government medical health insurance programs – Medicare, Medicaid and Tri-Care (Military—formerly CHAMPUS).
Currently the False Claims Act is being used more and more for fraud which results from violations of labor or environmental statutes.
Source: The Qui Tam Online Network
