False Claims Act – Qui Tam Cases

The False Claims Act (FCA) is the nation’s major “whistleblower” law to combat fraud against the federal government. The False Claims Act became significant when Congress amended it in 1986 to provide significant rewards for whistleblowers. In 1988, two years later, our lawyers began handling False Claims Act cases. It allows private citizen whistleblowers (known as “relators”) to expose fraud against taxpayer funds by bringing “qui tam” cases, which can permit them to share in the government’s recovery of money.

When we began working with the False Claims Act in 1988, most cases involved fraud in the defense industry. Today, most FCA cases deal with healthcare fraud, but many involve other types of fraud against the government. The major False Claims Act areas are:

1. Healthcare fraud (including Medicare and Medicaid fraud)
2. Defense contractor fraud
3. Financial industry fraud
4. Hurricane and other disaster relief fraud
5. Fraud in federal grants and cooperative agreements
6. Other fraud (a wide variety of cases)

Often called the “Lincoln Law,” the False Claims Act was enacted during the Civil War to stop war profiteering. Congress weakened it during World War II, which made it ineffective. In 1986, the Act underwent a major overhaul, as Congress established meaningful rewards to whisteblowers.

In 2009-2010, Congress strengthened the FCA further with major amendments through the Fraud Enforcement and Recovery Act of 2009 (FERA), the Patient Protection and Affordable Care Act (ACA), and the Dodd-Frank Wall Street Reform Act (the Dodd-Frank Act).

FCA recoveries have increased dramatically since the Act was amended in 1986. In 1987, the government recovered just $86 million under the Act. Now, it usually recovers well over $1 billion each year in FCA cases. In 2010, of the $3 billion recovered, $2.3 billion was recovered in qui tam whistleblower cases. A dramatic increase was seen in fiscal year 2012 with over $9 billion returned to the government through federal and state FCA cases.

This law has unusual procedures that are unfamiliar to many lawyers. For example, private citizen whistleblowers or “relators” file these cases on the government’s behalf. These cases by private citizens are known as “qui tam” cases. The cases remain confidential under seal while the government investigates and decides whether to join in the case.

As a reward, a private citizen who exposes the fraud can receive 15-30% of the money recovered. Depending on the case, money damages can be large. In addition, defendants can be liable for three times the amount of damages they cause (“treble damages”). The Act also authorizes penalties of $5,500 to $11,000 for each false or fraudulent claim by a defendant. The Act also protects individuals from retaliation for conduct protected under the statute.

At least 30 states have passed their own False Claims Acts in order to protect state and local taxpayer funds. Congress has provided an incentive to states to pass their own False Claims Act. For more information on state False Claims Acts and specific state acts, please visit our State False Claims Act page.

Thirty years ago, our lawyers began handling FCA cases. During that time, we gained experience on both sides as we have both defended and prosecuted cases under the Act. Our whistleblower team now includes former DOJ lawyers who litigated FCA cases for the government. Today, our practice at Finch McCranie LLP focuses on representing private citizen whistleblowers who want to combat fraud against the government. As former prosecutors, we work hand in hand with government counsel in pursuing these cases.

We have also assisted legislators in drafting two state versions of the False Claims Act. Based on our experience, Congress consulted us when it created the new SEC Whistleblower Program. We have also testified before the IRS about how its new IRS Whistleblower Program should operate.

We founded the Whistleblower Law Symposium, which attracts a national faculty to discuss False Claims Act and other whistleblower law developments. We also are regularly asked to speak at seminars to update other lawyers on developments in False Claims Act cases.

For a consultation about a potential case, please call us at (404) 658-9070, or click here to send us an email. Additional information on the FCA, as well as the other major programs that provide our clients a share of the government’s recovery: the IRS Whistleblower Program, and the SEC and CFTC Whistleblower Programs, can also be found on our blog.

What Lawyers Should Know About the False Claims Act and the Wave of New State False Claims Acts After the 2009-2010 Amendments.