Everything You Need to Know
Generally speaking, a whistleblower is typically an “insider” in a company (or sometimes a government agency) who uncovers instances of fraud, waste, abuse, or corruption in the company and discloses that wrongful conduct to someone capable of remedying the behaviors at issue. At Miller Law, we work with whistleblowers who know about fraud against the federal government, helping them bring their knowledge to the attention of government regulators who can stop it.
The mechanism for this work is the U.S. False Claims Act, a law dating back to the Civil War that protects whistleblowers from retaliation for reporting what they know and allows them to collect part of the government’s recovery.
Fraud, waste, abuse, and corruption can affect both private companies and governments. It can occur at both the private level (e.g., against a specific company) and the federal level (e.g., against the federal government). In fact, submitting false information to the government is not only a bad idea but also a federal crime under the federal False Claims Act (FCA).
In the United States, whistleblowers who report fraud against the federal government—and, in certain states, against the state government—are entitled to protection from employer retaliation and may be eligible for monetary rewards under the federal FCA.
The most common form of fraud against government programs is healthcare fraud, such as improper billing for Medicaid or Medicare programs, but the federal FCA also covers fraud involving government contracts, federal grants, or any other program that pays out money from the federal treasury.
What is the False Claims Act (FCA)?
How The US Combats Fraud
The FCA is the United States Government’s primary method for recovering money it lost due to fraud. It was originally signed into law in 1863 by President Lincoln. During the Civil War, it had been discovered that Union troops were receiving substandard goods and services by various suppliers, and the FCA was passed to combat this fraud.
Today, the FCA is, in fact, a collection of five different statutes: (1) 31 U.S.C. § 3729, (2) 31 U.S.C. § 3730, (3) 31 U.S.C. § 3731, (4) 31 U.S.C. § 3732, and (5) 31 U.S.C. § 3733. Collectively, these statutes hold accountable any person who has knowingly submitted false claims to the government.
Here, the term “knowingly” means that the person “(1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information.” Essentially, the FCA imposes liability on a person who submits claims to the government that the person knew—or should have known—were false, even if the person did not specifically set out to defraud the government.
What Kinds Of Claims Are Covered By The False Claims Act?
Evaluating The Scope Of The Law
The FCA is worded to be fairly broad in scope, but the FCA does explicitly identity at least seven different types of claims:
- False claims (i.e., presenting, or causing to be presented, a false claim for payment) – 31 U.S.C. § 3729(a)(1)(A)
- False records or statements (i.e., making, using, or causing others to make or use a false record of statement that is material* to the fraud) – 31 U.S.C. § 3729(a)(1)(B)
- Conspiracy (i.e., conspiring to violate the FCA) – 31 U.S.C. § 3729(a)(1)(C)
- Conversion (i.e., failing to return government property) – 31 U.S.C. § 3729(a)(1)(D)
- False receipts (i.e., making or delivering a receipt of a government property without verifying the truth of the information in the receipt) – 31 U.S.C. § 3729(a)(1)(E)
- Unlawful purchases of government property (i.e., buying public property from a government employee who may not be able to lawfully sell the property) – 31 U.S.C. § 3729(a)(1)(F)
- Reverse false claims (i.e., making, using, or causing to be made or used a false record or statement material* to an obligation to pay money to the government OR concealing, avoiding, or decreasing an obligation to pay money to the government) – 31 U.S.C. § 3729(a)(1)(G)
For example, the FCA would hold liable a physician who submitted a bill to Medicare for services the physician knew had not been provided or for services the physician knew were not medically necessary. Likewise, the FCA would hold liable a healthcare facility who submitted a false record to Medicaid in order to receive reimbursement from federal funds or who submitted a false end-of-year cost report to justify the receipt of federal funds that the facility had received throughout the year.
*For FCA purposes, “materiality” means that the fraud has a natural tendency to influence the government. More on that can be found here.
What happens to someone who has violated the False Claims Act?
The Relevant Penalties
Violations of the FCA can result in fairly significant fines and penalties.
If a party violates the FCA, that party will be liable to the government for a civil penalty of between $5,000–$10,00 and three times the amount of damages that the government sustained.
Who Can Sue Under The False Claims Act?
Action Routes for Relators
The government can pursue perpetrators on its own, or private citizens can file suits on behalf of the United States. (A lawsuit by a private citizen on behalf of the government is called a “qui tam” suit, and the private citizen is referred to as a “qui tam relator.”)
There is no limit to the number of whistleblowers that may bring the claim, but it is important that all the whistleblowers work together to report the fraud at the same time. (More on this below!)
Relators who successfully bring qui tam suits can receive a percentage of the government’s recovery, and many lawsuits under the FCA arise from such qui tam suits. (For the 2021 fiscal year, the Department of Justice obtained more than $5.6 billion from civil cases involving fraud and false claims against the government! Click here for more statistics information.)<