Federal False Claims Act Basics

Enacted during the Civil War by President Abraham Lincoln and strengthened in 1986, 2009, and 2010, the Federal False Claims Act (FCA) bestows liability on anyone who makes, causes, or conspires to make a false or fraudulent claim to the United States government, including situations in which a person falsely certifies compliance with a condition of payment or recklessly ignores the falsity of claim. Fines under the FCA can range from $5000- $10,000 (adjusted for inflation) in addition to 3 times the amount of damages that the government sustains due to the false claim. The defendant will also be liable for any costs of litigation incurred to recover these damages. The general statute of limitations is 6 years from the date of violation.

Qui Tam

Under the Federal False Claims Act, an individual may become a Relator in a Qui Tam lawsuit, essentially acting on behalf of the U.S. Government to bring a lawsuit to recover funds paid as the result of false claims. As a Relator, a private whistleblower may be eligible for an award of between 15% and 30% of the fines and damages that are recovered on behalf of the government.

A Qui Tam lawsuit is complex and requires that the Relator meet certain requirements, including, among other things, that the information first be provided to the government, that the lawsuit be filed under seal, that the confidentiality of the lawsuit be maintained, that the information not be previously publicly disclosed, and that the Relator be the original source of the information supporting the lawsuit. These complex rules and requirements have led to many otherwise legitimate Qui Tam lawsuits being dismissed for failure to strictly follow the FCA.

The FCA also prohibits retaliation against individuals who take steps toward filing a Qui Tam lawsuit or who attempt to stop violations of the FCA. In the case of retaliation, the employee would be entitled to “all relief necessary to make the employee whole,” including reinstatement of their previous position, two times back pay plus interest, and compensation for any special damages from discrimination, including litigation costs and reasonable attorneys’ fees. Whistleblowers who have suffered retaliation under the FCA must bring their claims within 3 years but need not also bring a Qui Tam lawsuit.