False Claims Act

What is the False Claims Act?

The False Claims Act has solidified into the biggest hammer employed by the government in its enforcement efforts against corrupt domestic and international businesses. Settlements north of a billion dollars continue to occur, and liability for violating the federal False Claims Act can significantly impact companies that contract with the government or operate in the health care industry.  To see the full text of the False Claims Act Statute, click here.

How does a qui tam case work?

Qui tam lawsuits are a type of civil lawsuit that has become a powerful way for whistleblowers to help the government stop many kinds of fraud – Medicare and Medicaid fraud, defense contractor fraud and numerous other types of frauds that impact the government financially – and recover billions that have been stolen from the U.S. Treasury and taxpayers.

At the same time, qui tam lawsuits allow whistleblowers to get rewarded for the professional and personal risks they take to expose and stop fraud against the government – fraud that can endanger the lives of patients, U.S. soldiers and others.

Overview of qui tam cases

Once a person has evidence of fraud against the government and decides to blow the whistle, that person needs to find a lawyer to represent him/her. Thorough research should be done and careful consideration should be given to the hiring decision as the work by that lawyer will be key to the success of the qui tam case and will be a major factor in determining whether the whistleblower will receive a reward and the amount of the reward.

Under the False Claims Act, a private citizen may sue an individual or a business that is defrauding the government and recover funds on the government’s behalf. The qui tam lawsuit is filed “under seal,” meaning that it is kept secret from everyone but the government to give the Justice Department time to investigate the allegations. Even the person or entity being accused of fraud is not told about the qui tam case. The qui tam lawsuit and supporting documents should provide the government with detailed information about the fraud.

The government investigates the allegations and decides whether it will join, or “intervene,” in the case. The government intervenes in only a small percentage of qui tam lawsuits. Although whistleblowers have the option under the False Claims Act to pursue qui tam cases on their own, the chances of success are much higher when the government intervenes.

The False Claims Act states that a qui tam case will be sealed for 60 days, but courts generally extend the seal multiple times to give the government enough time to investigate the allegations to decide whether to join the case. Government investigations can take years.

Oftentimes the government will ask the court to partially lift the seal on the qui tam lawsuit to discuss the allegations and a possible settlement with the individual or entity accused of fraud. Most successful qui tam cases are resolved through settlement negotiations rather than a court trial, although trials may occur.

The amount of the whistleblower reward depends on many factors, including the quality of the case as presented to the Justice Department and the work of the whistleblower’s attorney to help the qui tam case succeed. If the government intervenes in the case and recovers funds through a settlement or a trial, the whistleblower, or “relator,” is entitled to 15 percent to 25 percent of the recovery. If the government doesn’t intervene in the case and it is pursued by the whistleblower team, the whistleblower reward is between 25 and 30 percent of the recovery

If you would like to contact Nicholson & Eastin about a potential case or have any questions Please click here.

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