The False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733, provides that any person who knowingly submits false claims to the government is liable for triple the government’s damages plus penalties for each false claim. In addition to allowing the federal government to pursue those who submit false claims, the FCA allows private citizens to file “qui tam” suits on behalf of the government against those who have defrauded the government. Private citizens who successfully bring qui tam actions may receive a portion of the government’s recovery. The FCA also contains a strict anti-retaliation provision protecting those who assist with an FCA investigation or action.
The FCA was originally enacted in 1863 in response to defense contractor fraud during the Civil War. It has since been amended several times, but the law’s objectives remain the same: to recover government funds lost due to fraudulent claims and to reward and protect those who blow the whistle on fraud against the government.
Liability for False Claims
The FCA imposes liability and penalties for defrauding or submitting false claims to the federal government. The law creates liability to the government for “any person who knowingly presents . . . a false or fraudulent claim for payment or approval [or] knowingly makes . . . a false record or statement material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1).
A defendant who is found to have knowingly defrauded or submitted false claims to the federal government is liable for triple damages (3 times the amount of damages the government incurred because of the fraudulent act), as well as civil penalties, attorneys’ fees, and costs. 31 U.S.C. §§ 3729(a)(1)(G) & (a)(3); § 3730(d).
The FCA defines “knowing” and “knowingly” to mean that a person, with respect to information:
(i) has actual knowledge of the information;
(ii) acts in deliberate ignorance of the truth or falsity of the information; or
(iii) acts in reckless disregard of the truth or falsity of the information.
Significantly, under the FCA, to show that a person acted “knowingly” does not require proof of specific intent to defraud. 31 U.S.C. § 3729(b)(1).
Under the FCA, the term “claim” means any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that:
(i) is presented to an officer, employee, or agent of the United States; or
(ii) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest, and if the United States Government—
(I) provides or has provided any portion of the money or property requested or demanded; or
(II) will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded.
31 U.S.C. § 3729(b)(2)(A). However, the term “claim” does not include requests or demands for money or property that the Government has paid to an individual as compensation for federal employment or as an income subsidy with no restrictions on that individual’s use of the money or property. 31 U.S.C. § 3729(b)(2)(B).
Qui Tam Actions and Recovery
Lawsuits under the False Claims Act lawsuit start with a whistleblower bringing a “qui tam” action on behalf of the government and herself to recover the damages to the government due to the fraudulent act. “Qui tam” means “in the name of the king.” In this context, “qui tam” is short for a Latin phrase (“qui tam pro domino rege quam pro se ipso in hac parte sequitur”) which means roughly “he who sues in this matter for the king as well as for himself.” This reflects the fact that a whistleblower who brings a qui tam action does so on behalf of the government as well as him or herself.
The whistleblower in qui tam actions is called a “relator.” A relator can be anyone with knowledge of the fraud against the government. The relator can be an employee, but the relator does not have to be an employee.
The FCA provides that the relator may recover up to 15-30% of the amount recovered by the government through the qui tam action. 31 U.S.C. § 3730(d).
Retaliation Prohibited / Relief Provision
The FCA protects from retaliation those who report fraud against the government. The law’s anti-retaliation provision prohibits a defendant from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against an individual because he or she assisted with a False Claims Act investigation or action. 31 U.S.C. § 3730(h)(1).
A whistleblower who prevails on a retaliation claim under the FCA is entitled to “all relief necessary to make [him or her] whole[.]” 31 U.S.C. § 3730(h)(1). That relief can include:
(i) reinstatement with the same seniority status that the whistleblower would have had but for the discrimination;
(ii) two times the amount of back pay;
(iii) interest on the back pay, and
(iv) compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
In short, the FCA allows private citizens to serve as whistleblowers by filing qui tam suits on behalf of the government against those who have defrauded the government. The defendant can be liable for civil penalties plus three times the government’s damages, and whistleblowers who successfully bring qui tam actions may receive a portion of the government’s recovery. The FCA also contains a strong anti-retaliation provision protecting those who assist with an FCA investigation or action.
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