FAQ

While the roots of the False Claims Act date back hundreds of years, very few American lawyers have ever heard of it. Even fewer still are experienced in using this unique and complicated statute.

Unfortunately, there are many persons holding themselves out to the public as qui tam specialists who lack the experience, knowledge, patience, and financial wherewithal to handle False Claims Act cases successfully. Before choosing counsel to handle what may be one of the most significant matters in your life, you should obtain satisfactory answers to the following questions.

If the attorney you are considering is unwilling or unable to provide you with such answers, you should keep looking. Some research on your part before you sign an engagement agreement is critical to improving your chances of succeeding. Remember, almost always, the government contractor you are opposing will be represented by the Nation’s most experienced and well-financed attorneys. You should likewise be so represented.

The federal False Claims Act, 31 U.S.C. § 3729 et seq., permits any person to bring a lawsuit on behalf of the United States to recover money and penalties from any government contractor who has submitted or caused others to submit false claims. The person bringing the lawsuit is awarded up to 30% of the money recovered plus attorney fees.

The False Claims Act is the primary law by which the United States Treasury is protected. It was originally enacted at the urging of President Abraham Lincoln to recover monies misappropriated by unscrupulous defense contractors during the Civil War.

In 1986, President Ronald Reagan signed significant amendments to this law. Among other changes, these amendments make it easier for any person to bring these whistleblower actions, increase the penalties for contractors who file false claims, provide that any losses suffered by the United States should be repaid at triple the dollar amount lost, provide for the payment of substantial rewards and recovery of attorney fees for whistleblowers, and provide employment protection for those who assist in such lawsuits.

According to Department of Justice statistics, more than 3,000 False Claims Act lawsuits have been filed since the 1986 amendments. These suits have so far returned over $7,000,000,000 of taxpayer money to the Treasury. Dozens of whistleblowers have received rewards of $1,000,000 or more.

More importantly, much future fraud has been deterred, the government made whole for losses and potentially disastrous consequences from substandard military equipment averted.

Top Department of Justice officials, United States Senators, and Federal Judges have praised the False Claims Act.

Qui tam (often pronounced “key tom”) is shorthand for the Latin phrase, qui tam pro domino rege quam pro si ipso in hac parte sequiter. This phrase is translated as “who sues on behalf of the King as well as for himself.”

The early English kings did not have an army of prosecutors and FBI agents to investigate and prosecute thefts from the royal treasury. Instead, these kings relied upon their subjects to bring so-called “popular actions” to protect royal funds. If the action was successful, the king would receive a part of the recovery and the prosecuting subject the other part. Such subjects were commonly known as informers and their lawsuits were known as qui tam actions.

Qui tam suits have played a role in American jurisprudence since the first days of this nation. Statutes authorizing such suits have swung in and out of favor for the last 200 years, generally being favored during times of great national crisis. The person who brings a qui tam suit today is known as a “relator.”

The False Claims Act is a unique statute. It contains several preliminary steps which, if not handled properly, can result in your case being dismissed.

The best first step is to seek out experienced counsel who can guide you through the steps necessary to bring your suit. Unfortunately, because of the unique nature of this statute, most lawyers are not familiar with how to handle your case. Please review the top ten questions list for evaluating counsel to assist you in selecting a lawyer who can advise you. Click here for the top ten question list.

As part of the 1986 amendments to the False Claims Act, the rewards for whistleblowers were increased as were the damages provisions.

Currently, anyone who submits a false claim or causes another to submit a false claim to the government is required to repay the government triple the amount of the United States’ loss. In addition, such person is required to pay a penalty of not less than $5,000 nor more than $10,000 for each false claim submitted.

The relator who first brings suit is paid a reward based on a scale. Should the United States Department of Justice elect to take over the prosecution of your qui tam suit, your reward is generally calculated at not less than 15% nor more than 25% of the total amount of trebled damages and penalties recovered by the United States.

Should the United States Department of Justice decide to permit you to prosecute your qui tam action, without their assistance, your reward is generally calculated at not less than 25% nor more than 30% of the total amount of trebled damages and penalties recovered by your suit.

In certain cases where your suit is based on public information which you did not first provide to the government, or you are the mastermind of the scheme to defraud the United States, your reward can be less than 10% or even zero.

In addition, the law provides that if your suit is successful, you can also recover your attorney fees and court expenses. If you prove your employer retaliated against you, you can recover double the amount of your lost wages and emoluments of employment.

Another major change made with the 1986 amendments was the addition of whistleblower protection. If your employer discriminates against you in any manner because of your lawful conduct in bringing a qui tam action or assisting in such action, the law protects you. Your employer can be required to pay all money necessary to make you whole for its discrimination, including double the amount of any pay lost as well as reinstatement of your job, seniority, and benefits.

Unfortunately, fraud, especially against the federal government, is all around us. Many successful relators have been employees or former employees of a government contractor.

Certainly not every government contractor cheats on its contracts. However, virtually every company of any size will engage in a government contract at one time or another. Some statistics indicate there are currently over 40,000 separate government contractors with the Department of Defense alone. There are also untold thousands of entities and individuals who regularly contract with the United States concerning Medicare. In short, there are government contracts everywhere. Most of these contracts are matters of public record and are often the subject of bragging, press releases, and other forms of public disclosure by those holding them.

Once you have determined that a government contract exists, you then should determine if all of its agreed terms and conditions are being met. Many contracts require certifications by company officials as a condition for payment to be issued that all terms of the contract have been met. If such terms have not been met, the certification is false and therefore all bills submitted to the government for payment thereafter could be false claims.

False claims can occur or be caused to be filed in any area in which a contract with the United States exists. Typical areas which have resulted in successful recoveries in qui tam suits for the United States include:

DEFENSE PROCUREMENT CASES. The original False Claims Act in 1863 was passed because of rampant cheating by Union Army war suppliers. Defense cases today typically involve product substitution (where the United States enters into a contract for the production of a specific product but instead receives a different product), overcharging or mis-charging (where the contractor submits billing containing false charges), improperly inspected goods (many contracts require specific inspections to occur which a contractor may skip or falsify), or a failure to test a product when so called for by the contract.

HEALTH CARE FRAUD. Recoveries in qui tam cases brought against those who have cheated the Medicare Trust Fund now comprise the largest dollar recoveries and the largest number of new cases filed. Typical healthcare related cases involve claims for services which were not actually performed, claims which were charged at rates higher than permissible, or claims for services which were medically necessary, but for which the patient was obtained as a result of an illegal kickback or referral.

OTHER GOVERNMENT PROGRAMS. Successful qui tam cases have been brought in numerous other government programs, ranging from oil and gas royalty leases to loan applications from federal agencies to federal flood insurance and environmental clean-up contracts.

Another of the changes instituted by the 1986 amendments was to make illegal so-called “reverse” false claims. In a reverse false claims case, the government is cheated not because it paid money to a contractor who submitted a false claim for payment, but rather because a defendant made, used, or caused to be made or used a false document to conceal or decrease an obligation to pay money to the United States.

For example, in some well-known cases, various major oil companies under-reported the value of oil and gas pumped out of United States-owned land pursuant to lease agreements. The under-reporting permitted the oil companies to pay lower royalties than what was actually owed to the United States.

See our sample cases for more information.

See our publications for more information about the only complete relator’s treatise on the subject: False Claims Act: Whistleblower Litigation.

Learn more about about who we are and our track record in developing the modern False Claims Act era.

Contact us for additional information or potential case inquiries.