Any business that knowingly submits false or fraudulent claims for payment to the U.S. Federal Government is considered to have made a “false claim,” according to state and federal law. The business entity may also be held accountable if it conspires with third parties to create a fraudulent claim or intentionally permits the use of a false claim or record.
For most false claim infractions, the defendant must have deliberately acted for them to be held accountable. This means unintentional fraudulent submissions to the government may not result in a violation immediately.
False claim violations can frequently result in extremely harsh punishments, including frequent criminal repercussions akin to those for other kinds of white-collar crimes.
Which Statutes Regulate False Claims?
The federal Fraudulent Claims Act is the primary statute that regulates false claims violations. The broad and detailed definitions for a false claim violation are outlined in this statute.
In addition to federal law, state False Claims Act legislation may also contain offenses. For instance, the False Claims Act of California specifies commercial companies’ rules. As a result, both federal and state laws may hold a company accountable.
The False Claims Act: What Is It?
The False Claims Act allows the government to combat fraud by bringing a claim for several damages and penalties. The Act also supports government efforts by allowing and promoting private individuals to file a civil lawsuit on the government’s behalf.
Is Making a False Claim Against the Government Punishable?
False or fraudulent claims for money or property can result in legal consequences under the False Claims Act. Additionally, the Act makes it illegal to retaliate against some private individuals who support or take part in the investigation and prosecution of instances covered by the Act.
What Fraudulent Acts Are Covered by the Act?
USC 3729(A)(1) defines actions that are unlawful under U.S. law (7). These are what they are:
- Any person who knowingly provides, or causes to be given, to an officer or employee of the United States government or a member of the United States Armed Forces a false or fraudulent claim for payment or approval is subject to liability under subsection (A)(1).
- (A)(2) – imposes liability on anyone who intentionally creates, uses, or authorizes the creation or use of a false record or statement to obtain the payment or approval of a false or fraudulent claim from the government.
- (A)(3) – establishes liability on anybody who conspires to cheat the government by obtaining the approval or payment of a false or fraudulent claim, but is now rarely used.
- (A)(4) imposes liability on any person who has possession, custody, or control of money or property used or to be used by the government and delivers or causes to be delivered less property than the amount for which the person receives a certificate or receipt with the intent to defraud the government or willfully conceal the property.
- (A)(5) establishes culpability on any person authorized to prepare or deliver a document verifying receipt of property used or to be utilized by the government without fully knowing that the information on the receipt is correct. However, it is also rarely applied in court.
- (A)(6) – imposes liability on anyone who knowingly purchases, or receives as a pledge of an obligation or debt, public property from a government officer, employee, or member of the armed forces who legally may not sell or pledge the property but has not been used by the government since the Civil War.
- Any person who intentionally creates, uses, or authorizes the creation of a false record or statement to hide, evade, or lessen a responsibility to pay or send money or property to the government is subject to liability under Section (A)(7).
When pursuing fraud accusations against specific persons under this statute, the government and private citizens have concentrated on subsections 1, 2, 4, and 7.
What Penalties Apply to False Claims?
For a business, filing a false claim could result in severe penalties and fines. Awards that have been awarded include, for instance:
- Thrice the amount of harm to the government;
- $5,500 to $11,000 per claim as a fine;
- Monetary penalties; or
- Payment for the lawsuit’s associated expenses and legal fees.
In some circumstances, a judge may lower the amount of damages given to the government. This could happen if the violation promptly provides the government with all information they were aware of after learning about the false claim and cooperates with the inquiry.
An employee is incentivized to file a whistleblower claim since they are the most qualified to reveal facts that the government would not otherwise be able to learn about. However, merely alerting the government to the fraudulent filing is insufficient for the employee to be compensated under whistleblower laws.
The plaintiff will be compensated to the extent that the qui tam litigation successfully retrieves money from the violator. An employee may be entitled to between 15 and 30 percent of the amount that the government recovers after a settlement or successful trial, in addition to attorney’s fees and costs.
When a whistleblower brings a lawsuit, the potential award ranges from 15 to 25%. The potential compensation ranges from 25 to 30 percent if the government decides to prosecute the case. According to the employee’s level of misbehavior and whether they contributed significantly to the prosecution of the case, a court may reduce the sum given to a whistleblower.
A whistleblower is shielded from retaliatory acts by their company, which serves as another motivation to file this kind of lawsuit. Consider a scenario in which a worker on a government contract for the building of helicopters learns that testing requirements were not properly followed by their employer and that the helicopters in question failed the necessary testing.
Consider that the company has submitted a payment request claiming that the helicopters have passed these evaluations. Employees who successfully filed a qui tam lawsuit and did not participate in the intentional submission of fraudulent material will be fully compensated to the extent that the government successfully pursues claims against the employer.
The employee may also pursue further damages if their employer later demotes or fires them in retaliation, such as:
- The same senior status being reinstated;
- Two times the sum of back pay and special damages recompense;
- Interest on the owed wages; or
- Compensation for certain damages may include legal fees and court costs.
Which Issues Are Affected by False Claims Laws?
False claim rules forbid providing the government with fabricated information or fake documentation. In addition to financial records, this could also include:
- The submission of false health care claims
- False or repeated product/service billing
- Reports that exaggerated total business expenses
- Violations regarding “kickbacks” from the corporation (such as illegal payment for client referrals)
- “Stark Law” transgressions (dealing with patient referrals for physicians and other legal matters)
False claims infractions are typically punished with some penalties. Penalties in some situations may include paying a fee up to three times the value of the submitted false claim. This is especially true for repeated offenses or crimes involving intricate financial schemes and large financial losses.
Do I Need Legal Assistance With False Claims Laws?
False claim laws can frequently be very complicated and differ from state to state. For assistance with any legal difficulties concerning a false claim, you might want to consult an experienced business attorney.
Your attorney can review your legal options concerning federal and state false claim statutes. Additionally, your lawyer can give you advice on what to do if you need to launch a lawsuit or report a false claim violation.
