False Claims Act Litigation

The False Claims Act provides the federal government with means of fighting fraud through an action for multiple damages and penalties. In addition, the Act supplements the federal government’s efforts by authorizing and encouraging private citizens to initiate civil actions on behalf of the federal government.

It allows private citizens to sue people or entities engaged in defrauding the government. These private citizens can recover damages and penalties on the government’s behalf if their lawsuits are successful. The statute provides these private citizens, usually whistleblowers, with financial rewards as well as protection against retaliation. They are able to keep their jobs if an employer tries to retaliate against them for revealing the employer’s fraud in a private lawsuit.

The False Claims Act is referred to as “Lincoln’s Law,” because it was enacted during the Civil War. Apparently even during the Civil War, contractors supplying the military were defrauding the government. Of course, the law has been amended since that time to improve the government’s ability to recover losses attributable to fraud.

The whistleblower provision is considered key to the success of the law. Usually, it is a person inside an organization who has knowledge of the organization’s fraud against the government. It is these private citizens who are likely to file a lawsuit. If their case is successful, they get a share of the money recovered. Of course, the rest goes to the government.

The person who files suit can also recover attorney’s fees and costs from the fraudulent party. Officially, this person is known as a “relator”, but unofficially, people who sue on behalf of the government under the False Claims Act are referred to as “whistleblowers.”

Congress hoped that creating these financial incentives, along with provisions protecting whistleblowers from reprisal or retaliation, would give whistleblowers and the private attorneys who represent them an incentive to file lawsuits prosecuting fraud on behalf of the government.

Is There Civil Liability for Making a False Claim Against the Government?

The False Claims Act imposes civil liability on people who defraud the federal government by making false or fraudulent claims to the government for money or property. The Act also imposes liability for retaliating against certain private individuals who assist or participate in the investigation and prosecution of cases of fraudulent claims under the Act.

What Are Fraudulent Acts under the Act?

Acts for which a person can be liable under federal law are identified in U.S.C.A § 3729(A)(1)-(7). They are as follows:

• False Claims for Payment: The Act imposes liability on any person who knowingly presents, or causes to be presented, to an officer or employee of the federal government or any member of the U.S. armed forces a false or fraudulent claim for payment or approval of a payment;
• Falsifying a Record for Payment: The Act imposes liability on any person who knowingly makes or uses a false record or statement in order to get a false or fraudulent claim paid or approved by the government;
• Conspiracy: The Act imposes liability on any person who conspires to defraud the government by getting a false or fraudulent claim paid;
• Delivering Less than Shown by a Receipt: The Actimposes liability on any person who is in possession of property or money for use by the government and, intending to defraud the government or willfully to conceal the property, delivers less property than the amount for which the person receives a certificate or receipt;
• False Receipts: The Act imposes liability on any person who, authorized to deliver a document certifying receipt of property used by the government delivers the receipt without completely knowing that the information on the receipt is true;
• Buying from a Government Employee Not Authorized to Sell: The Act imposes liability on any person who knowingly buys public property from an officer or employee of the government, or a member of the Armed Forces, who is not legally authorized to sell the property that has not been used by the government since the Civil War;
• Using a False Record to Reduce an Obligation: The Act imposes liability on any person who knowingly makes a false record or statement to conceal or decrease an obligation to transmit money or property to the government.

Reportedly subsections 1, 2, 4, and 7 of Subparagraph A are the sections that the government and private citizens have focused on when prosecuting fraud claims against individuals under the Act.

A requirement of all fraud law, including the False Claims Act, is that the fraudulent misrepresentation be material. The materiality requirement ensures that the violations are significant and the fraudulent conduct is sufficiently important to have influenced a government decision. The term “material” in the False Claims Act is defined as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”

It does not require proof that the person who perpetrated the fraud entertained the specific intent to defraud the government. The False Claims Act defines that the terms “knowing” and “knowingly” as meaning simply that the perpetrator:

• Actually knew that a statement or claim was false;
• A while deliberately ignorant of whether information was true or false; or
• Acted with reckless disregard of truth or falsity.

What Are Some Examples of False Claims?

Currently, much of the fraud that goes on involves health care, and specifically Medicare and Medicaid. Some examples of violations of the False Claims Act are as follows:

• Billing Medicare or Medicaid for services that were not in fact provided or products that were not delivered;
• Misrepresenting the nature of the services rendered or products delivered through inappropriate coding of bills;
• Misrepresenting the patient’s condition in order to collect greater sums for treatment;
• Billing for services provided that were not medically necessary. This includes furnishing services in excess of the patients’ needs, based on their diagnosis, or furnishing a battery of diagnostic tests, when, in light of the diagnosis, only a few were really needed. It also includes misrepresenting the nature of the patient’s condition to justify the services or products;
• Billing more than once for a service or product that was provided only one time;
• Falsifying records for the purpose of meeting the Conditions of Participation in Medicare. Among the common falsifications are the alteration of dates, the forging of physicians’ signatures, and other items;
• Billing for procedures as if they happened over a period of days when in fact all treatment occurred during one visit (known as “split billing”);.
• Billing Medicare per a schedule with fees that are higher than those used for non-Medicare patients;
• Submitting bills for payment by Medicare that should be paid by other insurers under the Medicare Secondary Payer rule.

What Are Damages and Penalties Under the False Claims Act

The federal government may recover up to three times the damages caused to it by the fraud. In addition, a civil penalty can be imposed for each violation.

The False Claims Act references a civil penalty of between $5,000 and $10,000, but it is indexed to inflation, so it goes up annually. As of May 2022, False Claims Act penalties ranged as high as $25,076 per violation. The minimum penalty as of May 2022 is $12,537.

Should I Contact a Lawyer If I Have Been Sued for Violating the False Claims Act?

Claims for fraud against the government are far more common than most people realize. If you have been sued for making false claims, you need to consult an experienced government lawyer to discuss your defense as soon as possible.

If you have witnessed fraud and wish to file a whistleblower complaint as a relator, you want to consult a whistleblower lawyer for guidance. The fact that attorney’s fees can be collected from the defendant makes these cases attractive to lawyers who are expert in filing lawsuits for False Claims Act violations.