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FAQs

1. What is the False Claims Act?

2. Why was the False Claims Act enacted?

3. What does "qui tam" mean?

4. What types of fraud can support a False Claims Act case?

5. Who can be a whistleblower?

6. What if I can't afford a lawyer to bring a qui tam False Claims Act case?

7. Does the law cover only fraud against the United States?

8. What type of reward can I expect for achieving a False Claims Act recovery?

9. What are the risks of bringing a False Claims Act case?

10. How does the statute work?

 

1. What is the False Claims Act?

The False Claims Act allows someone who knows about fraud against the government to sue on behalf of the government to recover three times the amount of the fraud, plus civil penalties. That person, sometimes known as a "whistleblower", is generally awarded between 15 and 30% of the recovery and attorneys' fees. In the past, individual whistleblowers have received tens of millions of dollars for their efforts.

Examples:

  • If a company submits a claim for payment to the government knowing that it has delivered a defective product, someone who knows about this fraud might be able to bring a lawsuit against the company under the False Claims Act.
  • If a company participates in a government program and has lied about whether it is entitled to be in that program, someone who knows about this misconduct might be able to bring a lawsuit against the company.
  • If a company purposely understates the amount that it owes in customs duties, someone who knows the facts might be able to bring a lawsuit against the company.

Of course, there are many, many ways that a company can attempt to defraud the government, and the False Claims Act is intended to cover virtually all of them.

2. Why was the False Claims Act enacted?

The False Claims Act was enacted during the Civil War to stop dishonest suppliers from cheating the government. Based on this history, the False Claims Act is also known as "Lincoln's Law."

3. What does "qui tam" mean?

Generally, the government decides whether to bring a lawsuit to protect its own interests. For example, the government decides whether to bring a lawsuit against a company that has violated the environmental laws. The government has recognized, however, that many types of fraud will not be uncovered unless a private individual steps up and brings the lawsuit. The phrase "qui tam" means that someone other than the government brings the lawsuit in order to protect the government's interests. The term "qui tam" comes from the Latin phrase "qui tam pro domino rege quam pro seipse", which means "he who sues for the king as for himself."

4. What types of fraud can support a False Claims Act case?

Virtually any type of fraud against the government will support a False Claims Act case. The fraud can be in any industry or sector, although most of the cases so far have been in the healthcare and pharmaceutical industries for defrauding the Medicare and Medicaid programs, and in the defense industry.

5. Who can be a whistleblower?

Anyone can be a whistleblower or "relator" (the technical name for a whistleblower is a "relator"). If the fraud has not been publicly disclosed, anyone may bring a suit under the False Claims Act, even if that person has no direct knowledge of the fraud. For example, if an employee learns from a colleague that their employer has committed fraud against the government, that employee may file suit even though he or she has no first-hand knowledge of the fraud. If the fraud has been publicly disclosed, a person with direct knowledge independent of the public disclosure may still bring an action under the False Claims Act.

6. What if I can't afford a lawyer to bring a qui tam False Claims Act case?

A law firm may decide to take a False Claims Act case on a contingency fee basis. This means that the law firm will not charge the whistleblower any fees unless the whistleblower receives compensation through a settlement or a judgment.

7. Does the law cover only fraud against the United States?

No. The original False Claims Act was a federal law, and it covered fraud against only the United States. After seeing the great success of the federal False Claims Act, many states and municipalities have also enacted False Claims Act. Many of these states and municipalities also have qui tam provisions that allow whistleblowers to bring lawsuits and recover awards.

8. What type of reward can I expect for achieving a False Claims Act recovery?

The whistleblower is typically awarded 15–30% of any recovery, either through a settlement or a judgment.

9. What are the risks of bringing a False Claims Act case?

Companies that become defendants in False Claims Act cases might choose to retaliate in some way against a whistleblower. While the law specifically prohibits this type of retaliation, some companies retaliate anyway. When a company retaliates, it is most often with respect to employees who choose to become whistleblowers. Some of these companies have fired the whistleblowers. Sometimes, a company will say that the whistleblower was fired for unrelated reasons (for example, that the employee's performance was below expectations). A defendant company will sometimes try to damage the reputation of the whistleblower. If retaliation does occur, relators are entitled to all relief to make them whole, including reinstatement, two times the amount of back pay, litigation costs, and attorney fees. A whistleblower should carefully consider with his/her lawyer – before filing a lawsuit – whether it is worth taking the risk of proceeding in a particular case.

10. How does the statute work?

Someone who knows about fraud against the government can file a claim under the False Claims Act. Certain special procedural requirements must be met; for instance, claims regarding the federal government must be filed in federal district court, under seal, and a copy must be served on the U.S. Attorney General. When a complaint is filed under seal, no one other than the court and the applicable government authorities are entitled to learn that the complaint exists. The claim will not be served on the defendant until the court so orders. The claim will usually remain under seal for at least 60 days while the Department of Justice (or similar state agency) investigates and decides whether to join the case. If the government does decide to intervene, it will lead the prosecution. The government may also settle the case, or may file a motion to dismiss the action. If the government declines to join the case, the whistleblower is usually entitled to go ahead with the lawsuit.

Damages under the False Claims Act are potentially huge, as the government's recovery generally may include the amount of money the government paid under the false claim, plus three times the amount of damages sustained by the government, plus a penalty of $5,500 to $11,000 per false claim. The federal False Claims Act includes statutes of limitations. An action must be filed within the later of the following two time periods: 1) six years from the violation of the False Claims Act, or 2) three years after the government knew or should have known of the violation, but not later than ten years after the violation. State and local false claims acts also have statutes of limitations, some of which are shorter than the federal statutes.

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