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About the False Claims Act

What Is The False Claims Act?

The False Claims Act, sometimes referred to as the "Lincoln Law", is a federal law that has become the most powerful tool used to combat fraud against the government. The qui tam provision of the False Claims Act allows private citizens to sue individuals or businesses who defraud the government – and receive an award for doing do. Many states have enacted state false claims acts to combat fraud against state governments and reward whistleblowers as well.

The essence of a False Claims Act case is that someone (a company or an individual) cheated the government in some way. This cheating, or fraud, can take many forms, including but not limited to:

  • overcharging for a product
  • failing to perform a service
  • delivering less than the promised amount of goods or services
  • providing inferior products or services
  • failing to comply with program restrictions/governmental regulations
  • charging for one thing but delivering another

Submitting a claim for payment from the government under any of the above circumstances makes that claim fraudulent, or false – hence the name, the False Claims Act.  Here are some 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.

What Are The Penalties for Violating the False Claims Act?

Under the False Claims Act, the government stands to recover three times the total damages they sustained, plus a penalty of $5,500-$11,000 per every false claim for payment that was submitted. This Act intentionally imposes harsh punishments on those found in violation, to discourage others from committing fraud.

When damages are large and many false claims were submitted over a period of years, a company or an individual may be liable for millions of dollars under the False Claims Act. In our Landmark Victory, we obtained a $334 million jury award on behalf of the United States and the State of Illinois.

How Does The False Claims Act Work?

Anyone who is aware of fraud against the government can file a case under the False Claims Act because of the qui tam provision. The government has recognized that many types of fraud will not be uncovered unless a private individual with inside knowledge steps up. The qui tam provision allows private citizens to act as whistleblowers, and file a lawsuit on behalf of the government. 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." Whistleblowers who sue on behalf of the government are rewarded with 15-30% of the money the government recovers if the suit is successful.

Anyone can be a whistleblower or "relator", the technical name for whistleblower. If the fraud has not yet 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.

The law does not only over fraud against the United States, although that is what the original federal law intended.  After seeing the great successes of the federal False Claims Act, many states and municipalities have also enacted the False Claims Act. Many of these states and municipalities also have qui tam provisions that allow whistleblowers to bring lawsuits and recover awards.

How Do Private Citizens Take Action?

If you know about or suspect a False Claims Act violation, you should contact a whistleblower, or qui tam attorney. Many special procedural requirements must be met, and there may be sensitive employment issues involved with the case as well, so it is important to consult with an attorney as early as possible in the process.

For example, 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, it is highly confidential, with no one other than the court and the applicable government authorities allowed to know that the complaint exists. The complaint will not be served on the defendant until the court so orders, and the complaint 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 join the case, federal and/or state attorneys take control of the prosecution. If the government declines to join the case, the whistleblower is typically entitled to go ahead with the lawsuit, and prosecute the case on behalf of the government. 

If you cannot afford a lawyer to bring a qui tam False Claims Act case, a law firm may decide to take your 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. 

The whistleblower attorneys at Goldberg Kohn focus on helping whistleblowers report fraud and we will provide you with a free, confidential consultation to discuss a possible case. Call us at 312-863-7222 or contact us online.

I have more questions. Where do I start?

To learn more about the False Claims Act, being a whistleblower, and types of rewards, please visit our FAQs page 

Attorneys at Law

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Chicago, Illinois 60603-5792
Tel: 312-863-7222
Fax: 312.332.2196

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