Overview of the False Claims Act and qui tam lawsuits

The False Claims Act (“FCA”) was enacted in 1863 as a tool to combat fraud against the government. The FCA provides that any person who knowingly submits a false claim or causes another to submit a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government is liable for the government’s damages plus a penalty for each false claim. 31 U.S.C. §§ 3729 – 3733. A claim is a demand for money or property made directly to the government or to a contractor if the money is spent on the government’s behalf. The FCA has a scienter requirement, where the person has to knowingly submit a false claim to the government; simply submitting a false claim alone is not enough. Knowledge of false information is (1) actual knowledge; (2) deliberate ignorance of the truth or falsity of the information; or (3) reckless disregard of the truth or falsity of the information. § 3729(b)(1). 

Under the FCA is a qui tam provision, or whistleblower provision, that allows private individuals to file suit on behalf of the government. The person filing the lawsuit is known as the relator. The lawsuit is first filed under seal for 60 days to allow the government time to decide if they want to intervene. If the government cannot complete the investigation within 60 days, it can seek an extension, after which time, it must notify the court that it is proceeding with the action or declining to take over the action. If the government declines to intervene, the relator can proceed on his or her own. If the government intervenes, the relator is entitled to receive 15 – 25% of the amount recovered. If the government does not intervene, the relator’s share increases to 25 – 30% of the total recovery.  

Since the amendment in 1986, the Department of Justice has had the right to dismiss a FCA case even over the objection of the relator, so long as the relator is granted the opportunity for a hearing. 31 U.S.C. § 3730(c)(2)(A).  If the relator wishes to settle or dismiss the lawsuit, it must first get the permission of the government. Generally speaking, the government will not move for a motion to dismiss the action unless:

  1. “the complaint is without legal or factual merit; 
  2. the complaint duplicates a pending government investigation; 
  3. the action would “interfere with an agency’s policies or the administration of its program”; 
  4. the case impacts negatively on another case being brought by the government; 
  5. proceeding with the case creates a risk that classified information may be disclosed or U.S. national security interests impacted; 
  6. if successful, the cost of pursuing the case will outweigh the expected return; and 
  7. the relator is engaging in egregious procedural errors imperiling the government’s ability to prosecute the case.” 31 U.S.C. § 3730(c)(2)(A). 

The qui tam provisions of the FCA are powerful tools that help the government combat fraud. If you are an individual who has knowledge of fraud being committed against the government, consider speaking with a FCA attorney today. Josh Borsellino is an attorney that understands the rules and regulations regarding qui tam lawsuits. He works on a contingency fee basis meaning that you owe him nothing unless there is a recovery. Call him today to see if you have a viable claim. 817.908.9861 or 432.242.7118. 

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