Federal False Claims Act
The False Claims Act is intended to protect the Federal Government from fraud by creating a liability for any person who submits, or causes to be submitted, a false claim of payment to the government. The Act includes nearly any type of fraud in which the government has been billed or paid for a claim where the claim was fraudulent. Violations of the Act may result in a judgment of three times the amount of loss sustained by the government, plus civil fines. Since January of 2009, when President Obama established a task force aimed at investigating and prosecuting financial crimes, the government has recovered more than $24.3 billion through False Claims Act cases. The majority of these funds were recovered in cases involving fraud against federal health care programs.
False Claims Act cases involve many types of case including Health Care and Medicare/Medicaid Fraud, Pharmaceutical Fraud, Defense Contracting Fraud, Disaster Relief Fraud, Construction and Procurement Fraud, Research Fraud, Financial Industry Fraud, Mortgage Fraud, and others.
The Act may be utilized where the government is billed for services and goods that were never rendered or delivered, overpayment that was not reported, dishonesty to the government about the value of goods or the origin of goods, billing the government for falsified research or research that was not completed, performing unnecessary medical procedures then billing the government to increase Medicare payments, billing the government for brand name drugs when generics were used, manipulation of billing codes to increase billing, or charging for more work than was actually performed.
Requirement of Knowledge
The statute requires that the person submitting, or causing a claim to be submitted to the government, have knowledge that the claim is false. Knowledge, for purposes of the Act, is defined as actual knowledge, deliberate ignorance of the truth of the falsity of the information, or reckless disregard of the truth or falsity of the information. It is important to note that the person submitting the claim need not have actual knowledge that the claim is false. Essentially, the Act imposes liability on any person who submits a claim that he or she knows (or should know) is false.
For purposes of the Act, a claim is a demand for money or property made directly to the Federal Government or to a contractor, grantee, or other recipient if the money is to be spent on the government’s behalf and if the Federal Government provides any of the money demanded or if the Federal Government will reimburse the contractor or grantee.
The ‘reverse claim’ provision provides for liability where someone obtains money from the Federal Government to which they are not entitled and then uses false statements or records in order to retain the money. This may occur where interim payments are made by the government to a party who has not earned the benefit of the payments then files a falsified report in order to justify the payments and avoid paying a refund to the government.
Housing and Mortgage Fraud
Recent settlements addressing housing and mortgage fraud have dealt with banks’ practices in underwriting, origination and quality control of residential mortgages sold by banks to Fannie Mae and Freddie Mac, as well as loans insured by the Federal Housing Administration. The types of Fraud involved in this may include inflated insurance claims, misrepresented quality of loans, and failure to institute effective quality control measures.
Qui Tam “Whistleblower” Provision
The qui tam provision of the False Claims Act allows private individuals to file suit for violations of the Act on behalf of the government. This “whistle blower” provision allows individuals to report fraud and receive a portion of any damages received by the government. Individuals who file claims under the qui tam provision, may benefit financially, but also risk damage to their personal reputation and careers for their whistle blowing activities.
Whistleblowers are referred to, for purposes of the Act, as ‘relators’. A relator can be anyone who has evidence of a fraud occurring against federal contracts or programs. Under the Act, a qui tam suit must be filed within six years from the date of the fraud, or three years after the government knew or should have known about the fraud, and no later than 10 years after the fraud. However, filing a qui tam case sooner is always better. Consulting an attorney can help you to evaluate your case and determine the best course of action. The government may decide to intervene (join) the case or decline. The suit may proceed with or without the government’s intervention but may certainly be more difficult without.
Initially, the case will be filed under seal and kept secret during the investigation period. The Act does provide protections for individuals who come forward against their employers through the anti-retaliation provisions. The amount of protection is determined by a number of issues including the type of whistleblowing. An employee who is fired, demoted, harassed, or otherwise discriminated against because of lawful acts by the employee in furtherance of an action under the Act is entitled to relief which may include reinstatement, double back-pay, compensation for any special damages including litigation costs and reasonable attorney’s fees.