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What is the False Claims Act?

On Behalf of | Oct 10, 2023 | False Claims Act

While it has been modified a bit over the years, the False Claims Act has been in place since the Civil War – because fraud against the government by its contractors is nothing new.

Under current legislation, a company that knowingly tries to defraud the government, either by making a false claim for payment or by making false claims to avoid paying the government, is liable for triple the government’s losses plus fines.

Whistleblowers are the key to preventing fraud

While the government is always free to act on its own, the reality is that most cases of contractor fraud come to light because someone with a conscience speaks up and tells the government what’s happening.

Known as “relators,” these whistleblowers have the right, under the False Claims Act, to bring a “qui tam” lawsuit on the government’s behalf. They’re also entitled to between 15% and 30% of what the government recovers, depending on the situation. Since the fraud is usually significant, that can amount to millions of dollars in any one case.

The False Claims Act is often invoked in situations involving:

  • Medicare and Medicaid fraud, including situations where a provider bills for services that were never rendered to patients or routinely exaggerates patients’ conditions so that they can perform (and bill for) unnecessary medical procedures
  • Defense contractor fraud, including cases where a contractor inflates their prices or provides substandard goods that don’t meet their contract requirements
  • Government grant fraud, especially when those grants that were procured under false pretenses or maintained through deceptive or misrepresented performance results
  • Education fraud, including things like misrepresenting student enrollment or the institution’s qualifications in order to receive more funding
  • Environmental fraud, which can include falsified environmental compliance reports and the improper disposal of hazardous waste so that the company can avoid penalties

There are numerous steps in the process of invoking the False Claims Act, and they have to be handled carefully if you want the protections and benefits that whistleblowers are entitled to receive. Legal guidance can help.