What are False Claims Act Cases? The core of a false claims case is that the government was cheated in one form or another -- the "false claim."
The false claim may take many forms: overcharging for a product, failing to perform a service, delivering less than the promised amount of goods or services, underpaying money owed to the government, and charging for one thing but delivering another, to list just a few examples. The legal definitions of a false claim can be found in section § 3729 of the Act .
A company or individual that has made a false claim may be liable for triple damages, a civil fine of $5,500 to $11,000 per false claim, and the attorney's fees of the citizen whistle-blower (called the "relator"). Individuals or companies that cause someone else to submit a false claim can also be found liable under the False Claims Act. The standard of proof in a False Claims Act case is "preponderance of the evidence", i.e., the claim is more likely true than not. This is the same burden of proof ordinarily applicable in most civil cases, and is easier to meet than the "beyond a reasonable doubt" standard used in criminal cases.
Things to Consider
When deciding if a potential False Claims Act case is meritorious, a potential whistleblower needs to consider a number of things:
- The whistleblower should have actual knowledge of the fraud, not just a suspicion. Evidence in addition to the whistleblowers mere knowledge is also necessary in most cases. The evidence of the fraud has to be specific, identifying the "who, what, when and where" of the fraud. Assertions of false claims usually require some documentation.
- The fraud cannot be tax fraud. Tax fraud is specifically exempt from prosecution under the False Claims Act.
- The whistleblower's evidence of the fraud cannot come from a publicly disclosed source such as a newspaper, TV, magazine, radio, court record, administrative hearing, Congressional hearing, U.S. General Accounting Office report, or Freedom of Information Act request.
- Federal money must be involved, or, in a state with a state False Claims Acts, state money must be involved.
- The fraud cannot involve a state defrauding the Federal government, though it can involve a County or City defrauding the Federal government.
- The company or entity that submitted False Claims to the government must have done so knowingly. Deliberate indifference to the truth of a claim, or acting with reckless disregard of the truth counts as knowing.
- Generally, the case needs to be filed within six years of the violation (see § Section 3731 of the False Claims Act).
- Mere mismanagement by a government contractor is not covered by the False Claims Act. Likewise, wasteful contracts which the government enters into with its eyes open, are not covered.
- The government's own waste and mismanagement is not subject to the False Claims Act; only those who have made false claims to the government are subject to prosecution under the False Claims Act.
- Government employees are not specifically barred from filing a qui tam lawsuits against their own agencies, but the Justice Department usually opposes FCA suits brought by this type of whistleblower, and such whistleblowers can expect to meet more resistance than would otherwise be the case.
Beyond the Legal Requirements
If your potential false claim is deficient under one or more of the above considerations, there is a good chance you do not have a case. However, if the fraud you have uncovered appears to stand up under these considerations, you still have a few more hurdles to clear.
For a case to be worth pursuing, the fraud needs to rise to a sizeable level, and there has to be a reasonable expectation that the entity engaged in the fraud will be able to pay back the stolen money and the associated fines. In short, assessing the dollar value of a case is a very real part of determining whether to move forward on a case.
Another factor is the quality of the information in the possession of the whistleblower. It is simply not enough to broadly allege fraud; specific knowledge of the fraud and how it works is required. The more documentation available, the more likely that both a private attorney and the Federal government will be interested in the case.
FCA cases often involve frauds that aren't apparent to the untrained eye. Because such frauds are complex and technical, they remain undiscovered by the government. This is why participation by the whistleblower in the qui tam law suit is so important to the prosecution. Billing records, for example, may scream "fraud!" to someone with specialized knowledge, but look perfectly legitimate to others. A whistleblower should be prepared to show how the fraud works, and explain how the evidence reveals a pattern of fraud against the federal government (or any one of the 13 states with their own False Claims Act laws).
