THE FALSE CLAIMS ACT - QUESTIONS & ANSWERS
The False Claims Act is a unique federal law that allows citizens with evidence of fraud against the federal government to sue, on behalf of the government, to recover triple the amount that has been defrauded from the government. As compensation for their efforts, the citizen, known as the “relator,” can receive an award, typically between 15% and 30% of the total amounts recovered. The term “qui tam” stands for a longer Latin phrase [qui tam pro domino rege quam pro se ipso in hac parte sequiter] that is translated as “he who brings an action for the king as well as for himself.” Qui tam is the technical legal term for the legal principal which allows individuals who have evidence of fraud to sue the wrongdoer on behalf of the government. What types of conduct or activities are covered under the Act? Virtually any situation within which the federal government is dispensing money, or collecting money, can give rise to a qui tam violation. Activities which constitute a violation under the False Claims Act are: (a) knowingly presenting, or causing to be presented, to the federal government a false or fraudulent claim for payment; (b) knowingly using, or causing to be used, a false record or statement to get a claim paid by the federal government; (c) conspiring with others to get a false or fraudulent claim paid by the federal government; (d) knowingly using, or causing to be used, a false record or statement to conceal, avoid or decrease an obligation to pay money or transmit money to the federal government. How can a private citizen receive an award under the False Claims Act? In short, it is only the filing of a qui tam lawsuit and subsequent settlement or favorable judgment which enable a private party to receive a recovery under the False Claims Act. How much money can a private citizen receive for bringing a qui tam action? The person who files the suit, known as the “relator” can receive between 15% and 30% of the total recovery from the defendant, whether through a favorable judgment or settlement. Relators have received awards as high as one hundred fifty million dollars ($150,000,000.00) in a single case (see the recent settlements section of this web site). If a person brings a qui tam action, and the government chooses to intervene by taking over the lawsuit, the relator generally is eligible to receive between 15% and 30% of the recovery. If a person brings a qui tam action and the government chooses not to intervene, the relator can proceed without the government and can receive between 25% and 30% of the recovery. What is the liability for violating the False Claims Act? Violators of the False Claims Act are liable for three (3) times the dollar amount that the government is defrauded plus civil penalties of $5,500 to $11,000 for each false claim submitted. Virtually anyone who receives money from the federal government, pays money to the federal government, or helps someone else get money from the federal government, can engage in conduct which would make them liable for a violation of the False Claims Act. Common examples of defendants in qui tam actions, include the following: State and Local Government Agencies and Officials: Because they are recipients of large amounts of federal money, state and local governments and their agencies can be defendants in qui tam actions. This also includes state run universities and colleges. Individuals and Businesses: Virtually any individual or company which does business with the government, sells something to the federal government, or any agency or branch thereof, can be a defendant in a qui tam action. Claims can range from charging the government for defective products, to failing to advise a government agency that a seller has been selling goods to the government agency at full price, while offering a discount price to others. Government Contractors and Subcontractors: Anyone who contracts to provide services or goods to the federal government can be a defendant for a vast array of qui tam claims. Medical Providers: Doctors, hospitals, HMO’s and clinics are often defendants in qui tam actions, for medicaid/medicare fraud and a wide range of fraudulent billing practices which can range from charging for services not performed, to performing services which were unnecessary. Private Universities: Private universities and colleges have been charged as defendants in qui tam actions that involve their handling of federal grants and research and development money. Is there a deadline for filing a qui tam action? Under the False Claims Act, an action must be filed within the later of two time periods: (a) Within six years from the date of the violation of the Act, or (b) Within three years after the government learned, or should have learned about the violation, but in no event later than ten years after the violation of the Act. Please Note - if, before you file, someone else files a False Claims Act lawsuit or helps publicize allegations similar to yours, you may lose your right to bring a qui tam suit. How much does it cost to bring a qui tam action? If you choose to retain the services of Campanelli & Associates, P.C., and we agree to take your case, we will represent you on a contingency fee basis. This means that you pay no out-of-pocket legal fees. We get paid if, and only if, your claim results in a monetary award or settlement, from which we get a percentage for our fees. You may, however, be responsible for expenses which are generally much less than what legal fees would be (ie filing fees, photocopying). How long does a qui tam action take? The time from the filing of a qui tam action until its resolution varies greatly from case to case, and can range from months to years. Cases which are resolved more quickly are generally those within which the relator has secured all of his or her proof in advance of filing the lawsuit. This increases the likelihood that the government will intervene and take over the case, and that, in turn, increases the likelihood that the case with settle sooner, rather than later. Do I have to report the fraud that I know to the government or my employer before filing a qui tam action? In general, the False Claims Act does not require you to report the fraud before filing a qui tam action. However, there are circumstances in which you must inform the government before filing. Have I lost my right to bring a qui tam action if I have already informed the government about the fraud? No. You do not give up your right to bring a qui tam action by going to the government before filing your qui tam lawsuit. You should be aware however, that you are barred from bringing a qui tam suit based upon allegations or transactions which are the subject of a False Claims Act suit already filed by the government. So if you deliver your information to the government before filing a qui tam action, and the government in turn files a False Claims Act action before you file, then you will have lost your right to bring a qui tam lawsuit. This can be avoided if you file promptly after informing the government. Can I keep my identity secret if I file a qui tam action? When you initially file a qui tam lawsuit, it is filed “under seal” and the defendant remains unaware of your lawsuit during a period within which the federal government reviews the claims contained within your lawsuit, and decides if it wants to take over your case. Once the seal is lifted, however, your name will likely be disclosed to the defendant at some point. Do I have any protection against my employer firing me for blowing the whistle under the False Claims Act? Yes. Under the False Claims Act, any employee who is discharged, demoted, harassed or otherwise discriminated against because of lawful acts of the employee in furtherance of an action under the Act is entitled to receive all relief necessary to make the employee whole. Such relief may include reinstatement, double back pay, and compensation for any special damages including litigation costs and attorneys fees. Does the False Claims Act cover tax fraud? While The False Claims Act does not cover tax fraud, there is a separate federal provision, 26 C.F.R. 301, which provides for rewards of 15% to 30% to persons who disclose large tax frauds to the Internal Revenue Service (IRS). Under the §301, if you are aware of a company or person who has defrauded the Internal Revenue Service (IRS), out of $2 million dollars or more, (including principal, penalties and interest), and the company or person has an annual income of at least $200,000 per year, you can file a formal written disclosure of the fraud with the IRS. If you do, and the IRS recovers money as a result of the information you provided, you will receive a reward, typically between 15% and 30% of any monies recovered by the IRS. To obtain more information, contact: Andrew J. Campanelli (516) 746-1600 For information about actual cases, go to the NEWS section. |