Washington DC False Claims Act Attorneys

How the False Claims Act Works for Whistleblowers

This overview provides a summary of how the False Claims Act works. It should not be construed as in any way providing you with legal advice. If you are aware of possible fraud being committed against the Government, you should contact an experienced false claims act attorney to discuss your case.

Under the False Claims Act, a person who learns of fraud being committed against the Government can file suit through his own privately retained attorney. The roots of the False Claims Act go all the way back to the Civil War, when Abraham Lincoln signed it into law to protect the Government against fraudulent suppliers of war equipment. Since then, the False Claims Act has grown into the Government’s most powerful weapon in fighting fraud and abuse.

The False Claims Act provides for liability for triple damages and a penalty from $5,500 to $11,000 per false claim for anyone who knowingly submits or causes the submission of a false or fraudulent claim to the United States. The statute allows a private person, a whistleblower, referred to in the statute as a “relator,” to bring a lawsuit on behalf of the United States, where the private person has information that the named defendant has knowingly submitted (or caused the submission of) false or fraudulent claims to the United States. The relator need not have been personally harmed by the defendant’s conduct.

The False Claims Act has a very detailed process for the filing and pursuit of these claims. The qui tam relator must be represented by an attorney. The qui tam complaint must, by law, be filed under seal, which means that all records relating to the case must be kept on a secret docket by the Clerk of the Court. Copies of the complaint are given only to the United States Attorney General and the local United States Attorney, and to the assigned judge of the District Court. The Court may, usually upon motion by the United States Attorney, seek a partial lift of the seal to make the complaint available to other persons.

The complaint, and all other filings in the case, remains under seal for a period of at least sixty days. At the conclusion of the sixty days, the Department of Justice must, if it wants the case to remain under seal, file a motion with the District judge showing “good cause” why the case should remain under seal. In the usual course, these motions request an extension of the seal for six months at a time.

In addition to the complaint filed with the District Court, prior to filing the complaint, the relator must serve upon the Department of Justice a “disclosure statement” containing substantially all the evidence in the possession of the relator about the allegations set forth in the complaint. This disclosure statement is not filed in any court, and is not available to the named defendant.

Under the False Claims Act, the Attorney General (or a Department of Justice attorney) must investigate the allegations of violations of the False Claims Act. The investigation usually involves one or more law enforcement agencies (such as the Office of Inspector General of the victim agency, the Postal Inspection Service, or the FBI). In some investigations where state agencies are also victims of the fraud, state attorneys general with expertise and interest will participate in the investigation and work closely with the federal agencies.

The investigation will often involve specific investigative techniques, including subpoenas for documents or electronic records, witness interviews, compelled oral testimony from one or more individuals or organizations, and consultations with experts. If there is a parallel criminal investigation, search warrants and other criminal investigation tools may be used to obtain evidence as well.

At the conclusion of the investigation, or earlier if so directed by the Court, the Department of Justice must choose one of three options named in the False Claims Act:

    1. Intervene In One Or More Counts Of The Pending Qui Tam Action. This intervention expresses the Government’s intention to participate as a plaintiff in prosecuting that count of the complaint. Fewer than 20% of filed qui tam actions result in an intervention on any count by the Department of Justice.
    1. Decline To Intervene In One Or All Counts Of The Pending Qui Tam Action. If the United States declines to intervene, the relator and his or her attorney may prosecute the action on behalf of the United States, but the United States is not a party to the proceedings apart from its right to any recovery.
    1. Move To Dismiss The Relator’s Complaint. The Government may move to dismiss the complaint either because there is no case, or the case conflicts with significant statutory or policy interests of the United States.

In practice, there are two other options for the Department of Justice:

    1. Settle The Pending Qui Tam Action With The Defendant Prior To The Intervention Decision. This usually, but not always, results in a simultaneous intervention and settlement with the Department of Justice (and is included in the 20% intervention rate).
    1. Settle The Pending Qui Tam Action With The Defendant Prior To The Intervention Decision. This usually, but not always, results in a simultaneous intervention and settlement with the Department of Justice (and is included in the 20% intervention rate).
    1. Advise The Relator That The Department Of Justice Intends To Decline Intervention. This usually, but not always, results in dismissal of the qui tam action.

Intervention by the Department of Justice in a qui tam case is not undertaken lightly. Intervention usually requires approval by the Department of Justice in Washington, D.C and the affected agency or agencies. As part of the decision process, the views of the investigative agency are solicited and considered, and a detailed memorandum discussing the relevant facts and law is usually prepared. This memorandum usually includes a discussion of efforts to advise the named defendant of the nature of the potential claims against it, any response provided by the defendant, and settlement efforts (if any) undertaken prior to intervention.

Upon intervention approval, the Department of Justice files:

    1. a notice of intervention, setting forth the specific claims as to which the United States is intervening; or
    1. a motion to unseal the qui tam complaint filed by the relator and the notice of intervention. All other documents filed by the Department of Justice up to that point generally remain under seal.

The decision by the Department of Justice to intervene in a case does not necessarily mean that it will endorse, adopt or agree with every factual allegation or legal conclusion in the relator’s complaint. It has been the usual practice of the Department to file its own complaint about 60 days after the intervention, setting forth its own statement of the facts that show the knowing submission of false claims, and the specific relief it seeks. In addition, the Department of Justice has the ability to, and often will, assert claims arising under other statutes (such as the Truth in Negotiation Act or the Public Contracts Anti-Kickback Act) or the common law, which the relators do not have the legal right to assert in their complaint, since only the False Claims Act has a qui tam provision.

After the relator’s complaint is unsealed, the relator may choose to proceed with the action, in which case the complaint must under the Federal Rules of Civil Procedure be served upon each named defendant within 120 days.

Each named defendant has the duty to file an answer to the complaint or a motion within 20 days after service of the Government’s complaints. Unless there is a motion to dismiss filed (or some other procedural motion), discovery under the Federal Rules of Civil Procedure begins shortly thereafter.

Penalties, Recovery and Corporate Integrity Agreements

A whistleblower who successfully obtains a recovery by settlement or judgment is entitled to an award of between 15% to 25% percent of whatever amount the Government recovers in a civil settlement based on the relator’s qui tam lawsuit.

Healthcare fraud investigations by the Office of Inspector General (OIG) or the Department of Justice often result in the OIG entering into a Corporate Integrity Agreement (CIA) with the subject of the investigation. These agreements help assure that the fraudulent actor will not be able to continue its illegal practices. The fraudulent actor must agree to various conditions under the agreement in exchange for not being excluded from participating in federal programs. According to the OIG, the typical CIA lasts approximately 5 years and may include the following conditions[1]:

  • hiring of a compliance officer/appoint a compliance committee;
  • development of written standards and policies to prevent fraudulent practices;
  • implementing a comprehensive employee training program;
  • retaining an independent review organization to conduct annual reviews;
  • establishing a confidential disclosure program;
  • reporting overpayments, reportable events, and ongoing investigations/legal proceedings;
  • providing an implementation report and annual reports to OIG on the status of the entity’s compliance activities in preventing future fraud

For a sample corporate integrity agreement, click here.