False Claims Act/Qui Tam

The False Claims Act, passed in 1863, makes it unlawful for individuals or companies to defraud the government by submitting or causing another to submit a false claim, record, or statement to the government. The law prohibits both wrongfully obtaining money and wrongfully avoiding payment to the government.

False claims are defined as “a demand for money or property,” according to the U.S. Department of Justice. 1 The law applies to false claims made directly to the government as well as to others if the money is spent on behalf of the government, if it is provided in part by the government, or if the individual who received the money will be compensated by the government. An example of this type of fraud includes off-label promotion of a drug by a pharmaceutical company, in which the company markets a drug for uses not approved by the government’s Food and Drug Administration (FDA).

An individual does not have to be explicitly aware that the claim filed is false to be charged with violating the False Claims Act. Intentional ignorance or disregard of the fact that the claim is false is enough to have violated the act.

Those who violate this law are subject to harsh penalties, including fines ranging from $5,000 to $10,000 for each false claim made. The offender must also pay a fine of three times the amount of the damages to the government. These fines may be lessened to twice the government’s damages under certain circumstances, such as if the person who committed the fraud fully cooperates or alerts the government of the fraud within 30 days of its filing.2

The False Claims Act contains a unique provision that allows for an individual to sue on behalf of the government; this provision is called “qui tam.” A person with knowledge of fraud against the government can file a civil suit against the perpetrator of the fraud. The individual who begins the suit is called the “relator.” Individuals who have brought qui tam lawsuits are often called “whistleblowers.” Once the qui tam complaint is filed, the government must investigate. The government may choose to take over the lawsuit or may let the relators, or whistleblowers, continue by themselves.

Whistleblowers who alert the government to the fraud and file a suit are compensated with a percentages of any damages recovered from the culprit. A whistleblower can receive from 15% to as much as 30% of the damages. The whistleblower is also reimbursed their legal fees by the person who committed the fraud if the suit is successful.

Whistleblowers are protected from retaliation, including loss of employment, demotion, suspension, discrimination, or harassment, by their employer due to their part in exposing the fraud. If their employer does unlawfully retaliate, the whistleblowers are entitled to “relief” from the retaliation. This relief includes getting their job back if fired, twice their lost wages plus interest, and other damages.2

To learn more about qui tam actions, please read our Whistleblower FAQ. Find out what constitutes a violation of the act on our False Claims Act Violations page.

The Huntsville attorneys at Martinson & Beason, P.C. have represented numerous individuals acting as whistleblowers on behalf of the government. Our attorneys can expertly guide you through the process and work to protect you from retaliation. If you have knowledge of fraud committed against the government, contact Martinson & Beason, P.C. today. We represent clients in Huntsville, Decatur, Mobile, and throughout Alabama.

Email us or call us at (256) 533-1667.

False claims resource pages:

1 http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Primer.pdf