August 21, 2024
The False Claims Act (FCA) is a federal law that makes it illegal to, among other things, knowingly submit a false claim for payment to the federal government. For example, a hospital that submits falsified Medicare invoices for payment to the federal government or a military supplier that provides defective goods to the U.S. Navy would be in violation of the FCA. As the overseer of the largest economy in the world, our federal government is of course a ripe target for corruption, and many successful FCA actions against defendants in the pharmaceutical industry, healthcare industry, international commerce, and military defense procurement industry are brought every year.
While every taxpayer’s financial interests are served by the purposes of the FCA, the FCA provides specific financial rewards for those individuals who come forward with knowledge of fraud perpetrated against the federal government. An FCA plaintiff stands to be rewarded between 15-30% of the total financial penalties imposed on an FCA defendant. These financial penalties are substantial: currently, an offender faces penalties between $13,508 and $27,018 for each false claim submitted to the federal government as well as three times the damages (“treble damages”) incurred by the government due to the false claims.
Because many FCA lawsuits involve many thousands of individual false claims, the total financial penalties – and thus the rewards to whistleblowers – can exponentially rise. It is not uncommon for the total penalties imposed in a FCA lawsuit to amount to tens or hundreds of millions of dollars, and several multi-billion dollar penalties have been paid in FCA lawsuits.
With that potentially significant financial reward in mind, the question then becomes whether or not a would-be FCA plaintiff has the information, standing, and resources necessary to pursue a successful FCA lawsuit.
What Qualifies as a Violation of the FCA?
To bring a successful FCA claim, in most cases a whistleblower plaintiff will prove that a person or entity:
- Knowingly presented (or caused to be presented) a false or fraudulent claim for payment or approval; OR
- Knowingly made, used, or caused to be made or used, a false record a statement material to a false or fraudulent claim; OR
- Conspired with another to do one or both of the above (conspiracy means to make an agreement to commit a violation, even if the violation did not necessarily occur); OR
- Had possession, custody, or control of property or money used or to be used by the government but failed to deliver all of that money or property to the government; OR
- Provided documentation to the government of the receipt of property that is untrue with the intent to deceive the government; OR
- Knowingly bought or received a pledge of property from a government employee or official who was not authorized to sell or pledge property; OR
- Knowingly made a false record or statement relating to an obligation to transit money or property to the government, or knowingly concealed or improperly avoided or decreased an obligation to pay or transmit money to the government.
In practice, FCA claims are often brought against defendants in the pharmaceutical industry, healthcare industry, defense procurement industry, or export/import industry for actions such as:
- “Off label” marketing of drugs for uses other than their approved uses
- Billing for medical services that were either never provided or which were unnecessary
- Overbilling for medical services that were provided, e.g. “upcoding” of medical services
- Use of kickbacks to promote the selection of goods or services
- Overbilling for services or goods provided in the defense and military context
- Use of government resources for non-compliant financial products
- Failure to pay proper customs duties (i.e. through falsifying the country of origin, misclassifying the imported products, or otherwise falsely lowering the customs duties owed)
Do You Have Sufficient Evidence of FCA Violations?
To bring an FCA claim and survive a motion to dismiss, you are not expected to have 100% of the facts available to you that will prove the full extent of the lawsuit, including damages. For example, if you have information that a hospital routinely charged the government for medical procedures it did not perform, it may only be through discovery that the full extent of the number of procedures and the resulting fraudulent costs.
However, at the initial stage, it is necessary for a plaintiff to allege enough facts to draw a reasonable inference that the defendant is liable for the alleged misconduct. Mere suspicion and conclusions without facts to back them up will not be sufficient. Furthermore, as an FCA claim is based on allegedly fraudulent action, a plaintiff must be able to “identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent [conduct], and why it is false.”
These are of course legal standards, and any plaintiff is strongly encouraged to work with legal counsel in developing and collecting the evidence to support their FCA claim, but the takeaway is that while there is a baseline minimum amount of evidence necessary to support an FCA claim at the outset, a plaintiff is not required to have comprehensive evidence of all fraud upon which the lawsuit will be determined.
Is Your Information Regarding FCA Violations Already Public?
A person is not required to have worked at a company that committed FCA violations to bring a claim, but there is a requirement that the information at the core of an FCA lawsuit be non-public, or, if the information has already been made public, that the plaintiff have been the “original source” of the now-public information.
What this means is that a plaintiff can not open the LA Times and read a story about a doctor committing Medicaid fraud, and then draft up an FCA complaint based on what he read. Similarly, if the government releases a report about Medicaid fraud, a person cannot file an FCA complaint based on the report. The exception would be, however, if the plaintiff themselves had been the “original source” of the information in the article, for example.
Has Anyone Else Come Forward with the Same Information?
If another plaintiff has already filed an FCA complaint based upon the same general allegations that you intend to base your FCA complaint, you are likely out of luck as the courts generally honor a “first-to-file” rule which allows only the first plaintiff to come forward with a complaint based on FCA fraud to proceed with the lawsuit. For this reason, if you have information regarding FCA fraud that others are aware of too, then it is imperative to work quickly with experienced counsel to assemble the evidence necessary to proceed with your FCA claim. Note that, even where a plaintiff had some involvement in the fraud himself, he may still be able to proceed with an FCA claim.
Furthermore, a statute of limitations also applies to the FCA, such that an FCA lawsuit is required to be filed within six years of the illegal conduct, or within three years of when the government knew or should have known about the conduct, but in no case longer than 10 years after the conduct occurred.
Contact a California Whistleblower Attorney today
If you believe you have a knowledge of fraud that may form the basis of a successful FCA or CFCA claim, you are highly encouraged to work with experienced California whistleblower counsel to discuss and prepare your matter in a completely confidential environment.
