What Is the False Claims Act (FCA) and How Does It Work?

The False Claims Act (FCA) provides significant financial incentives to private whistleblower plaintiffs who come forward with information related to fraud perpetrated against the US government. This often involves a defendant who has submitted a claim for payment to the federal government – for example, in the Medicare program or in providing services to the US military – where the goods and/or services were substandard, unnecessary, falsely represented, or otherwise provided in violation of federal law. 

The FCA provides a powerful deterrent against individuals and companies who would defraud the government, but it also provides a strong incentive for whistleblowers to come forward with their knowledge of the fraud in the form of a financial reward between 15-30% of the total financial penalties paid by the defendants in the FCA lawsuit. 

Given that over $72 billion in financial penalties have been levied against defendants since the institution of the FCA – and the fact that individual FCA lawsuits have resulted in hundreds of millions of dollars in penalties – such whistleblowers may be in a position to earn a very significant financial reward for pursuing an FCA lawsuit. 

Key Provisions of the False Claims Act

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, international commerce, and military defense procurement industry.

Types of Fraud Covered by the FCA

The FCA makes it illegal to, among other things, knowingly submit a false claim for payment to the federal government (additionally, many states including California have state FCA laws that provide financial incentives to whistleblowers who come forward with fraud against those state governments). 

The types of fraud that can form the basis of an FCA lawsuit can occur in a wide variety of contexts, but common types of facts underlying successful FCA lawsuits include:

• Medicare and Medicaid claims for services or products that were not actually provided
• Medicare and Medicaid claims that are inflated and/or for services or products that were unnecessary
• Fraud related to the TRICARE health program for U.S. military service members and their families
• “Off label” marketing of drugs for uses other than their approved uses
• Overbilling for medical services that were provided, e.g. “upcoding” of medical services
• Failure to pay the full customs fees owed related to international commerce, e.g. by misstating the value and/or quantity of goods
• Providing inferior goods or services to the U.S. military
• Overbilling for services or goods provided in the defense and military context
• Failing to pay the proper amount of royalties on oil and gas leases with the federal government
• Use of kickbacks to promote the selection of goods or services, whether in the context of healthcare, military services, or other contracts that rely on reimbursement from the federal government
• Use of government resources for non-compliant financial products
• Failing to comply with federal cybersecurity 

If you have substantial evidence of such fraud that can form the basis of an initial complaint – and that information is not already a matter of public record for which you were not the source – you may be in a position to pursue a successful whistleblower lawsuit, and are encouraged to work with experienced FCA counsel in doing so. 

Penalties and Consequences for Violations of FCA

The financial penalty for violation of the FCA is three times the amount of the loss to the federal government, in addition to $11,000 per claim. A single FCA lawsuit may contain allegations of multiple violations, and may in fact contain a very significant number of violations, for example where a doctor or hospital has submitted hundreds or even thousands of individual false claims. Thus, it is not uncommon for a single FCA defendant to pay tens or even hundreds of millions of dollars in financial penalties. Because a plaintiff stands to collect between 15 and 30% of the total fines levied, it is important for that plaintiff to work closely with experienced FCA counsel to comprehensively and clearly document as many violations as possible, and to provide strong evidence to support the allegations. 

Contact a California False Claims Act Attorney Today

A plaintiff in a successful FCA lawsuit has the potential of obtaining a financial reward between 15% and 30% of the total penalties levied against the defendant. It is important to work with legal counsel with the experience to not only assist you in compiling and submitting your information in pursuit of obtaining the largest whistleblower reward possible – while at the same time protecting victims of fraud and promoting fair market competition – as well as the experience to protect you from retaliation and obtain justice on your behalf. If you have information that you believe may form the basis of an FCA claim, contact our office today to schedule a consultation with one of our attorneys to determine your next steps.