Insiders & Outsiders Welcomed: The Federal False Claims Act Explained

The Federal False Claims Act (“FCA”), 31 USC § 3729 et seq., was enacted in 1863 to combat fraud committed against the Government. The FCA contains a provision that allows private citizens to file a lawsuit on the Government's behalf when the private citizen has knowledge of the fraud. A lawsuit is commonly filed against a company that is defrauding the Government. A person who files a lawsuit under the FCA is termed a “relator” in legal parlance. Another term used is “whistleblower.” A relator or whistleblower can be anyone with knowledge or information that the Government has been defrauded. Most individuals who file an FCA action are employed by the company that is committing (or committed) the fraud. An FCA action is not limited to these insiders. Anyone who has knowledge of the fraud can bring a case. The FCA requires the relator/whistleblower to have information that is not publicly available about the fraud committed against the Government.

Outsiders have brought FCA lawsuits – specifically, individuals the defrauding company does not employ. Individuals such as the defrauding company’s customers, employees of its suppliers, and its vendors have brought FCA actions. Sometimes, FCA lawsuits are brought by competitors. When companies defraud the Government, they obtain an unfair (and illegal) competitive advantage. FCA lawsuits can help level the playing field by eliminating and discouraging fraudulent conduct. The FCA contains a provision that permits a relator/whistleblower to share in the Government’s financial recovery. Relators generally receive between 15% and 25% of the Government’s total recovery if the Government intervenes in the litigation. If the government recovers $5,000,000, the Relator’s share is between $750,000.00 and $1,250,000.00. The ability of a relator to share in the FCA recovery is a strong incentive to initiate an FCA lawsuit. There are multiple categories of fraud that can be committed against the Government.

Common Areas of Fraudulent Conduct Covered Actionable Under the FCA

  • Health Care Fraud involves a company’s receipt of fraudulently obtained payments from Medicare, Medicaid, and TRICARE. This type of fraud includes, but is not limited to:
    • A medical provider fraudulently reporting the services that are provided,
    • Billing for services that were never rendered,
    • Billing for medically unnecessary services,
    • Paying for referrals of patients through kickbacks, bribes, and rebates, and waiving co-payments, coinsurance, and deductibles as an inducement to receive medical services.
  • Procurement Fraud pertains to the Government’s purchase of goods and services, where a government contractor obtains payment through schemes that include, but are not limited to:
    • Falsifying pricing data,
    • Providing substandard materials in violation of contract requirements,
    • Overcharging the Government for labor and materials,
    • Falsifying expenses and shifting expenses from other jobs to Government contracts.
  • COVID-Related Fraud involves a company’s fraudulent receipt of payments under the Paycheck Protection Program (PPP), whereby the company falsified its eligibility to receive the PPP funds or provided false information to receive more PPP funds than it was otherwise eligible to receive.
  • Underreporting Fraud involves the under-reporting and underpayment of royalties owed to the Government for leases on Federal land to extract resources such as natural gas and oil. This type of fraud also includes schemes to fraudulently declare the value of goods imported to underpay customs duties owed to the Government. In addition, this includes schemes to misrepresent the country of origin to avoid paying tariffs to the Government.
  • Education Fraud involves violating the Higher Education Act of 1965 (“HEA”) by making false representations to become eligible to receive government funds for tuition and tuition-related expenses. Under Title IV of the HEA, when an educational institution seeks subsidies from the Department of Education, it is required to enter into a Program Participation Agreement (“PPA”). Fraud in this area is committed when an educational institution falsely certifies that it has abided by the various statutory, regulatory, and contractual requirements contained in the PPA for its receipt of Title IV funds.

The Law Firm of Morgan Rooks, P.C.

If you have knowledge of fraud committed against the Government, contact the attorneys at the Law Firm of Morgan Rooks PC. Filing an FCA claim must be done a certain way to be eligible to receive compensation for reporting the fraud. While the FCA permits relators/whistleblowers to file an FCA lawsuit, it does not allow this to be done without legal representation. An attorney must file the FCA suit for the relator.

Contact the Whistleblower claims attorneys at The Law Firm of Morgan Rooks, P.C. by calling 856-746-6332. When you schedule a consultation, it will allow our team to review your case and help you start your case.

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