The federal government spends money – a lot of money. In 2016, the federal government spent over $471 billion in contracts with private entities.* Over $2.8 billion of that money went to contractors in Louisiana alone – another $4.4 billion went to Mississippi contractors, and a whopping $33 billion went to Texas. Given the sheer amount of money at stake, there is a significant opportunity for graft, theft, and fraud. The False Claims Act, or FCA, is the government’s primary civil tool for recovering money from unscrupulous contractors.
A Brief History of the FCA
The FCA was first passed during the Civil War, in response to contractors who were selling third-rate equipment to the Union Army. It forbid government contractors from making any claims for payment that were “false, fictitious, or fraudulent,” and imposed both criminal and monetary penalties. It also allowed individuals to file lawsuits on behalf of the government, and offered them a reward for doing so.
In 1986, Congress amended and expanded the FCA. The law still allows individuals, called relators, to file lawsuits on behalf of the government. The government may or may not choose to intervene in the lawsuit. Whether or not the government chooses to intervene, the relator may proceed with the suit. If the relator is successful, the Court will order the company to repay all money received through false or fraudulent claims, plus triple damages as a penalty. The relator is entitled to between 15% – 30% of the total award.
The FCA has led to some significant payments to whistleblowers. For example, in one case from Florida, a hospital accountant blew the whistle on a company policy of inflating costs for Medicare reimbursements. The case eventually settled for over $85 million, and the court awarded $20.5 million to the whistleblower (24% of the total award). In another case, a Verizon employee filed a complaint concerning fraud in telecommunications contracts. The case settled for $96.5 million, and the employee was awarded over $19 million – roughly 20% of the total award.
Of course, not all FCA suits lead to multi-million dollar recoveries. However, the government takes allegations of fraud seriously, even in relatively smaller cases. The FCA also protects whistleblowers from being fired, disciplined, or otherwise retaliated against by their employer. In fact, an FCA suit is initially filed under seal, so an employer will not even know who the whistleblower is until the Court unseals the record – sometimes, this will not happen until after the settlement has already been reached.
The False Claims Act is a complicated law with an unusually complex procedure. It requires an attorney who is experienced with the FCA and who understands its nuances. The remaining articles in this series discuss several key aspects of the FCA:
- What Is A “False Claim,” And Who Can Report It?
- What Are Common Types of Medical Billing Fraud?
- What is the Procedure For Filing An FCA Lawsuit?
- Can My Company Punish Me For Acting As A Whistleblower?
- The Medical Assistance Programs Integrity Law — Our Louisiana False Claims Act
If you have any other questions about the FCA, you can call me at (504) 267-0777, or e-mail me here.
* This figure does not include grants, loans, or direct government spending. All government spending figures in this article are taken from www.usaspending.gov, a website operated by the federal Department of the Treasury.