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False Claims Act Litigation / Health Care Litigation

Posted by: on Fri, Mar 15, 2013

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The False Claims Act (31 U.S.C. Sections 3729-33) allows a private individual or “whistleblower”, with knowledge of past or present fraud on the federal government, to sue on behalf of the government to recover stiff civil penalties and triple damages.

The person bringing the suit is formally known as the “Relator.”

If the suit is successful, it not only stops the dishonest conduct, but also deters similar conduct by others and may result in the Relator’s receipt of a substantial share of the government’s ultimate recovery – as much as 30 percent of the total.

The False Claims Act, also called the “Lincoln Act,” “Informer’s Act,” or the “Qui Tam statute,” was enacted during the Civil War. Qui Tam is shorthand for the Latin phrase “qui tam pro domino rege quam pro seipse”, meaning “he who sues for the king as for himself.” The law was targeted at stopping dishonest suppliers to the Union military at a time when the war effort made it all but impossible for the government to investigate and prosecute the fraud itself. Today it serves a similar purpose because of the enormous size of the federal government and the variety or programs under which it expends taxpayer funds.

When the Act was amended in 1986, there was great concern that the national deficit had risen dangerously and President Ronald Reagan had declared that a vast amount of government spending was being misused through waste and fraud.

After the 1986 amendments strengthening the Act were passed (see below), the Act was used primarily against defense contractors. By the late 1990s, however, the focus had shifted to health care fraud, which now accounts for the majority of cases filed by whistleblowers and by the government.

More than 4,000 Qui Tam suits have been filed since 1986, when the statute was strengthened to make it easier and more rewarding for private citizens to sue. The government has recovered over $22 billion as a result of the suits, of which over $960 million has been paid to Relators/whistleblowers.

The False Claims Act, 31 U.S.C. § 3729 et seq., provides for liability for triple damages and a penalty from $5,500 to $11,000 per claim for anyone who knowingly submits or causes the submission of a false or fraudulent claim to the United States.

Generally, only the Relator who is the first to file a lawsuit can be rewarded for reporting the fraud. Even if one person uncovers the fraud, someone else can file the lawsuit first and bar the first whistleblower from sharing in any recovery.

1986 changes

(False Claims Act Amendments (Pub.L. 99–562, 100 Stat. 3153, enacted October 27, 1986)

1. The elimination of the “government possession of information” bar against qui tam lawsuits;
2. The establishment of defendant liability for “deliberate ignorance” and “reckless disregard” of the truth;
3. Restoration of the “preponderance of the evidence” standard for all elements of the claim including damages;
4. Imposition of treble damages and civil fines of $5,000 to $10,000 per false claim;
5. Increased rewards for qui tam plaintiffs of between 15–30 percent of the funds recovered from the defendant;
6. Defendant payment of the successful plaintiff’s expenses and attorney’s fees, and;
7. Employment protection for whistleblowers including reinstatement with seniority status, special damages, and double back pay.

2009 changes

Main article: Fraud Enforcement and Recovery Act of 2009

On May 20, 2009, the Fraud Enforcement and Recovery Act of 2009 (FERA) was signed into law. It includes the most significant amendments to the FCA since the 1986 amendments. FERA enacted the following changes:

1. Expanded the scope of potential FCA liability by eliminating the “presentment” requirement (effectively overruling the Supreme Court’s opinion in Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008));
2. Redefined “claim” under the FCA to mean “any request or demand, whether under a contract or otherwise for money or property and whether or not the United States has title to the money or property” that is (1) presented directly to the United States, or (2) “to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest” and the government provides or reimburses any portion of the requested funds;
3. Amended the FCA’s intent requirement, and now requiring only that a false statement be “material to” a false claim;
4. Expanded conspiracy liability for any violation of the provisions of the FCA;
5. Amended the “reverse false claims” provisions to expand liability to “knowingly and improperly avoid[ing] or decreas[ing] an obligation to pay or transmit money or property to the Government;”
6. Increased protection for qui tam plaintiffs/relators beyond employees, to include contractors and agents;
7. Procedurally, the government’s complaint will now relate back to the qui tam plaintiff/relator’s filing;
9. Provided that whenever a state or local government is named as a co-plaintiff in an action, the government or the relator “shall not [be] preclude[d]… from serving the complaint, any other pleadings, or the written disclosure of substantially all material evidence;”
10. Increased the Attorney General’s power to delegate authority to conduct Civil Investigative Demands prior to intervening in an FCA action.

With this revision, the FCA now prohibits knowingly (changes are in bold):

1. Submitting for payment or reimbursement a claim known to be false or fraudulent.
2. Making or using a false record or statement material to a false or fraudulent claim or to an ‘obligation’ to pay money to the government.
3. Engaging in a conspiracy to defraud by the improper submission of a false claim.
4. Concealing, improperly avoiding or decreasing an ‘obligation’ to pay money to the government

The text of the Act is set forth below:

31 USC § 3729 – False claims act

Current through Pub. L. 112-283. (See Public Laws for the current Congress.)

(a) Liability for Certain Acts.—

(1) In general.— Subject to paragraph (2), any person who—

(A)knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B)knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

(C)conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

(D)has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;

(E)is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

(F)knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or

(G)knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,

is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410 [1]), plus 3 times the amount of damages which the Government sustains because of the act of that person.

(2) Reduced damages.— If the court finds that—

(A)the person committing the violation of this subsection furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information;

(B)such person fully cooperated with any Government investigation of such violation; and

(C)at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation,

the court may assess not less than 2 times the amount of damages which the Government sustains because of the act of that person.

(3) Costs of civil actions.— A person violating this subsection shall also be liable to the United States Government for the costs of a civil action brought to recover any such penalty or damages.

(b) Definitions.— For purposes of this section—

(1)the terms “knowing” and “knowingly”—

(A)mean that a person, with respect to information—

(i)has actual knowledge of the information;

(ii)acts in deliberate ignorance of the truth or falsity of the information; or

(iii)acts in reckless disregard of the truth or falsity of the information; and

(B)require no proof of specific intent to defraud;

(2)the term “claim”—

(A)means any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that—

(i)is presented to an officer, employee, or agent of the United States; or

(ii)is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest, and if the United States Government—

(I)provides or has provided any portion of the money or property requested or demanded; or

(II)will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded; and

(B)does not include requests or demands for money or property that the Government has paid to an individual as compensation for Federal employment or as an income subsidy with no restrictions on that individual’s use of the money or property;

(3)the term “obligation” means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment; and

(4)the term “material” means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.

(c) Exemption From Disclosure.— Any information furnished pursuant to subsection (a)(2) shall be exempt from disclosure under section 552 of title 5.

(d) Exclusion.— This section does not apply to claims, records, or statements made under the Internal Revenue Code of 1986.


[1] So in original. Probably should be “101–410”.

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(a) Liability for Certain Acts.—

(1) In general.— Subject to paragraph (2), any person who—

(A)knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B)knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

(C)conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

(D)has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;

(E)is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

(F)knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or

(G)knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,

is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410 [1]), plus 3 times the amount of damages which the Government sustains because of the act of that person.

(2) Reduced damages.— If the court finds that—

(A)the person committing the violation of this subsection furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information;

(B)such person fully cooperated with any Government investigation of such violation; and

(C)at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation,

the court may assess not less than 2 times the amount of damages which the Government sustains because of the act of that person.

(3) Costs of civil actions.— A person violating this subsection shall also be liable to the United States Government for the costs of a civil action brought to recover any such penalty or damages.

(b) Definitions.— For purposes of this section—

(1)the terms “knowing” and “knowingly”—

(A)mean that a person, with respect to information—

(i)has actual knowledge of the information;

(ii)acts in deliberate ignorance of the truth or falsity of the information; or

(iii)acts in reckless disregard of the truth or falsity of the information; and

(B)require no proof of specific intent to defraud;

(2)the term “claim”—

(A)means any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that—

(i)is presented to an officer, employee, or agent of the United States; or

(ii)is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest, and if the United States Government—

(I)provides or has provided any portion of the money or property requested or demanded; or

(II)will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded; and

(B)does not include requests or demands for money or property that the Government has paid to an individual as compensation for Federal employment or as an income subsidy with no restrictions on that individual’s use of the money or property;

(3)the term “obligation” means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment; and

(4)the term “material” means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.

(c) Exemption From Disclosure.— Any information furnished pursuant to subsection (a)(2) shall be exempt from disclosure under section 552 of title 5.

(d) Exclusion.— This section does not apply to claims, records, or statements made under the Internal Revenue Code of 1986.


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