What Is the False Claims Act?

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False Claims Act Overview

The False Claims Act is a law that is designed to target fraud against the government. The law was signed into law by President Abraham Lincoln.

Some types of fraud covered by the False Claims Act, or FCA, are Medicare or Medicaid health care billing fraud, government procurement, and military contract fraud, SEC corporate fraud, and IRS tax fraud.

Medicare.gov notes that in some cases, companies will try to defraud the government by making false claims for funds through Medicare and Medicaid. 

Healthcare fraud can include instances like the following:

• Fraudulent upcoding in medical billing
• An ambulance company claiming emergency services for a simple transport or entering into a kickback arrangement with hospitals
• Overcharging for medical goods or healthcare services
• Kickback or illegal referral arrangements between providers
• Providing services that are not medically necessary
• Claiming and billing for services provided by a physician when the care was provided by a less qualified employee

A range of actions could qualify as government procurement and military contract fraud, including:

• Overcharging for goods or services
• Performing sub-standard work or substituting lower quality materials for promised higher quality materials
• Billing for services not performed
• Providing inaccurate information about completion, quality, or timelines of contract work

Legal Issue

The False Claims Act involves a qui tam, or whistleblower provision. In many cases, people who work with an organization are the first to see that there is fraud being committed. So, the False Claims Act provides protections for those who serve as whistleblowers and report fraud within an organization.

Many people who could serve as whistleblowers may hesitate and not report fraud. They may worry about whistleblower retaliation from their employer, because they fear that they could be punished or they worry they could lose their jobs.

Happily, the False Claims Act holds liability adjacent companies or contractors that defraud government program. The False Claims Act protects employees, contractors, and agents who serve as whistleblowers from retaliation.

So, if a whistleblower brings a claim against a company, they cannot be discharged, demoted, suspended, threatened, harassed, or discriminated against in the terms and conditions of their employment according to the FCA. 

If you have witnessed fraud against the government by an employer or a government contractor, you may be able to file a whistleblower lawsuit. It is illegal for your employer or the company with whom you contract to retaliate against you.

Whistleblower lawsuits, also known as qui tam lawsuits, cannot be based on public information. So, the person who files such a lawsuit has to have some inside knowledge of an alleged fraud committed to have a valid claim.

Only the first whistleblower to file a claim is considered by the court and eligible for compensation if their whistleblower lawsuit is successful. This is done to encourage whistleblowers to not hesitate in bringing their claims forward.

Whistleblower Lawsuits

If you report fraud directly to the government, you will be eligible for a cash reward, but it will be a small one. In contrast, filing a whistleblower lawsuit under the Federal False Claims Act makes you eligible for a larger cash reward if the lawsuit is successful.