The federal False Claims Act is one of the most prominent tools available to combat fraud against the government. It works by encouraging potential whistleblowers to step forward.

Whistleblowers, also called relators, are individuals who witness some form of fraud against the government and report the company or contractor’s wrongdoing.

The whistleblower can be an employee, former employee, competitor, or another contractor who has witnessed some form of alleged fraud. The False Claims Act provides a multitude of protections and incentives to whistleblowers, and has helped bring to light millions of dollars in fraudulent claims.

Whistleblowers can report various types of fraud. Medicare or Medicaid fraud allegations are some of the most common, with employees or other witnesses “blowing the whistle” on healthcare companies submitting claims for unnecessary services or services that the patient never receives.

Medicare or Medicaid fraud is normally committed by hospitals, physicians, pharmacies, medical product companies, labs, ambulance transport companies, and home healthcare agencies. Most of the fraud committed in this area involves medical billing and kickbacks to healthcare providers or hospitals.

Government or military contract fraud is the other major form of fraud reported by whistleblowers. This fraud can range from billing for goods and services never received or performed, to providing inaccurate information on the contract.

Government contractors named in whistleblower allegations often include defense military contractors, security, environmental, or other companies tasked with providing goods or services to the government.

In addition to the federal False Claims Act, many states have their own versions of a whistleblower protection law.

Overview of False Claims Act Benefits

The False Claims Act was first implemented during the Civil War, in order to help fight fraud being committed against the federal government by suppliers to the Union Army. Often referred to as “Lincoln’s Law,” the law was not often used during the first century of its enactment. The law really only gained traction during World War II.

The act was amended in 1986 after highly publicized accounts of fraud against the government, particularly in the defense contract industry.

The amendments broadened the whistleblower protections available under the False Claims Act by increasing incentives and decreasing the number of barriers involved in submitting whistleblower claims.

Since the 1986 amendments, the False Claims Act has become one of the government’s most effective and successful methods of combating fraud and financial abuse.

From 1986 to 2013 the federal government recovered over $40 billion in losses from fraud. Nearly one half of the $40 billion recovered since 1986 has been attributed to the whistleblower protection provided by the False Claims Act.

Whistleblowers typically stand to earn between 15 to 30 percent of whatever settlement comes out of the whistleblower lawsuit. Potential claimants should contact a specialized attorney to determine if they have a whistleblower lawsuit.