False Claims Act

The Essentials of the False Claims Act

The False Claims Act prohibits an individual, company, or other entity from knowingly causing, presenting, or submitting a false claim to the government to obtain government money or property or reduce an obligation owed to the government. Under the False Claims Act, private individuals may bring a qui tam action on behalf of the United States to seek recovery of civil monetary penalties ranging from $5,500 to $11,000 per violation and up to three times the amount of damages sustained by the government due to fraud.

Indeed, encouraging whistleblowers to report fraud and pursue False Claims Act actions has been an essential enforcement mechanism leading to billions of dollars in government recoveries.  In recognition of the crucial role played by qui tam whistleblowers, the False Claims Act authorizes whistleblowers to share in up to 30 percent of the recovery obtained by the government through settlement or trial.

Although an understanding of the False Claims Act may assist potential whistleblowers better identify False Claims Act violations and more accurately conceptualize the process of a False Claims Act case, private individuals with knowledge of fraud are encouraged to consult with a qualified whistleblower attorney to discuss their case in a professional and confidential context.  An explanation and overview the False Claims Act’s core concepts and typical type of cases is provided below, however, specific qui tam cases typically necessitate the discussion of particular details with an experienced whistleblower lawyer.

The False Claims Act

False Claims Act Procedure

Achieving Successful Outcomes

Types of False Claims Act Cases

The False Claims Act is a broadly worded statute designed to encompass a wide range of fraudulent activity perpetrated by private individuals, companies, and other entities engaged with the government in any relationship involving government property or funds.  Although the False Claims Act encompasses many types of fraud occurring across a wide range of circumstances, effective litigation of a successful False Claims Act case requires partnership with qualified, experienced, and innovative attorneys dedicated and willing to pursue reports of fraudulent activity. The following is a non-exhaustive list of types of fraud that have recently been the focus of False Claims Act litigation and settlements, complete with citations to press releases.

  • Off-label promotion of drugs, forbidden by the Food, Drug and Cosmetics Act and causing false claims to federal health care programs. [1]
  • False price reporting to the government, causing inflated “average wholesale prices” and false claims for reimbursement from health care providers. [2]
  • Violation of Current Good Manufacturing Process regulations promulgated by the Food & Drug Administration, causing false claims for adulterated drugs. [3]
  • Kickbacks by medical device manufacturers to physicians for using their devices. [4]
  • “Upcoding” or “unbundling” Medicare/Medicaid codes for reimbursement, or the submission of false claims by charging Medicare/Medicaid for more expensive procedures or for individual procedures instead of submitting claims as a package. [5]
  • Submitting false claims for health care services that were not medically necessary or were not actually performed. [6]
  • Shifting overhead costs to the government in violation of defense contracts. [7]
  • In defense contracts, shifting costs from fixed price contracts to “cost-plus” contracts. [8]
  • Improper referrals to personal or family owned businesses in the course of consulting contracts with the Armed Forces. [9]
  • Causing false claims to federal student loan programs by compensating student recruiters based on enrollment figures, in violation of Title IV of the Higher Education Act. [10]

[1] “Warner-Lambert to Pay $430 Million to Resolve Criminal & Civil Health Care Liability Relating to Off-Label Promotion,” Department of Justice press release. http://www.justice.gov/opa/pr/2004/May/04_civ_322.htm (accessed February 24, 2011). The author wishes to disclose that he was attorney for the relator in the case.

[2] “TAP Pharmaceutical Products Inc. and Seven Others Charged with Health Care Crimes; Company Agrees to pay $875 Million to Settle Charges,” Department of Justice press release. http://www.justice.gov/opa/pr/2001/October/513civ.htm (accessed February 24, 2011).

[3] “GlaxoSmithKline to Plead Guilty & Pay $750 Million to Resolve Criminal and Civil Liability Regarding Manufacturing Deficiencies at Puerto Rico Plant,” Department of Justice press release. http://www.justice.gov/opa/pr/2010/October/10-civ-1205.html (accessed February 24, 2011).

[4] “St. Jude Medical Pays $16 Million to Settle Claims that it Paid Kickbacks to Physicians,” Department of Justice press release. http://www.justice.gov/opa/pr/2011/January/11-civ-078.html (accessed February 24, 2011).

[5] “False Claims Act Settlement Reached with Local Doctor for Improper Billing Practices,” press release of The United States Attorney’s Office for the District of Massachusetts. http://www.justice.gov/usao/ma/Press%20Office%20-%20Press%20Release%20Files/June2010/KumarAnilPR.html (accessed February 24, 2011).

[6] “National Dental Management Company Pays $24 Million to Resolve Fraud Allegations,” Department of Justice press release. http://www.justice.gov/opa/pr/2010/January/10-civ-052.html (accessed February 24, 2011).

[7] “Scheme to Defraud Government on Reconstruction Contracts Leads to Criminal Charges and Civil Penalties for Louis Berger Group, Inc.” Department of Justice press release. http://www.justice.gov/usao/md/Public-Affairs/press_releases/press08/

SchemetoDefraudGovernmentLeadstoCriminalChargesandCivilPenaltiesforLouisBergerGroupInc.html (accessed February 24, 2011).

[8] “Department of Justice Settles Dispute with Major Southern California Defense Contractor,” Department of Justice press release. http://www.justice.gov/opa/pr/Pre_96/September94/527.txt.html (accessed February 24, 2011).

[9] “Dynamics Research Corporation to Pay $15 Million to Resolve Allegations of Kickbacks and False Claims on Air Force Contracts,” press release of The United States Attorney’s Office for the District of Massachusetts. http://www.justice.gov/usao/ma/Press%20Office%20-%20Press%20Release%20Files/Aug2009/DynamicsResearchCorporation.html (accessed February 24, 2011).

[10] “University of Phoenix Settles False Claims Act Lawsuit for $67.5 Million,” Department of Justice press release. http://www.justice.gov/opa/pr/2009/December/09-civ-1345.html (accessed February 24, 2011).