False Claims Act

Definition

Federal statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government.  The False Claims Act may be enforced either by the Justice Department or by private individuals in a [[wex:qui_tam#content|qui tam]] proceeding.

 

Overview

The False Claims Act allows private parties to file [[wex:qui_tam#content|qui tam]] actions alleging that [[wex:defendant|defendants]] [[wex:fraud|defrauded]] the federal government. [[USC:18:286|18 U.S.C. § 286]], [[USC:18:287|18 U.S.C. § 287]], [[USC:31:3279|31 U.S.C. § 3279 et seq]]. If the suit succeeds, the private party may receive up to 30% of the government's award. In these suits, the government is the real party in interest, and thus is considered the [[wex:plaintiff]]. The private party who initiates the suit is called a [[wex:relator#content|relator]].

In a [[wex:qui_tam#content|qui tam]] suit under the False Claims Act, the [[wex:relator#content|relator]] first files suit in federal District Court. The suit is filed under seal, so that only the [[wex:relator#content|relator]] and the government know about it. After the suit is filed, the Department of Justice, in conjunction with the local District Attorney, has 60 days to investigate and decide whether to intervene. The government can, and usually does, request an extension.

If the government intervenes, it takes over the case. If the government wins or settles, the [[wex:relator#content|relator]] receives between 15% and 25% of the government's [[wex:damages|award]], depending on her involvement in the case. If the government does not intervene, the [[wex:relator#content|relator]] may choose to continue on her own. If she wins, she may recover up to 30% of the government's award. The court will reduce the [[wex:relator#content|relator's]] award if she was involved in the improper activities.

For example, if an employee of a defense contractor discovered that his boss was defrauding the government, the employee could file a False Claims Act [[wex:qui_tam#content|qui tam]] suit against his employer. After filing the suit, the Department of Justice, in consultation with the local District Attorney, might choose to intervene. Then, if the employee and [[wex:plaintiff|plaintiff]] win, the employee would be entitled to between 15% and 25% of the government's award.

Some False Claim Act [[wex:relator#content|relators]] are entitled to whistleblower protection.

See, e.g., United States ex rel Eisenstein v. City of New York (08-660).