Federal False Claims Act

The Federal False Claims Act (31 USC §§ 3729-3733) was enacted during the Civil War in 1863 in response to rampant fraud committed against the United States by government contractors and is still in effect.

In short, a person who knowingly presents a false claim for payment to a government-funded health care program, such as Medicare or Medicaid, is liable to the Government each time for a civil penalty of not less than $5,000.00 nor more than $10,000.00, as adjusted for inflation, plus three times the amount of damages which the Government sustains because of the false claim.

In addition to allowing the Government to pursue perpetrations of fraud on its own, the Act allows private citizens to file suits on behalf of the Government (qui tam actions) against those who have defrauded the Government. Private citizens (whistleblowers) who successfully bring qui tam actions may receive a portion of the Government’s recovery.

In July 2012, a whistleblower received $300,000,000.00 out of $2,000,000,000.00 recovered by the Government from pharmaceutical company, Glaxo Smith Kline. This is the largest recovery on record.

It is interesting to note that 9 of the 10 largest Whistleblower recoveries all came from Government recoveries related to healthcare. The outlier was a recovery against Bank of America.

This article is for information purposes only and is not intended to constitute legal advice.