Also known as the “Lincoln Law,” the False Claims Act is a federal law that penalizes those who defraud government programs. In addition to providing up to treble damages in a pro-plaintiff verdict, the Act delivers upwards of up to 30% of recoveries. It has been described as the single most important resource American taxpayers have to recover the fortunes stolen by government contractors every year.

The False Claims Act deals with fraud involving all federal programs or contracts except tax fraud. The civil actions that whistle blowers bring under the Act are known as qui tam lawsuits, and plaintiffs receive monetary rewards if their cases result in the recovery of government funds. Most qui tam actions today involve alleged Medicare and Medicaid fraud, but claims can be (and are) brought against other businesses in other industries, such as banks and other financial institutions, defense contractors, and pharmaceutical companies.

Examples of fraud schemes prosecuted under the False Claims Act include:

• Charging more than once for the same product or service
• Invoicing for goods and services that were never provided
• Falsifying service records to reflect better performance
• Invoicing for drugs or medical devices that are not FDA-approved
• Charging for work that was never performed
• Performing unnecessary medical treatments to obtain more Medicare reimbursement
• Deception about the wholesale price of prescription drugs
• Billing for brand-name medication while providing generic versions
• Billing for unworked hours to get bigger reimbursements
• Receiving a contract by paying kickbacks or bribes

Institutions and corporations alike are threatened by False Claims Act enforcement measures, which can cost them significant sums. In 2014 the government recovered a landmark $55.7 billion from judgments and settlements in False Claims Act cases, including $3.1 billion from financial institutions and $2.3 billion from the healthcare industry.

The False Claims Act challenges for businesses

The opportunity for substantial monetary rewards have resulted in an increasing number of qui tam suits being filed every year, and the Department of Justice uses the Act to extract as much money as possible in civil penalties and damages. For instance:

• 29 states and the District of Columbia have their own false claims acts that pose a major financial risk to businesses, even those that never considered themselves to be government contractors.
• Recent circuit court decisions and statutory changes have resulted in claims that are challenging to dismiss

Any business or institution facing investigation or charges under the False Claims Act should immediately hire an attorney with an extensive background in federal defense cases. An experienced False Claims Act lawyer has a deep knowledge of agency, statutory, and regulatory requirements pertaining to the Act and will assist their client in presenting a defense and/or attempting to resolve a dispute without litigation. If settlement is not feasible in a particular situation, then the attorney will work for the most favorable outcome in both qui tam and federally initiated actions.