FAQ's - False Claims Act

1. What kinds of fraud may be prosecuted under the False Claims Act?
2. What can I do if I believe that my employer is defrauding the government?
3. Why is the False Claims Act an effective tool against fraud?
4. What kind of protection does the False Claims Act provide for whistleblowers?
5. What if I report fraud, and the government takes no action?
6. What can I expect, realistically, if I become a whistleblower?
7. How do I find competent counsel?

1.  What kinds of fraud may be prosecuted under the False Claims Act?

The FCA itself does not specify all of the different contexts in which fraud might occur - it merely gives a general definition of fraud. (False Claims Act)  Some of the most common types of fraud include:

1. Fraud by government defense contractors;
2. Medicare and Medicaid billing fraud;
3. Kickbacks and illegal referral schemes;
4. Fraud involving pharmaceutical company marketing practices;
5. Substandard patient care on the part of nursing homes and other health care institutions; and
6. Government grant program funds illegally diverted to non-approved uses.

2.  What can I do if I believe that my employer is defrauding the government?

First, it is ill-advised to attempt to handle the matter on your own. Seek the advice of competent counsel. Ask the attorney you contact if s/he has handled false claims act cases before, how many s/he has handled, whether or not the government intervened and what the success rate has been.

Second, be aware that it is against the law for your employer to take an adverse employment action against you, e.g. suspend or terminate your employment, for acts you have taken to enforce the government's rights under the False Claims Act. Courts have indicated that any acts taken "in furtherance" of the investigation or prosecution of fraud constitute protected activity including an investigation conducted without contemplation of, or knowledge of the legal possibility of, a False Claims Act suit.

Third, find the appropriate government agency to report to and report the fraud. Again, it is advisable that you have legal counsel to aid you at this point in the proceedings. Most law firms that handle these kinds of cases will - as thoroughly as possible - investigate both the facts and the applicable law prior to reporting the fraud to the government. Overworked government officials have little time to investigate rumor and innuendo: they require a detailed report that is factually and legally specific before devoting precious government resources to an investigation.

Fourth, other than your attorney, do not share the information with people who are likely to convey it to others. By far the worst thing you could do would be to go the press. For one thing, you may be exposing yourself to liability for defamation or violation of your duty of loyalty to the employer. Large corporations usually have more than sufficient funds to proceed against individuals in defamation suits and are often likely to stop at nothing to destroy the reputation of an individual who exposes them to significant liability. Additionally, the "public disclosure" and "first to file" requirements of the False Claims Act could create problems for your case, if a report gets published or another insider decides to file a qui tam action before you do.

3.  Why is the False Claims Act an effective tool against fraud?

First the act empowers individuals who have inside knowledge of fraud to initiate the investigation by reporting to the government and to eventually file suit on behalf of the government. Second, the act provides for treble damages. Third, the act provides for a fine of up to $11,500 per false claim submitted.

Fourth, the act provides for a lengthy statute of limitations - in some cases up to 10 years from the date of the fraud. Last but not least, the act provides remedies for employees who have been terminated, suspended, or otherwise negatively impacted in their employment by employers in retaliation for the employee's investigation or reporting of the illegal activities.

Am I protected against retaliation under the False Claims Act, even if at the time I discovered and reported the fraud, I had never heard of this law?

As a practical matter, most people who discover fraud against the government will never have heard of the False Claims Act or be familiar with its provisions. Requiring an employee to advise his employer that he either has filed or is contemplating filing a qui tam complaint would make the protection against retaliation meaningless and would contravene the purpose of the statute, which is to permit the government to investigate fraud without tipping off the person(s) and/or corporation(s) involved in the act of defrauding the government.

4.  What kind of protection does the False Claims Act provide for whistleblowers?

The False Claims Act provides a very effective remedy for employees who have been terminated or have suffered other retaliation as a consequence of investigating or reporting fraud to the government. You should know however, that, similarly to the anti-retaliatory provisions of the Civil Rights Act, there is little that you can do to prevent being fired, although you can sue for damages if it happens. The False Claims Act permits an employee to sue the employer individually for retaliation and has potential remedies that include "all relief necessary to make the employee whole" including, but not limited to, reinstatement to previous job or position, or, if that is not practical, 'front pay' damages for termination, double back pay, compensation for "special damages" including litigation expenses and reasonable attorneys fees and which have been held by some courts to include compensation for emotional distress. Obviously, in some cases, the 'bounty' percentage of what the government recovers can result if far greater recovery than the individual retaliation damages, but the damages for retaliation can indeed be significant.

5.  What if I report fraud, and the government takes no action?

The act provides that, once a False Claims Act has been filed with the court, the government must make a determination whether or not to intervene and report its decision to the federal district court within 60 days. In most cases, the government will need more time, and will request it from the court; however, the filing of the case triggers the statute's other requirements that the government investigate and, if the case has merit, intervene in the prosecution.

6.  What can I expect, realistically, if I become a whistleblower?

The sad fact of life is that most whistleblowers are fired and many cannot find employment again in their chosen profession, at least during the course of the investigation and prosecution of the case. And these cases take years to prosecute. So anyone making the decision to "do the right thing" should not go into it lightly, nor should you think that a qui tam case is the road to riches. Many qui tam cases never really see the light of day, and many more are dismissed on technical grounds prior to trial. On the other hand, if your employer is involved in fraud, you may indirectly be yourself involved in the illegal activity. You need to take whatever action is available to get yourself out of the picture. On the bright side, many whistleblowers do in fact succeed in helping both the government and themselves. If you have the moral courage to stand up for what's right, there is a good chance that justice will prevail.

7.  How do I find competent counsel?

There are many sources for locating competent counsel. Obviously, we feel that Cross & Bennett, L.L.C. should be your first choice. However, there are other sources for finding attorneys, including Taxpayers Against Fraud, a non-profit corporation devoted to the advancement of False Claims Act cases and the fight against fraud. See www.taf.org.

Cross & Bennett, L.L.C. has handled both intervened cases (i.e. cases in which the government joins) and declined cases (cases in which the government declines to join) and has worked hard to develop professional relationships with state and local authorities. Cross & Bennett, L.L.C. can assist in the preparation and submission of a report of fraud to the appropriate authorities, and we investigate and thoughtfully evaluate all cases before filing.