Whistleblower Litigation

False Claims Act Explained

The False Claims Act is the government’s primary civil remedy to recover false claims for government funds and property. The funds are paid out under government contracts, such as national security and defense contracts. They also include funds paid under programs including Medicare, Medicaid, veterans’ benefits, federally insured loans and mortgages, transportation and research grants, agricultural supports, school lunches and disaster assistance.

Without the help of whistleblowers, detecting this kind of fraud is often impossible. This law has been so effective, roughly 30 states and local governments have also passed these laws to protect state and local funds.

The Effects of the False Claims Act

Since 1987, whistleblowers and others have recovered over $38 billion through the False Claims Act, including qui tam and non-qui tam cases. Qui tam refers to cases brought by whistleblowers and in some instances litigated by them without assistance from the government. The number of qui tam cases filed under the False Claims Act has grown significantly over the years to a record 753 new matters in fiscal year 2013. In that year alone, whistleblowers helped the government recover over $2 billion, including cases in which the government did and did not intervene.

The importance of having a large, successful whistleblower law firm advocate and litigate on your behalf among the hundreds of cases filed each year has never been more obvious. Hagens Berman is that firm.

History of the False Claims Act

The False Claims Act has a long and noble history. The Continental Congress passed the first false claims law in 1778. The law was passed in response to an incident in 1777. Two men came forward alleging that the commander-in-chief of the Continental Navy was corrupt. In retaliation, the commander-in-chief sued the informants for libel. Congress declared it the duty of “all persons in the service of the United States, as well as all others” to inform the proper authorities of “misconduct, frauds or misdemeanors committed by any officers in the service of these states, which may come to their knowledge.”

Fraud in government contracts was pervasive during the American Civil War. As the Union scrambled to obtain supplies, many corrupt contractors sold the army rancid food, defective guns and ammo and feeble horses and mules. With the majority of men involved with the war effort, there were very few law enforcement officers to investigate claims.

In response, Congress passed the False Claims Act on March 2, 1863. Significant amendment to that law occurred in the late 1980s. In 1986, Congress refortified the False Claims Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government. Since 1986, qui tam provisions have helped recover more than $27 billion in taxpayer money.

The qui tam provision of the law allows a private person, known as a relator, to bring a lawsuit on behalf of the United States if the private person has information showing that the defendant has submitted or caused to be submitted fraudulent claims to the government. The relator can bring this action even if he or she has not suffered any damage because of the false or fraudulent action. If successful, the relator receives a portion (usually 15 to 25 percent) of any recovered damages by the government. If the relator litigates the case on his or her own, the amount of recovery for the whistleblower can increase to 30%.

Congress has strengthened the False Claims Act to encourage more whistleblowers to come forward and to protect whistleblowers from retaliation. Somewhat remarkably, the statute has been amended three times just during the Obama Presidency—each time it has been amended in favor of supporting whistleblowers.

As it has grown in popularity, however, corporate defendants have developed new ways to challenge and attack whistleblowers. The law has become more complicated, with different standards in different parts of the country.

For these reasons, it is critically important for a potential whistleblower to consult quickly with an experienced law firm. Hagens Berman will provide a free and comprehensive, confidential and privileged analysis of your potential whistleblower matter. With more than 70 attorneys in nearly a dozen offices across the country, and as one of the top plaintiff firms in the country, we are best positioned to be your advocate as a whistleblower.

If you believe that you have information about a company that may be engaged in fraud, you could be rewarded for reporting it.