False Claims Act Qui Tam Whistleblower
Enacted over 150 years ago, the federal False Claims Act was the nation’s first whistleblower law intended to combat fraud against the government. It was originally written during the Civil War, at a time when the government kept receiving substandard goods from federal contractors, and was enacted to help fight government spending waste due to fraud.
After multiple reports of government contractor fraud in the 1980s, the False Claims Act was updated to add additional penalties and protections. One change of particular importance was the addition of whistleblower rewards. Rewards of up to 30% of the eventual fine or fee paid by bad actors could be awarded to the whistleblower who reported the fraud. After the Great Recession, the Act was amended to provide additional protections for whistleblowers.
Claims under the False Claim Act are also known as qui tam actions. Qui tam is a Latin phrase prescribed to a claim or lawsuit in which the whistleblower or person who assists in prosecution receives some or all of the penalties that result from the claim. The full Latin phrase is “qui tam pro domino rege qua, pro se ipso in hac parte sequitur” translate to “they who sue in this matter for the king as well as for himself”. The “himself” part describes the personal award for those who report the illegal conduct.
Schneider Wallace represents whistleblowers for False Claim Act qui tam lawsuits. Free and private legal consultations are available to those aware of misconduct and you should speak with our experienced attorneys as soon as possible. Contact our whistleblower attorneys at 1-800-689-0024 or email@example.com.
False Claims Act Claim
To make a False Claims Act claim, one needs to report on misconduct or fraud against the government that was previously unknown. You cannot make a new claim against a known or public fraud. Another aspect of the claim is that the action is known by the agent, which means that they knew the invoice was incorrect, price was incorrect, or other misdeed was occurring and committed it knowingly.
For frequently asked questions about filing a False Claim Act claim, see our False Claim Act Qui Tam FAQ.
Types of government fraud covered by the False Claims Act include:
- Price fixing
- Incorrect pricing
- Fraud during the bidding process
- False statements of work
- Fraud by the bid evaluator to favor a bidder
- False emergency contract award
- False invoices
- Charging for unallowed costs, material or labor
- Accounting fraud
- Defective material
- Missing material or volume
- False or missing certifications
- False or missing testing
- Product substitution
- Witness tampering
- Kickbacks to contractors, sub-contractors, vendors or government employees
For more information about procurement fraud, see our procurement fraud page.
For more information about product substitution, see our page on product substitution fraud.
False Claims Act Penalties
Penalties for violations of the False Claims Act include a penalty of $5,000 to $10,000, plus three times the amount of the fraud or damages. At first glance, these penalties do not seem like much, but the penalties are adjusted for inflation and currently range from $11,665 to $23,331. Additionally, penalties can be applied for each act, so a contractor that mischarges on a weekly invoice for two years before being reported, may be facing 100 penalties for each of the 100 invoices with incorrect pricing.
The tripling of the amount of the fraud (also known as treble damages) can create large recoveries for the government. A contractor that mischarges by $1 million can face $3 million in penalties, before factoring in the individual penalties for each act. A contractor that stole $1 million from the government over 2 years of weekly invoices could therefore be subject to a penalty up to $5 million in total. With a maximum award of up to 30% of the penalty, the whistleblower who reported the crime could recover more in awards than the government contractor originally stole through fraud.
Penalties by year, adjusting for inflation:
- September 1999, or earlier: $5,000 to $10,000.
- October 1999 through July 2016 $5,500 to $11,000.
- August 2016 through January 2017: $10,781 to $21,563.
- February 2017 through January 2018: $10,957 to $21,916.
- February 2018 through June 19, 2020: $11,181 to $22,363.
- June 20, 2020 or thereafter: $11,665 to $23,331.
False Claim Act Rewards
The False Claims Act can award large financial rewards to those who report government fraud, abuse or waste. A qui tam lawsuit brought under the False Claims Act allows the whistleblower to recover up to 15 to 30 percent of a recovery. The upper limit of 30 percent occurs if the whistleblower, or relator in a qui tam case, proceeds without the government joining as a plaintiff. If the government joins the lawsuit, the maximum reward is 25 percent.
- Government Joins Lawsuit: 15% to 25%
- Government Does Not Join Lawsuit: 15% to 30%
This 15-25% or 15-30% includes not just the triple (treble) damages, but also the total of all penalties which can be up to $23,331 for each violation. Awards under the False Claims Act can be substantial. The largest award to a whistleblower to date has been $250 million dollars.
To determine the size of the whistleblower reward, the actions of the whistleblower in assisting the case are reviewed. Actions that can affect the award include:
- Information quality: The more information supplied, and the more critical it was to prove the claims, the better the award.
- Lawsuit assistance: A whistleblower whose efforts include not just reporting the crime, but assisting in the litigation to enforce the penalty will receive a larger award. This includes work by both the whistleblower and his/her personal attorney(s).
- Complicity: While being a part of the misconduct will not stop a whistleblower from receiving an award, whistleblowers who were not part of the scheme may receive larger awards than those who assisted in the fraud.
The fact that you can receive a whistleblower reward even if you took part in the scheme is important. The government wants anyone who knows of an illegal act costing the taxpayers money through fraud or waste, to report their knowledge of the crime. Sometimes only those who were parties to an illegal scheme are aware of what misconduct is occurring. Whistleblowing can occur from the members of the scheme itself, and those whistleblowers can recover an award. If you are aware that your job requires you to commit, assist in, or ignore an ongoing fraud, you should seek a legal consult immediately regarding how to report the crime and put a stop to the criminal activity.
Read more about: False Claims Act rewards.
False Claims Act Cases
A False Claim Act case arises when:
- Defendant knowingly presents a false or fraudulent claim for payment;
- Defendant knowingly makes, uses, or causes to be made or used a false record, statement or claim;
- Defendant conspires with others to commit a violation; or
- Defendant knowingly makes, uses or causes to be made a false record, statement or claim to avoid payment to the government
The False Claim Acts covers acts of procurement fraud or product substitution, but it can also include claims such as a false statement intended to avoid paying the government a fee or cost for services or goods. Any action that costs the government money, whether it be overcharging for a good, charging for goods or services not delivered, substituting in an inferior good than what was contracted for, or avoiding a payment to the government is covered by the False Claims Act.
Schneider Wallace represents whistleblowers for False Claim Act Qui Tam lawsuits. Schedule a consult with our whistleblower law firm for a free and private legal consultation. Contact us at 1-800-689-0024 or firstname.lastname@example.org.
State False Claim Act Laws
In addition to the federal False Claims Act, most states have passed their own False Claim Acts. These laws create protections for whistleblowers from retaliation, provide confidentiality and anonymity to those who report illegal schemes, and establish reward programs.
States with Fraud Procurement Laws:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- Rhode Island
California: California’s False Claim Act (CFCA) allows for qui tam lawsuits similar to the federal False Claims Act. The CFCA allows both whistleblower rewards for reporting misconduct against the State of California, and whistleblower protections for those who report wrongdoing.
California passed their False Claims Act in 1987, following the new amendments in the federal False Claims Act. Like its federal counterpart, CFCA penalizes each instance of misconduct up to $11,000 and allows for individual whistleblowers and their attorneys to file qui tam lawsuits. Whistleblower rewards can be up to 50 percent of the final recovery.
Read more about: California False Claim Qui Tam Lawsuits.
Texas: Texas passed the Texas Medicaid Fraud Prevention Law to report healthcare fraud. It is estimated that five percent of healthcare spending by government agencies is for fraudulent claims. Qui tam lawsuits can proceed against parties by whistleblowers presenting evidence of false claims. Whistleblowers can receive up to 30 percent of the recovery as a reward.
Texas maintains a program for reporting and investigating misuse of statement funds. These can include misuse by colleges, universities, state grants, and federal stimulus funds and hurricane recovery funds.
Read more about: Texas False Claim Qui Tam Lawsuits.
New York: New York’s False Claims Act provides for qui tam lawsuits by anyone aware of a wrongdoing against the State government, if that violation occurs by a company or person with $1 million income and alleges damages against the state exceed $350,000. New York’s laws include the ability to file a qui tam claim for both the state and on behalf of local cities, school districts, or other local government entity. Whistleblower rewards can be up to 30 percent of the recovery.
Read more about: New York False Claim Qui Tam Lawsuits.
North Carolina: North Carolina’s False Claims Act allows for qui tam lawsuits by those who have knowledge of an unreported misconduct, similar to the federal False Claims Act. Whistleblower rewards can be up to 30 percent of the recovery.
Read more about: North Carolina False Claim Qui Tam Lawsuits.
False Claims Act Lawyer
Schneider Wallace represents whistleblowers, whether the violation is against the federal government, state government, or a local government. Schedule a consult with our whistleblower law firm for a free and private legal consultation.
To speak with a lawyer with years of experience handling both government whistleblower and contractor fraud cases, contact us at 1-800-689-0024 or email@example.com.