The Federal False Claims Act
Under the Federal False Claims Act, a private individual or “whistleblower” with knowledge of past or present fraud perpetrated against the federal government (usually by an employer) can sue on behalf of the government to recover stiff civil penalties and damages.
The person bringing the suit is known as the “Relator.” If the suit is successful, it not only stops the dishonest conduct, but it also deters similar conduct by others in the future. Additionally, in certain cases the government may decide to step in and assist in the litigation. When successful, this may result in the Relator receiving a substantial share of the government’s recovery – as much as 25 percent of the total. And if the government decides not to intervene, the Relator may conduct the action unilaterally (with the help of experienced counsel, of course). This means that he or she would be entitled to 25 to 30 percent of the amount of any judgment or settlement reached.
Because government agencies are commonly overtaxed, sometimes the fraud goes unnoticed. When it is discovered, law enforcement and prosecutors may not have the manpower or resources to adequately and timely pursue legal action. To assist in that effort, there are specific kinds of lawsuits known as Qui Tam actions that enable private citizens to bring claims for damages and receive a percentage of any recovered funds or penalties.
There are various kinds of Qui Tam lawsuits that have been successfully litigated:
- Health care fraud involving overbilling, risk adjustment, and unperformed services
- Defense contractor fraud originating from cross charging, product substitution, and misallocation of costs
- Municipal fraud arising from construction projects, financing transactions, and yield burning
We understand that many honest individuals may have reservations about reporting fraud for fear of losing their jobs. But rest assured that regardless of government intervention, the Federal False Claims Act shields the Relator from retaliation. It is illegal for an employer to harass, demote, withhold wages, fire, or retaliate in any way against a Relator who has chosen to speak to report suspected fraud. However, before you report fraud within your company, you should consult an attorney to ensure that you are fully protected.
Employers who have engaged in the following conduct may be acting in violation of the Federal False Claims Act:
- Submitting false statements in a government loan application
- Medicaid or Medicare Fraud
- Over-billing the government
- Bid Fixing
- Stealing from employee pension funds
- Insurance Fraud
- Under-reporting corporate income
In addition, tax fraud may be reportable as well. At least $400 billion dollars never makes its way into the U.S. Treasury each year because of tax evasion and tax fraud.
Tax fraud is often deeply hidden in illegal tax shelters and intricate, ever-changing schemes – offshore accounts, false tax minimization and money transfer manipulation – that can be difficult and time consuming for the IRS to trace. In 2010, the IRS reported spending over $13 billion to hunt down tax criminals. Inside information from whistleblowers can be incredibly helpful. The IRS estimates that a tax fraud investigation using accurate whistleblower information is 60% less expensive than an investigation without inside information. For this reason, the IRS is eager to work with whistleblowers seeking to expose tax cheats. And a successful investigation can earn the whistleblower as much as 30 % of the IRS’s recovery.
False Claim and Qui Tam laws are complicated. For that reason, it is wise to have a law firm and attorneys experienced in these matters on your side.
Sommers Schwartz is that law firm. We represent courageous people who blow the whistle on those that commit fraud against our government agencies, fraud that costs taxpayers substantial sums each year.
If you are in possession of first-hand knowledge of fraudulent bills, wrongfully obtained funds, or other illegal financial activity that results in a state or federal government paying money to someone or a business for something they never received, you may be eligible to file a false claim case.
Contact a Sommers Schwartz attorney today to confidentially discuss your case and learn how we can help.