What Is the False Claims Act? A Guide for Employees and Whistleblowers

Potential fraud in the workplace can put employees and employers in a harrowing position, especially if the government is the target of the fraud. An employee may want to report what they have seen, but they might also worry about facing retaliation. And employers accused of misconduct may want to know what comes next or how to protect themselves.

The federal False Claims Act (FCA) creates a legal framework for addressing these concerns. It allows the government to pursue certain forms of fraud and gives private individuals a way to participate in claims. This law is complex and comes with significant penalties and substantial rewards, so seeking the help of an experienced attorney can be vital to protecting your interests.

At Smithey Law Group LLC, our award-winning employment attorneys represent employees and employers in all kinds of workplace matters. If you have questions about your rights and obligations under the FCA, we can give you answers.

What Is the False Claims Act?

The False Claims Act (FCA) is a federal civil law that imposes liability for certain knowing false or fraudulent claims and related misconduct involving the federal government. Defendants who are liable may owe treble damages and penalties. A private party who reports the fraud and initiates the FCA lawsuit may also be entitled to a percentage of the government’s recovery.

There are several ways to violate the FCA:

Presenting a false claim for government payment or approval,
Buying public property or receiving it as a pledge from a government employee who may not lawfully sell or pledge the property,
Delivering a receipt regarding property to be used by the government without fully knowing if the information in the receipt is true,
Using a false record or making a statement that is material to a false claim,
Delivering less than all required property that should be delivered to the government,
Engaging in actions to conceal or avoid an obligation to pay or transmit property to the government, and
Conspiring to commit any of the above-listed violations.

To violate the FCA, the actions above must be performed knowingly. “Knowingly” under this law means:

Actual knowledge,
Deliberate ignorance of the truth or falsity of the information, or
Reckless disregard for the truth or falsity of the information.

Whether someone accused of a violation acted knowingly requires a nuanced and highly fact-specific analysis. This analysis is best handled by a knowledgeable attorney.

Common Examples of False Claims Act Violations

FCA issues can arise in many industries because businesses, healthcare organizations, contractors, and other entities may receive federal funds or submit claims to federal programs.

Depending on the facts, examples of violations may include:

Billing the federal government for goods that were never delivered;

Submitting a Medicare claim that includes services the provider did not perform;
Charging the government for materials that were more expensive than materials actually used under a federal construction contract; and
Concealing violations of security protocols required under defense contracts.

The details matter. A billing error, contractual dispute, or ordinary workplace disagreement does not automatically amount to an FCA violation. Whether conduct violates the FCA depends on the specific statutory provision involved and facts such as what was represented, whether the conduct was knowing, and, where required by the statute, whether the false statement or conduct was material.

Who Can Bring a False Claims Act Lawsuit?

The attorney general may investigate suspected violations and initiate civil FCA lawsuits. The law also allows a private person to bring what is called a qui tam action on behalf of the federal government. The individual who starts a qui tam case is a whistleblower and is commonly called the “relator.”

A qui tam complaint is filed in federal court under seal. The complaint is not served on the defendant until the seal is lifted. The government has at least 60 days while the case is under seal to investigate and decide whether to intervene. If the government intervenes, it takes primary responsibility for the action while the relator generally remains a party. If the government doesn’t intervene, the relator can continue the case on their own.

Can Whistleblowers Receive a Financial Reward?

The FCA gives successful qui tam relators an opportunity to receive part of the government’s recovery. When the government proceeds with the action, a qualifying relator generally may receive between 15% and 25% of the proceeds. And if the government declines to proceed and the relator successfully pursues or settles the claim, the relator may receive 25% to 30%. Other rules can reduce an award in certain circumstances.

Reporting fraud on the government is important work that can come with great rewards, but relators must be careful. A relator may subject themself to harmful retaliation. Fortunately, the FCA offers protections against whistleblower retaliation.

How Does the False Claims Act Protect Employees Against Retaliation?

Employees often ask: What is the False Claims Act going to do for me if my employer learns that I reported suspected fraud? The answer is that the FCA contains an important anti-retaliation provision.

It helps protect employees, contractors, and agents from being:

Discharged,
Demoted,
Suspended,
Threatened,
Harassed, or
Otherwise discriminated against.

When retaliation violates the statute, available relief can include:

Reinstatement with the same seniority status,
Two times the amount of back pay,
Interest on back pay,
Compensation for special damages,
Litigation costs, and
Reasonable attorney fees.

These remedies for retaliation are helpful, but a whistleblower should understand all the risks and the best way to report before they file a complaint. We can walk you through the process and help safeguard your interests before you initiate a claim.

How Do You Report Suspected False Claims?

To file a qui tam complaint, you must:

File your complaint under seal,
File your complaint in camera (in private), and
Serve the federal government with a written disclosure that contains substantially all material information that you have.

These are strict procedural standards that can make or break a complaint. That’s why it’s critical to speak to an experienced attorney about reporting. An attorney can evaluate whether you have sufficient information for a claim and help you properly file your complaint.

How Is the FCA Different from Other Whistleblower Laws?

Not every whistleblower claim falls under the False Claims Act. And while many other whistleblower laws have anti-retaliation provisions, their procedures and rewards are different.

Other whistleblower laws may protect reports involving:

Workplace safety,
Securities,
Environmental matters,
Taxes, or
Other regulated conduct.

Other whistleblower laws have different procedures and remedies. Depending on the statute, a whistleblower may report misconduct to a government agency, bring an administrative claim, file a private lawsuit, or pursue more than one form of relief. Some statutes provide financial awards, but many do not. The applicable law depends on the type of misconduct, the government program or industry involved, and the employee’s relationship to the alleged wrongdoing.

Determining which statute applies to your whistleblower case can be just as important as deciding whether to report suspected wrongdoing. Smithey Law can help guide you in the right direction.

Let Us Protect You

Smithey Law Group’s award-winning attorneys are recognized leaders in the employment-law community. Our attorneys have earned professional recognition while contributing to employment-law education, leadership, and advocacy. If you are an employee with concerns about suspected fraud or are an employer responding to a whistleblower complaint, contact us by phone or online to discuss your next steps.

Legal References Used to Inform This Page

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