The False Claims Act

The False Claims Act is a federal law that has been in existence since the Civil War. It allows private citizens to sue on behalf of the government. If they are successful and the government is able to recover money as a result, the whistleblower is able to collect 30 percent of the amount that the government recovers. Under the False Claims Act, defendants who have committed fraud on the government may be assessed triple damages along with per-violation penalties of up to $11,000.

Why the government encourages these lawsuits

The Department of Justice has stated that qui tam lawsuits are among the most powerful tools the government has at its disposal for uncovering fraud and recouping losses that have resulted. The act was amended in 1986. Since that time, the federal government has been able to recover $38.9 billion from entities who have committed fraud under the act. Of that amount, $27.2 billion was recovered in cases that were filed by whistleblowers. Prosecuting a quit tam lawsuit costs far less than the government recovers from doing so. On average, the government recovers $20 for each dollar it spends on investigating fraud.

In 2013, $3.8 billion was recovered by the government, and $2.9 billion was recovered in cases that were filed by whistleblowers. Whistleblowers were awarded $388 million, an amount that doesn’t include recoveries and awards from state whistleblower laws or Medicaid fraud.

A qui tam lawsuit is a very important tool to help prevent fraud that is committed against the government. People who believe that they have information about a company committing fraud against the government might want to schedule a consultation with the employment law attorneys at Swartz Swidler for advice.