False Claims Act

The False Claims Act is found at Title 31, United States Code, Sections 3729-3733. It was originally enacted in 1863 and was intended at the time to address “massive” and “rampant” fraud against the Government arising from Civil War defense contracts and transactions. The False Claims Act is sometimes called the “Lincoln Law” because it was signed into law by President Abraham Lincoln. Due to social, historical and economic changes, the frequency in which the Act has been invoked has risen and fallen over time, and the kinds of commercial activities to which it has been applied have varied, as well. From its inception until the 1990s, the False Claims Act was used mainly in defense contracting. Since then, the majority of cases have been in health care. But the False Claims Act can cover any type of fraud against the Government (other than tax fraud; there is a separate law for that). Senator Chuck Grassley (R-Iowa), former Chairman of the Senate Finance Committee, and sponsor of the 1986 Amendment and subsequent amendments to the Act, has called the False Claims Act “the most powerful tool” in the Government’s arsenal for fighting fraud against the American taxpayers. The U.S Treasury had recovered $35 billion under the Act since the 1986 amendments.

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The False Claims Act is designed so that either the Government or a private party (known as a relator) or both jointly, may pursue civil actions on behalf of the United States for violations of the Act’s liability provisions. In a small number of cases the Government brings a False Claims Act lawsuit on its own. More often, the relator starts the case and the Government joins it so they end up being co-plaintiffs in the lawsuit. Occasionally, the Government declines to pursue the matter in whole or in part and the relator still goes forward on those “non-intervened” claims on his or her own. When a relator starts the False Claims Act suit, it is known as a “qui tam” action, and the relator gets to share in the ultimate recovery as an incentive for coming forward with his or her information. The typical range for the relator’s share when the Government intervenes in the case is between 15% and 25%. When the Government does not intervene it is between 25% and 30%. In a small number of cases the percentages can go down, but for most successful cases they are in the listed ranges.


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A lot of people wonder why so many of the reported qui tam whistleblower cases involve fraud against the Medicare, Medicaid and other government healthcare insurance programs. Not wanting to sound cynical, but it’s similar to what Willie Sutton answered when asked why he robbed banks (“Because that’s where the money is.”), explains Healthcare Fraud Attorney McInnis. Healthcare is one of the biggest categories of government expenditures, so it’s only natural that it would be subject to large amounts of program fraud. While healthcare false claims schemes may take many forms (billing for services never rendered, upcoding diagnoses and procedures, filing duplicate claims, failing to comply with CMS regulations, and so on) and occur at different types of healthcare providers (hospitals, doctor practice groups, pharmaceutical companies and medical device manufacturers), the one thing they all have in common is that some person or some organization submits an invoice or other type of claim to the Government asking to get paid for providing a service or product when the claimant (or people involved in the transaction) knows the claimant is not entitled to receive the requested amount. Thus, in order to get paid from the government healthcare programs, someone has to misrepresent, lie about or cover up important facts which render the claims for reimbursement as false or fraudulent. Filing a qui tam whistleblower suit under the federal or states false claims act is one way to alert the government about such false and fraudulent healthcare billing activity, and in many cases, to help recover money on behalf of the American taxpayers

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