What Is The False Claims Act (FCA)?

The False Claims Act (FCA) is a federal statute that was enacted to address widespread fraud and is intended to stop certain fraudulent claims committed against the government. At the time it was created, these included:

• Conspiracy
• Embezzlement
• False claims, false vouchers and forged signatures
• Theft

The FCA has been amended several times since it was passed in 1863.

Amendments to the False Claims Act

The FCA has been strengthened through several amendments, including major changes in 1986 that increased available damages. Since then, whistleblower cases have helped the federal government, as well as many state governments, recover billions of dollars.

Many individual states have enacted their own versions of the federal FCA.

Violations of the False Claims Act

The FCA has been used to reveal and prosecute various violations, including:

• Cyber fraud: Involves failing to report security, data or other breaches, providing faulty cybersecurity services, or misrepresenting compliance with federal standards. The DOJ’s Civil Cyber-Fraud Initiative targets these violations.
• Grant fraud: Includes knowingly charging unrelated costs, double billing, embezzlement, false claims on applications, and misusing funds for personal expenses.
• Healthcare fraud: Includes billing for services not rendered, medically unnecessary procedures, unbundling, poor care, failing to return overpayments, and violating Medicaid and Medicare rules.
• Procurement fraud: Covers misbilling, false testing results, origin misrepresentation, failure to report defects or overpayments, and non-compliance with contract terms.
• Reverse false claims: Involves voiding payments owed to the government, commonly through false customs declarations or undervaluing imports. Many whistleblowers have succeeded in FCA cases by exposing customs and import law violations.

The original FCA included qui tam provisions that let private individuals, known as whistleblowers or relators, sue on the government’s behalf when they have evidence of fraud involving federal funds. To succeed, the whistleblower must show the defendant “knowingly” made or kept a false or fraudulent claim for payment.

Whistleblower awards under the False Claims Act

Whistleblowers who bring successful qui tam claims are entitled to financial awards under the qui tam provisions of the False Claims Act and may be awarded 15% to 30% of the government’s recovery.

This means that whistleblowers can receive significant financial rewards under the FCA, which allows for civil penalties and treble (triple) damages. There is no set cap on awards, as amounts are based on the value and impact of the information provided. Since 1986, whistleblowers have earned approximately $7.7 billion in total awards.

In fiscal year 2024, the U.S. Department of Justice reported the following False Claims Act results:

• Over $2.9 billion recovered through FCA settlements and judgments
• More than $400 million awarded to whistleblowers
• 979 qui tam lawsuits filed, the highest number ever in a single year
• Over $2.4 billion recovered from qui tam cases

Healthcare fraud remained the leading source of recoveries. Other cases involved government contracts, COVID-19 relief fraud, and cybersecurity compliance violations.

Whistleblower protections under the False Claims Act

Provisions under the False Claims Act protect whistleblowers from retaliation by employers. Under the FCA, any employee who is demoted, discriminated against, fired, or harassed because they reported concerns or made a claim may be entitled to the following remedies:

• Compensation (including court costs and attorneys’ fees)
• Double back pay
• Reinstatement

* We represent our clients on a contingency fee basis. This means you will not pay any fees or expenses unless you obtain a recovery. If you receive compensation, our fee will be a percentage of your recovery and will be calculated before any of your claim and lawsuit costs and expenses are deducted. Costs and expenses will be deducted and paid from your recovery.

To file a case under the FCA, a whistleblower must have non-public knowledge of fraud committed against U.S. government programs or contracts. From there, the process generally involves the following steps:

1. Hire a lawyer with experience: The steps to filing a qui tam case are complex. Hiring a qui tam attorney with experience navigating the process is important.
2. Craft and file your sealed complaint: Unlike other types of lawsuits, qui tam cases must be filed under seal in federal district court. Copies of the filed civil complaint are then served on the U.S. Attorney General and the local U.S. Attorney. The case remains confidential (sealed) during the government’s investigation.
3. Wait for the government investigation: After receiving the sealed complaint, the government has 60 days to review the claim and decide whether to intervene, or take over, the case. The government may extend the 60-day seal for up to several years while investigating the claim.
4. If the government intervenes: If the government decides to intervene in the qui tam case, the government takes over the litigation. At that time, the qui tam relator and his or her attorney will play a smaller role in the case.
5. If the government declines to intervene: If the government decides not to get involved (declines to intervene), the whistleblower has the option of continuing the case on their own with their attorney.
6. Collect your reward if the case is successful: Whistleblowers receive up to 25% of the amount recovered if the government prosecutes (or intervenes in) the case. If the government declines to intervene and the relator decides to proceed with the action, the whistleblower can collect up to 30% of any judgment or settlement.

According to the DOJ, judgments and settlements obtained under the FCA totaled more than $2.9 billion for fiscal year 2024. Keep in mind that to be eligible for compensation, a whistleblower must be the first to expose the fraud and file the claim.

Motley Rice lawyers have represented numerous whistleblowers in a broad range of cases brought under the False Claims Act. These clients exposed fraudulent practices by:

• Defense procurement contractors
• Financial services companies
• Colleges and universities
• Healthcare providers
• Pharmaceutical companies

Our attorneys work to protect the rights of potential whistleblowers and help them file accurate and thorough complaints by following the proper procedures.

Read more about our whistleblower experience.