The False Claims Act is a federal law that permits a private individual that has either past or present awareness of fraud that was committed against the federal government to bring a lawsuit for the government. The False Claims Act, 31 U.S.C. § 3729 et seq. is the legislation that allows the whistleblower to file a lawsuit against a defendant that knowingly caused the false or fraudulent claims to the United States. The whistleblower does not need to have been personally harmed by the defendants conduct. For the whistleblower to file a lawsuit the information they hold must not be public knowledge, with the exception of the citizen filing the lawsuit known as the original source.
This False Claims Act allows individuals to file lawsuits against federal contactors, when they have knowledge of federal contractor’s fraud against the government and is commonly known as whistle blowing. When an individual files under the False Claims Act the can receive a portion of any recovered damages. This can usually be between 15 and 25 percent of the compensation recovered. These type of claims are normally filed by someone with insider knowledge of false claims that involve health care, the military or government programs involving expenditures.
The one stipulation is that the whistleblower must have legal representation; they cannot bring a qui tam action when filing a lawsuit under the False Claims Act. The qui tam actions are a lawsuit filed under a seal that will prohibit the defendant from disclosing any of the details about the case to shareholders or anyone else. Discovery of any of the facts in the case can be taken by the government, without disclosure of the plaintiff that brought the legal claim.
The term whistleblower can mean several things under the law, it can mean an individual that reveals misconduct by an employer, a business or another entity. The individual that is the whistleblower can file a qui tam legal suit on behalf of the government. They are able to then recover a percentage of the compensation awarded as their reward.
One of the examples of a qui tam case was that was reported according to the Department of Justice that settled for $27.5 million, was a hospital group that was based in McAllen, Texas that violated the False Claims Act. This involved doctors being paid illegal compensation to entice them to refer patients to hospitals within the group. This violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between the ears of 1999 and 2006.