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How the False Claims Act Works

The False Claims Act

The False Claims Act provides individuals with knowledge of fraud committed against the government with a chance to bring a civil lawsuit, called a qui tam claim, against the fraudulent party in an attempt to recover the funds owed to the government. So that informants have an incentive to come forward, the informant, or “relator,” is entitled to receive a percentage of all recovered funds.

Qui Tam Cases Are Filed Under Seal

To initiate a qui tam claim, the relator files a Complaint in a United States Federal District Court. The lawsuit is filed under seal, which means it is not disclosed to anyone except the government prosecutors and the Court. Even the defendants charged with committing fraud are not aware of the lawsuit at this time.

By filing the lawsuit under seal, the government has an opportunity to investigate the fraud allegations without the defendant becoming aware of the investigation. The seal is left in place for 60 days; however, it is often extended by the Court for as long as two years to provide the government with ample time to conduct its investigation.

Disclosure Statement

When filing the Complaint, the relator must also provide the government with a Disclosure Statement. Both the local United States Attorney’s Office and the Department of Justice in Washington, D.C. will receive this Disclosure Statement; however, it is not filed with the Court. The preparation of the Disclosure Statement is one of the most critical aspects of a qui tam claim, and it has a significant impact on the likelihood of a successful outcome.

In the Disclosure Statement, the relator sets forth the evidence in support of his or her allegations against the defendant. This document includes evidence and witnesses and should be a roadmap for the government when conducting its fraud investigation.

Investigation

During the government’s investigation into the allegations, the relator and his or her counsel must be prepared to cooperate with government agents and prosecutors. This participation may include:

• Reviewing documents
• Assisting in subpoena preparation
• Assisting in preparing affidavits for search warrants
• Providing information necessary to identify and locate relevant   witnesses

Once the investigation is complete, the government will decide whether it will join, or “intervene,” in the case. If the government is interested in the case and believes it has merit, it will likely join the case. At this time, the defendants are served with the lawsuit and notified of its existence.

If the government decides not to join in the case, the relator may still move forward alone. However, the chances of a successful outcome are much greater when the government participates.

Whistleblower Damages and Rewards

If the defendants are found guilty of fraud, they must pay three (3) times the government’s losses plus $5,500 to $11,000 in penalties for each false claim. When negotiating a settlement prior to trial, the government will often agree to forego the civil penalties and settle the case for two to three times the amount of the government’s losses. The defendant is also responsible for paying the fees and case-related expenses of the whistleblower’s attorney.

The False Claims Act stipulates that the whistleblower is entitled to receive 15% to 30% of the damages recovered by the government. This percentage will vary depending on a variety of factors.

If you have knowledge of a fraud or false claim against the government, please contact a qui tam lawyer today. The CQH Firm will consult with you about your case, free of obligation. All communications are confidential and protected by the attorney-client privilege. The CQH Firm will also consult with attorneys who require assistance on a case in the Philadelphia, New Jersey or New York areas, or elsewhere.

Call 1-(844) 677-4276 for a free legal consultation.

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