False Claims Act/Whistleblower Claims

The False Claims Act, 31 U.S.C. §§ 3729-3733, is a federal law that contains a whistleblower provision (also known as a Qui Tam provision) that allows a person (also known as a relator) to file a lawsuit against government contractors or those who receive or use government funds if that person believes the United States government is being defrauded. The government can choose to get involved in a qui tam case, continuing to work with the relator and the relator’s counsel in litigation. The law provides for treble (triple) damages and penalties. In addition, a person who files a false claims act complaint may be awarded a portion of the funds recovered, typically between 15 and 25 percent (and up to 30 percent if the government does not choose to participate in the case), for the risk and effort of filing a qui tam case. Suits under the Act usually must be filed within six years after the date on which the violation was committed although under certain circumstances, a claim may be brought within 10 years after the violation.

The False Claims Act allows for employees, former employees, and competitors or subcontractors of the defrauding companies to file an action. However, anyone with direct and independent knowledge not previously disclosed to the public regarding a government payment made based upon false claims can file a qui tam lawsuit. The False Claims Act was recently amended (in May 2009) by the Fraud Enforcement and Recovery Act of 2009 (“FERA”), which strengthened the qui tam law in several important ways:

• Congress overruled prior Supreme Court precedent that had required specific intent by subcontractors submitting false claims that were paid by the government—under the amended law, the false information must only be “material” to the government’s decision to pay a false claim, regardless of any specific intent to be paid by the government.
• Claims for government funds made to third parties, rather than directly to the government, now also may support a qui tam claim.
• Liability is now extended to situations where the government does not have title to the money subject to a false claim or is merely administering funds.
• The new Act expands “reverse false claim” liability for either concealing retention of an overpayment or avoiding payment to the government.
• The government has broader authority to seek discovery under civil investigative demands (“CIDs”) and can now share more of this information with relators.
• For purposes of the statute of limitations, a government qui tam action will “relate back” to the date of the relator’s complaint.

Examples of qui tam claims are:

• Submission of false cost, billing, or pricing data
• Excessive markups of or overcharging for products or services
• False claims for goods or services that were not provided
• False certification of compliance with laws, regulations, or contract terms
• Provision of inferior services or products
• Submitting false applications for government loans or grants
• Fraudulently seeking to obtain a government contract
• Conspiring with others to obtain false claim payment or secure a “reverse false claim”

The Troubled Asset Recovery Program (“TARP”) and the Capital Purchase Program (“CPP”) are two recent federal stimulus programs that are susceptible to waste, fraud, and abuse. Whistleblowers have been encouraged by federal lawmakers to play an active part in ensuring that taxpayer dollars are used efficiently and effectively in such bailout and stimulus programs.

If a company or employer retaliates against a person (whether employee, contractor, or agent) who files a false claims act complaint by, for example, discharging, demoting, suspending, harassing, threatening or otherwise discriminating against the person and affecting the terms and conditions of employment, the False Claims Act creates a federal cause of action that provides for double the amount of backpay plus interest, in addition to reinstatement, compensation for special damages, litigation costs, and attorney fees. Statutes of limitations for retaliation claims may vary according to state wrongful discharge law.

The American Recovery and Reinvestment Act of 2009 (McCaskill Amendment) expanded protection for whistleblowers against employer retaliation from fraud to financial mismanagement or waste of federal stimulus funding. This rule applies to any private contractor as well as local, state and federal contractors who provide services paid for with stimulus money.

Why Keller Rohrback?

For over 85 years, Keller Rohrback has successfully represented business and consumer clients against America’s top corporations. Our Complex Litigation Group is proud to offer its expertise in a wide variety of areas including: antitrust, consumer protection, employment and benefits, excessive fees in the investment industry, product liability, securities fraud, whistleblower, and disputes involving widespread personal injury to clients nationwide.

Our nationally-renowned practice group has a well-established track record of fighting for Americans who have suffered when wrongdoers prioritize their bottom lines above following the law. Its trial lawyers have obtained judgments and settlements on behalf of clients in excess of seven billion dollars.