FCA/Qui Tam Whistleblower FAQ

The False Claims Act is a federal law and is the government’s primary civil remedy to recover false claims for government funds and property. There are also roughly 30 state and local false claims act laws that similarly allow for recovery of funds for state and local governments. The funds are paid out under government contracts, such as national security, defense or procurement contracts. They also include funds paid out under programs including Medicare, Medicaid, veterans’ benefit programs, federally insured loans and mortgages, transportation and research grants, agricultural support, school lunches and disaster assistance.

Read more about the Qui Tam Whistleblower Program.

Read the False Claims Act.

The False Claims Act includes a qui tam provision enabling whistleblowers to act in a unique and powerful manner to report fraud and help the government recover funds. The whistleblower acts in the interests of the government. If the government decides not to take a whistleblower’s case, the whistleblower may litigate it with counsel. The law sets rewards and protections for whistleblowers. The False Claims Act allows whistleblowers who file claims leading to the recovery of government funds to receive part of any penalty imposed by the court.

Watch Hagens Berman’s Shayne Stevenson, head of whistleblower practice, explain qui tam law for whistleblowers, including how it defines whistleblowers and what kinds of actions qui tam allows.

Any person or entity may file a case under the False Claims Act. The suit must be filed by an attorney and must be filed in federal district court under seal.

Cases brought under the False Claims Act are filed under seal. Often they can be filed as so-called “John Doe” cases initially, so as to protect a whistleblower’s identity. Whistleblower cases are kept under strictly enforced confidentiality during the period of under seal investigation by the Department of Justice and agency investigators. The existence of the case and its details remain confidential for this period of time, often lasting several years. Whistleblower laws protect employees from retaliation as well, ensuring that they cannot be lawfully fired or otherwise retaliated against by an employer merely for blowing the whistle. If a whistleblower’s employer does retaliate, the whistleblower can sue for damages.

Fraud under the False Claims Act includes nearly any form of fraud on the United States government that results in payment to a person or entity that is not entitled lawfully to such payment, or for reimbursement. The following are just a few examples of the types of fraud actionable under the False Claims Act. Find out more information about these areas.

Health Care fraud. Over the past two decades, whistleblower reporting has led to billions of dollars in settlements in Medicare fraud cases, with whistleblowers receiving up to 30 percent of these recoveries as a reward for exposing misuse of government funds. Examples include:

• Upcoding or other improper billing schemes that inflate medical bills by claiming patients require more expensive procedures than actually necessary or for services not needed or provided.
• Off-label marketing of drugs and medical devices causing payment by government health care programs.
• Payments, also known as kickbacks (under the Anti-Kickback Statute) or Stark Law violations, to physicians, physician practices or hospitals from pharmaceutical companies or others in return for drug promotion or purchasing, or other improper referrals for Medicare business.

Pharmaceutical fraud. This area of qui tam fraud can include a wide range of deceitful practices that often depend on whistleblowers for reporting, including:

• Off-label marketing, or the marketing of prescription drugs for purposes or to patients not approved by the Food and Drug Administration.
• Kickbacks.
• Unlawful billing schemes or pricing schemes that artificially raise the price of prescription drugs.

Defense Contractor Fraud. The aerospace industry has many ties to the U.S. government, including the Department of Defense and NASA. Contracts can be massive, but it’s not just millions or billions of dollars on the line—there may also be lives at stake when fraudulent activity in aerospace and other defense industries occur, making whistleblowers even more important. Fraudulent behavior can include:

• Intentional inflation of prices on government contracts or failure to provide “best price."
• Supplying defective parts.
• Unlawful cost shifting.

Information Technology Fraud. With the drastic rise in information technology has come tremendous government expenditure on IT and related contracts, for everything from transferring hardcopy archives to digital formats to securing national servers. The defrauding of the government in this procurement context in any of these transactions is grounds for action, and whistleblowers are encouraged to report any information concerning, among other things:

• Lack of quality control, or the failure to properly test for defects or flaws in security.
• Failure to comply with specifications of a contract.
• Improper invoicing or deceit in bidding or analysis.

Construction Fraud. When fraud occurs in civil engineering or construction contracts awarded by the government, not only are taxpayer funds misused, but the everyday people who rely on the bridges, buildings, roads and other outcomes of such projects can be put in serious jeopardy. This fraud can include:

• Failure on the part of the contractor to meet specifications in a government contract.
• Unauthorized substitution of parts or equipment, such as using cheaper, inferior items when a contract calls for a specific, high-quality part.
• Intentional inflation of prices on government contracts.

Every year billions of dollars of U.S. government funds are paid to businesses and others who file or cause the filing of false and fraudulent claims for payment to the United States government and various state governments. Detection, investigation and prosecution for this fraud are often impossible without the help of whistleblowers.

The False Claims Act allows whistleblowers (even those who are not personally harmed by the fraud they report) to blow the whistle on fraud, on behalf of the federal and state governments. This helps the government recover loss due to fraudulent schemes that illegally defraud billions of taxpayer dollars each year.

When a whistleblower learns that a company has committed or is committing this kind of fraud, often it is by his or her employer. To be a whistleblower under the False Claims Act requires great care and careful planning. Such reporting can have a dramatic impact on a whistleblower’s life, which is why a whistleblower needs to quickly and intelligently discuss his or her information with an experienced whistleblower attorney.

As of 2014, 30 states and the District of Columbia (as well as three cities and Allegheny County, Pennsylvania) have enacted whistleblower laws to incentivize whistleblowers and protect their public programs from fraud via qui tam provisions. Click for a list of those areas and their respective state statutes.

Becoming a whistleblower can be rewarding, both in terms of helping the government to recover funds and hold wrongdoers accountable, and in terms of monetary incentives provided by government agencies.

Under the False Claims Act, whistleblower reward amounts differ based on a variety of factors, including whether or not the government chooses to join the qui tam case. Generally, a whistleblower recovers between 15 and 30 percent of the recovered amount. Some cases have recovered hundreds of millions of dollars for the government, and whistleblowers have been paid hundreds of millions of dollars under the False Claims Act.

Under the False Claims Act, whistleblowers cannot file or litigate their case without an attorney. Our firm, Hagens Berman, is one of the nation’s largest and most successful plaintiff whistleblower firms. We devote substantial resources to develop your case, work with the government to advance your case and, if necessary, will litigate your case to the end.

The False Claims Act protects against retaliation even when your allegations and information do not ultimately lead to the filing of a False Claims Act fraud lawsuit. Experienced legal counsel will advise a whistleblower on the ramifications of taking action to disclose fraud.

The effects of this law have been tremendous. In 2013, the Justice Department recovered $3.8 billion in settlements and judgments under the False Claim Act. The largest portion of this amount, $2.9 billion, related to lawsuits filed under the qui tam provisions of the False Claim Act by private whistleblowers. The brave individuals who reported the fraud were rewarded with a payout of $345 million in 2013 alone.

If you have other questions about whistleblower laws, protections or a process specific to your case, contact Hagens Berman’s whistleblower practice or whistleblower attorney Shayne Stevenson, head of whistleblower practice, by emailing [email protected] or calling 206-623-7292.