The False Claims Act allows whistleblowers to earn big rewards when they help the federal government fight fraud.

In the United States, qui tam litigation was first authorized under the False Claims Act (FCA), which was signed into law in 1863 by President Lincoln. The purpose of the FCA was to provide a means for the government to punish contractors who had defrauded the U.S. military during the Civil War, to recover its losses from them, and to discourage others from defrauding the government in the future.

The FCA has been significantly revised since 1863, but it still operates in basically the same way. Actions that are considered to be fraudulent under the Act now include submitting materially false claims to the government for payment, making false records and statements in relation to a claim, making false certifications, and conspiring to submit a false claim, among others. These fraudulent acts occur in countless contexts, most notably in the healthcare and government contracting industries where claims are frequently submitted directly to the government for payment.

Generally, the FCA provides liability for:

  • Knowingly presenting a false or fraudulent claim for payment or approval
  • Knowingly making or using a false record or statement to make a fraudulent claim
  • Possessing money to be used by the government and knowingly delivering less than the entire amount to the government
  • Making or delivering a receipt without completely knowing that the information on it is true, with the intent to defraud the government
  • Knowingly buying or receiving public property from a government employee who is not authorized to sell it
  • Knowingly making or using a false record or statement to avoid or decrease an obligation to pay the Government
  • Conspiring to do any of the above

A relator with evidence of fraud against the government who sues and recovers any amount will be eligible for between 15% and 30% of the total recovery, whether through a jury verdict at trial or a negotiated settlement. After presenting government attorneys with evidence of fraud, the Department of Justice decides whether or not to take over the litigation itself (known as “intervening”) or to allow the relator to continue the lawsuit on his or her own. In cases where the government intervenes, the relator may receive 15–25% of the recovery, and in cases where the government decides not to intervene, the relator’s share will be 25–30%.

The U.S. government takes fraud very seriously. The fines and penalties established by the False Claims Act can be extremely large. Any damages to the government caused by fraud will be tripled. On top of this, the Act imposes fines of $5,000 to $10,000 for every act of fraud.

Common types of fraud covered by the FCA include:

  • Charging for goods or services not provided
  • Quoting artificially inflated prices to the government during negotiations
  • Falsely certifying information to the government to receive payment for goods or services not allowed
  • Falsely identifying a non-authorized service provider as authorized
  • Billing the government for goods or services already paid for
  • “Unbundling” services to gain higher prices for each individual service
  • Billing the government for inferior goods or services
  • Billing for unnecessary medical procedures, tests and equipment
  • Marketing pharmaceuticals for uses not approved by the FDA

In addition to providing the successful relator with a large percentage of the damages and penalties recovered in a successful qui tam lawsuit, the Act also provides relators with protections for stepping forward with information. Qui tam relators’ identities are protected for a period of time because cases are filed under seal. When his or her identity is finally disclosed, the Act provides strong protections against firing, demotion, or harassment by employers in retaliation for blowing the whistle.


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