The 150+ year-old False Claims Act (FCA) is the foundation of the whistleblower reward system and is the government’s most effective anti-fraud law, recovering billions of dollars each year lost to fraudulent billing and overpayments made to government contractors.
The success and effectiveness of the law is accomplished by citizen enforcement — allowing whistleblowers (called Relators) to confidentially share information about fraud being committed against the government, file what is called a qui tam lawsuit on behalf of the United States, and share in any potential recovery as a reward (between 15%-30%). The involvement of whistleblowers is vital in discovering and putting an end to the rampant fraud that permeates government contracts, particularly in the areas of healthcare, Medicaid/Medicare, and defense contracting. Detecting and prosecuting the fraud would be extremely difficult, if not impossible, without them.
False Claims Act and Qui Tam Provision
A major component of the False Claims Act (FCA) is the “qui tam” (pronounced “kee tam”) provision allowing any person with provable knowledge of fraud against the U.S. government (be they a current/former employee, contractor, or industry expert), known as a “relator” or the whistleblower, to file a complaint, via an attorney, in federal district court on behalf of the government. The complaint remains “under seal”, meaning it’s held under the legal protection of secrecy whereby only the Department of Justice, including the local US Attorney and assigned district court judge, is aware of the complaint and evidence. While it is under seal (a period that lasts at least 60 days, but oftentimes much longer, many times a year or more), the relator’s identity is protected while the government investigates the allegations of fraud by interviewing the relator and other witnesses, subpoenas documents and consults with agency experts.
After a thorough review of evidence by the Department of Justice, the government determines to either:
- Intervene, meaning the U.S. Government will pursue the prosecution of the case. In doing so, if the lawsuit is successful, the relator is financially rewarded with a portion (typically 15 to 25 percent) of damages recovered by the government.
- Decline to intervene, meaning the U.S. Government passes on prosecuting the case. However, using the qui tam provision, the whistleblower may independently continue the lawsuit to prosecute the fraud on behalf of the government. In this situation, if the lawsuit is successful, the whistleblower can be rewarded up to 30 percent of any damages recovered.
The potential for financial reward is the encouragement that motivates those who know about fraud to blow the whistle and report the wrongdoing. Without the involvement of whistleblowers recognizing and reporting the fraud in these areas, detection of the fraud by the government would be nearly impossible.