August 26, 2016 - Posts

The Penalties for Fraud Against the United States are About to Get Much Steeper

Under the federal False Claims Act (FCA), the government is entitled to collect civil penalties against any Defendant who submits false claims for payment—over and above the actual damages that the government has suffered.  Since 1996, the minimum penalty has been $5,500 per false claim, and the maximum has been $11,000. However, starting on August 1, 2016, those penalties will be jumping to a minimum of $10,781 and a maximum of $21,563.

Stiff civil penalties are an important part of the government’s enforcement mechanism under the FCA, particularly in those cases where the government’s actual money damages have been small or difficult to quantify. Accordingly, these increased penalties will help to reinforce the message that the United States is serious about fighting fraud and that those who defraud the government should expect harsh consequences when they ultimately get caught.

The False Claims Act’s “First-to-File” Rule: Why Whistleblowers Should Act Quickly When They Learn of Fraud on the Government

The United States Government loses tens of billions of dollars annually to Medicare and Medicaid fraud as well as fraud on other government programs. Each year, however, the Government recovers billions of these stolen dollars when private citizens courageously reveal fraudulent schemes to the Government. In 2015 alone, the Government paid such whistleblowers nearly $600 million for their pivotal role in uncovering fraud by health care companies, defense contractors, and others who do business with the government. You can learn more from the U.S. Department of Health & Human Services’ annual Health Care Fraud & Abuse Control Program Report.

Successful whistleblowers reveal fraud to the Government under the qui tam provision of the federal False Claims Act (FCA). Individuals who have knowledge of fraud on the Government can expose it by filing a qui tam action. If that action leads to a recovery of the fraudulent proceeds by the government, then they are entitled to share between 15-30% of the total recovery. These whistleblowers—called “relators” under the FCA—are often employees who learn that their employers are systematically defrauding the Government. 

Although the qui tam provision of the FCA allows relators to be paid when the Government recovers defrauded funds, potential relators should know that a provision of the FCA—known as the “first-to-file” rule—ensures that only the first relator who reveals a fraudulent scheme to the Government will be paid a portion of the Government’s recovery. Therefore, if more than one relator reveals the same fraudulent scheme to the Government, only the first relator who revealed the fraud will be paid. In short, successful whistleblowers quickly realize that time is of the essence.

Have you learned about a scheme to defraud the Government?  Be the first relator.

As a result of the FCA’s first-to-file provision, any individual who learns of a scheme to defraud Medicare, Medicaid, or any other Government program should immediately seek the advice of a lawyer who regularly represents relators. If a relator instead delays, the relator may forever lose the chance to be compensated for bringing fraud on the Government to light. Being a whistleblower isn’t easy. The law is complex, and there are often significant personal consequences to exposing fraud, waste and abuse. As a result, if you have knowledge of fraud, then you should consult with a lawyer who has expertise in representing whistleblowers, and you should do it sooner rather than later.

To learn more about our Whistleblower and Qui Tam practice, click here. Our firm is located in Nashville, Tennessee but we represent whistleblowers all around the country. All consultations are free and strictly confidential.