False Claims Act

People who "blow the whistle" on financial fraud against the federal government are entitled to a "piece of the action" -- and in some cases this can result in substantial financial rewards.

Cheating the government is against the law, and fraud against the government is rampant. The federal government spends money on everything from construction to research, social programs to defense contracts. Almost any "knowing" or "reckless" misapplication or misuse of federal money can be illegal. When someone obtains federal money and does not provide the product or service promised, that can be a fraud. When someone obtains federal money for one purpose and uses it for another, that can be a fraud.

When a fraud is exposed, the government is entitled under the law to recover up to three times the amount of money involved, plus fines against the perpetrator. However, the government spends billions of dollars per year on tens of thousands of projects, and opportunities for fraud are virtually limitless. Therefore, the government relies on citizens to bring financial "flim flams" to its attention which it might otherwise not know about. To encourage citizens to come forward, when an individual "blows the whistle" on a fraud against the government, s/he is entitled to up to 30% of the total amount recovered, plus attorneys' fees.

Here's how it works: A citizen who suspects a fraud is being committed against the federal government consults an appropriate attorney. Together they do a preliminary investigation to be sure the suspicions have sufficient factual support and would legally constitute a fraud under the law. If so, the citizen files a legal complaint "under seal" (secretly) in the federal court, and notifies the United States Department of Justice (DOJ). DOJ investigates, and if it chooses may proceed against the perpetrator directly by "taking over" the case. Or, DOJ may decide to let the citizen proceed privately, as a "qui tam" plaintiff (a private person acting "on behalf of" the government). In either case, if the action is successful the government will recover money -- as much as three times the amount of the fraud, plus substantial fines against the perpetrator(s). The citizen who started the ball rolling by blowing the whistle and filing the initial, secret complaint is entitled to up to 30% of the total amount of money recovered (if the citizen proceeds privately with the case) or up to 25% (if the case is taken over by DOJ), plus reimbursement of court costs and reasonable attorneys' fees.

In several False Claims Act cases, citizens have been rewarded with millions of dollars for starting False Claims actions on behalf of the government. In one recent case, for example, a citizen was awarded over $4,000,000 for exposing a State agency's failure to properly contribute matching funds to qualify for a federal program. (The State was required to refund money to the federal government, and the whistleblower received a portion of this refund.) In other cases, a citizen received part of $182 million recovered from a private health care laboratory charged with billing the government for unnecessary tests not authorized by physicians, and a citizen shared in a $150 million recovery against a private company charged with overbilling the military for helicopters.

A fraud against the government need not involve a direct theft of federal money. Essentially, any use or application of federal money for a purpose other than the specific purpose which the money was supposed to be used for could be a fraud supporting a False Claims Act case. For example, if a subcontactor on a highway project receiving federal funds contracts to supply a product (such as concrete, gravel, steel, resins) complying with federally set specifications and knowingly or recklessly provides a non-complying product, that could be a False Claim even if the subcontractor did not deal directly with the federal government. Or, if a federal grant is earmarked for providing particular services and the recipient uses the money for some other purpose (such as buying equipment), this could be a fraud. Or, if the government hired a company to do on-site inspections and the recipient only reviewed the paperwork and did not do the required inspections, that could be a fraud.

False Claims Act whistleblowers are protected by law from retaliation. The law is not concerned with the motivation of the whistleblower. Individuals are as much protected if they're "in it for the money" as when they are motivated by outrage at an act of corruption. "Qui tam" whistleblowers are often "regular people" who simply find fraud involving taxpayers' money dishonest and unacceptable. If you think you may have information about someone cheating the federal government, Chamberlain and Kaufman will be happy to review your information with you in strict confidence, and with neither charge nor obligation.