False Claims Act: Stop Fund Misuse

False Claims Act: Stop Fund Misuse

The False Claims Act (FCA) is a powerful tool to prevent and punish fraud against the government. As an attorney who has worked on FCA cases for over a decade, I wanted to write up this guide to help friends, family members, and the public understand what the law is, how it combats fraud, and what you can do if you suspect federal funds are being misused.

What is the False Claims Act?

The FCA imposes liability on any person or organization that knowingly submits false claims to get federal government money or property. Common examples are overbilling Medicare/Medicaid, misusing grant funds, avoiding taxes, or providing substandard products/services to the government.

Liability under the FCA can be huge – defendants found guilty under the law must repay three times the damages caused to the government and additional penalties of $11,000 – $22,000 per false claim.

The law includes a “qui tam” provision that allows private citizens, known as “relators”, to file fraud lawsuits on behalf of the government and receive 15-30% of the recovery. Over 80% of FCA cases today are initiated by whistleblowers under the qui tam provisions rather than the Department of Justice itself.

So in short – the False Claims Act is the government’s strongest weapon for prosecuting fraud and misuse of federal funds. And it offers huge financial incentives for whistleblowers to uncover and report such fraud.

Real-World Examples of FCA Cases

To understand how impactful the law can be, check out these recent FCA cases:

• A hospital system in Florida had to pay $85 million in penalties for illegal kickbacks with physicians and overbilling Medicare.
• A university misused NIH grant funds for lobbying and had to repay $3.5 million.
• A defense contractor provided faulty rivets for military aircraft and paid $45 million.
• A biotech startup falsified test results for an FDA submission. The CEO will serve jail time.

In fiscal year 2022 alone, the Department of Justice recovered $6.2 billion in settlements and judgments from civil FCA cases – most of which originated from whistleblower complaints.

So the FCA has real teeth and is actively used to prosecute fraudsters and recover misused funds across industries like healthcare, defense, banking, education, and more.

How To Report Suspected Fraud

If you suspect any organization or person has defrauded the government, commit grant fraud, avoids taxes illegally, overbills programs like Medicare, or generally misuses federal funds, here is what you can do:

1. Document The Evidence

• Gather documents, emails, recordings, statements from witnesses, or any evidence you have.
• Take detailed notes if you directly observed misconduct.
• Save copies of everything and store it securely.

2. Report Anonymously

You can report fraud anonymously to the Department of Justice or the Office of the Inspector General. They have hotlines to call or online forms.

An anonymous report will trigger an investigation but won’t allow you to get a reward later as a relator.

3. Hire A Qui Tam Attorney

For the strongest case, meet with a qui tam attorney experienced in FCA litigation. They can properly evaluate your evidence, protect you from retaliation, and file a whistleblower lawsuit under seal to launch a full investigation.

If the government intervenes and prosecutes based on your complaint, you’ll be entitled to 15-30% of whatever is recovered. The average FCA whistleblower reward is over $7 million!

So don’t stay silent if you have proof of fraud or misuse of federal funds. Take action and report it! The False Claims Act enables people like you to hold fraudsters accountable and recover money back to the government. It’s an incredibly powerful tool more people need to know about.

Let me know in the comments if you have any other questions!

Resources

This Reddit AMA from an FCA attorney has great info.

Here is a Quora thread discussing major FCA qui tam case examples and settlements.

The Taxpayers Against Fraud Education Fund has free educational materials explaining the FCA.