False Claims Act

If you know that someone or some company is cheating the government, there are ways that you can stop the fraud and be rewarded for doing so. Contact us about your case.

The Federal False Claims Act contains a qui tam provision that encourages a private citizen who has evidence of fraud committed against the federal government to act as a whistleblower (also called relator) and sue on the government’s behalf to recover losses created by the fraud. Some states have also created statutes to protect state government against fraud by including qui tams provisions enabling them to recover money at the state level.

The government is allowed a period of time to investigate the allegations made by the whistleblower and to decide whether or not to take over the suit or allow the private citizen to pursue it independently. Qui tam lawsuits are often complex and costly so most private citizens retain attorneys who are knowledgeable about that area of the law and are willing to confront powerful defendants. In 1995, the Department of Justice announced that it had recovered more than $1 billion in civil fraud cases brought under the whistleblower provisions of the False Claims Act since they were amended in 1986. The whistleblower law provides that if a qui tam suit is successful, the whistleblower receives a percentage of the recovery. In addition, once a qui tam lawsuit is filed, the law provides certain protections for the whistleblower including protection from retaliation in the workplace.

The potential for fraud against the government is enormous because the federal government spends billions of dollars in the purchase of goods and services. One area proven to be ripe for fraud is healthcare involving Medicare and Medicaid in which physicians, providers, and suppliers submit fraudulent claims. The fraud can include billing for services not rendered, performing services without medical necessity, submitting fraudulent cost reports and paying kickbacks. Defense contractors as well as persons or companies receiving government money or grants are often the target of qui tam lawsuits. Whistleblowers have also brought lawsuits against pharmaceutical companies for fraud in off-label marketing, kickbacks and Medicaid best price violations.

MUELLER LAW is a supporter of Taxpayers Against Fraud (TAF), a nonprofit, public interest organization dedicated to combating fraud against the Federal Government through the promotion and use of the Federal False Claims Act and its qui tam provisions.

Qui Tam cases often receive attention because of the large amounts of money involved in the fraud against the federal government. These cases, not handled by ML, are examples:

A "qui tam" (whistleblower) lawsuit filed by a California businessman and biochemist, led to a recovery on behalf of the government. From 2000 to 2006, a Quest subsidiary manufactured and sold medical test kits to labs across the country despite complaints of inaccurate test results, putting the health of hundreds of thousands of dialysis patients at risk. The inaccurate diagnostic test kit resulted in medical providers submitting false claims for reimbursement to federal health programs.

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Network Appliance Inc., a government contractor, has agreed to to settle a False Claims Act case involving best price violations. Under Government Services Administration’s contract guidelines, companies that contract with the GSA are obliged to provide the Government with favorable pricing (“best price”) for the items sold to the Government. Network Appliance, Inc. did not give the Government accurate and complete data about the discounts offered to commercial customers, nor did it afford the Government an opportunity to achieve its most favored customer status. A former Network Appliance employee was the whistle blower who uncovered and reported the fraudulent conduct.

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In the first corporate whistle-blower case to emerge from Iraq, a federal appeals court ruled that a qui tam verdict against an American defense contractor (Custer Battles LLC) involved in Iraq reconstruction should not have been set aside by the trial court. The U.S. Court of Appeals for the 4th Circuit held that the contractor's fraudulent demand for payment from Coalition Provisional Authority (CPA) in Iraq for services rendered under currency exchange contract, paid from Iraqi development fund belonging to the Iraqi people, was a “claim” within meaning of False Claims Act (FCA).

U.S. ex rel. DRC, Inc. v. Custer Battles, LLC, 562 F.3d 295 (4th Cir. 2009)