False Claims Act
The False Claims Act authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).
The False Claims Act penalizes those who submit or cause to be submitted false or fraudulent claims to the government for payment. It also penalizes those who make or use false statements to get a false or fraudulent claim paid.
False Claims Act relators are eligible to receive 10% to 30% of the recovery. In an intervened case, the relator can obtain 15% to 25% of the recovery, depending upon the extent to which the person substantially contributed to the prosecution of the action.
In a non-intervened case, the relator can obtain between 25% to 30% of the recovery. Additionally, a relator who prevails in an FCA action—regardless of whether the government intervenes—is entitled to “reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730(d). Qui tam whistleblower lawsuits have enabled the government to recover more than $40 billion.
The qui tam provisions of the False Claims Act have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than $60 billion. In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in $3.4 billion in settlements and judgments, and the government paid $392 million in whistleblower awards to False Claims Act whistleblowers.
A qui tam whistleblower can be eligible for a large recovery. But there are many pitfalls and obstacles to proving liability, and there are unique rules and procedures that govern qui tam whistleblower cases. Therefore, it is critical to retain an experienced False Claims Act whistleblower lawyer to maximize your recovery.
Examples of False Claims Act Violations
Examples of the type of fraud that can qualify for a qui tam whistleblower award or bounty include:
- Paying kickbacks to refer patients for services that will be reimbursed by Medicare
- Fraudulently inducing a contract, i.e., making false representations to induce the government to enter into a contract
- Bid rigging
- Violating good manufacturing practices
- Double-billing Medicare
- Defective pricing, including noncompliance with the requirement to submit current, accurate and complete certified cost and pricing data under the Truth in Negotiations Act
- Inaccurate disclosure of pricing information and practices, such as:
- Hewlett-Packard’s $55 million settlement for providing incomplete commercial sales practices information to GSA contracting officers during contract negotiations.
- Informatica LLC’s $21.57 million settlement to resolve allegations that it provided false information concerning its commercial discounting practices for its products and services to resellers, who then used that false information in negotiations with GSA for government-wide contracts.
- Billing Medicaid for unnecessary medical services
- Overbilling for services performed, such as:
- Northrop Grumman’s $27.45 million settlement for overstating the number of labor hours its employees worked on two Air Force contracts by individuals stationed in the Middle East.
- Providing defective products, such as:
- Sapa Profiles Inc.’s $34.6 million settlement to resolve claims that it falsified thousands of certifications after altering the results of tensile tests designed to ensure the consistency and reliability of aluminum.
- Falsifying admission criteria and regularly diagnosing patients with “disuse myopathy,” an invented medical term meaning generalized weakness, in order to qualify for higher levels of reimbursement as an Independent Rehabilitation Facility (IRF).
- Encompass Health paid $48 million to resolve allegations that some of its IRFs provided inaccurate information to Medicare to maintain their status as an IRF and to earn a higher rate of reimbursement and that some admissions to its IRFs were not medically necessary.
- Creating a fraudulent joint venture to secure government contracts that are set aside for businesses that participate in the Service-Disabled Veteran-Owned Small Business program.
- In 2019, A&D General Contracting agreed to pay approximately $3.2 million for fraudulently obtaining over $11 million in government contracts which had been set aside for service-disabled veteran-owned small businesses.
- Violating the federal Anti-Kickback Statute and the FCA by billing millions of dollars for unlawfully forcing patients to endure 72-hour hospital stays for observation and mental illness treatment against their will.
- Pacific Health Corp. paid $16.5 million to settle claims that it doled out kickbacks for referrals of homeless patients and provided them with unnecessary treatments.
- Making improper payments to doctors to get them to write prescriptions for two Teva products.
- In 2020, Teva agreed to pay $54M to settle a qui tam case alleging that it paid doctors speaker fees and pricey to prescribe multiple sclerosis drug Copaxone and Parkinson’s disease drug Azilect.
- Paying doctors and kickbacks or financial incentives to get patient referrals.
- In 2020, Agnesian HealthCare paid $10M to settle a qui tam case alleging that its compensation plan for doctors violated the Stark Law, the Anti-Kickback Statute, the federal False Claims Act and the Wisconsin False Claims by rewarding and offering incentives to its network of affiliated doctors to refer Medicare and Medicaid patients exclusively to Agnesian doctors and facilities.
- Upcoding in the form of billing for 14,000-level tissue transfers, which should have been billed as lower-level wound repairs.
- Making misrepresentations regarding certified cost or pricing data in violation of federal procurement laws and regulations. See 10 U.S.C. 2306a; 41 U.S.C. Chapter 35; FAR 15.403-4 and 15.403-5.
The False Claims Act Protects Whistleblowers from Retaliation
The False Claims Act (“FCA”) protects employees, contractors, and agents who engage in protected activity from retaliation in the form of their being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.” 31 U.S.C. § 3730(h)(1).
False Claims Act whistleblower protection extends not only to employees and contractors, but also to partners. See U.S. ex rel. Kraemer v. United Dairies, L.L.P., 2019 WL 2233053 (D. Minn. May 23, 2019); Munson Hardisty, LLC v. Legacy Point Apartments, LLC, 359 F. Supp. 3d 546, 558 (E.D. Tenn. 2019) (LLC that was general contractor on defendant’s construction project was proper FCA plaintiff). In addition, the False Claims Act whistleblower protection law extends to physicians with staff privileges at a hospital. Powers v. Peoples Cmty. Hosp. Auth., 455 N.W.2d 371, 374 (Mich. Ct. App. 1990); El-Khalil v. Oakwood Healthcare, Inc., No. 19-12822, E.D. Mich. April 20, 2020.
Prohibited Acts of Retaliation by the False Claims Act Anti-Retaliation Provision
The False Claims Act prohibits an employer from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower. Prohibited retaliation includes:
- oral or written reprimands;
- reassignment of duties;
- constructive discharge; and
- retaliatory lawsuits against whistleblowers.
Remedies or Damages Under the Anti-Retaliation Provision of FCA
A whistleblower who prevails in a False Claims Act retaliation action under the FCA may recover:
- double back pay, plus interest;
- special damages, which include litigation costs, reasonable attorney’s fees, emotional distress, and other noneconomic harm from the retaliation. 31 U.S.C. § 3730(h)(2).
Recently, a jury awarded more than $2.5 million to a whistleblower in an FCA retaliation case. As there is no cap on compensatory damages, FCA retaliation plaintiffs can potentially recover substantial damages for the retaliation that they have suffered.
And in 2020, two cardiologists formerly employed by Tenet Healthcare Corporation recovered $11 million in compensatory damages in an arbitration of claims of FCA retaliation, tortious interference with business expectancies, false light, and breach of contract.