Recent trends show federal, state and local governments' recoveries under False Claims Act laws are on the rise. In December 2012, the federal Department of Justice (DOJ) announced $4.9 billion in settlements for the fiscal year ending September 30, 2012, representing the largest annual recovery under the federal False Claims Act in department history. When calculating total recoveries since January 2009, the total amount rises to $13.3 billion.
False Claims Act laws allow private citizens to file actions on behalf of the government for false claims, or fraudulent transactions, made under public contracts. These claims are also known as qui tam suits. The main areas of recovery under the federal False Claims Act include: health care claims, mortgage fraud and military contracts. The impending changes in health care laws and the outcome of current fiscal cliff negotiations may also result in increased enforcement efforts.
In addition, federal agencies have long sought state cooperation in the curbing of Medicare and Medicaid fraud. States with their own False Claims Act laws enjoy another avenue of enforcement for fraud-based claims relating to government contracts.
At the municipal level, whistleblowers have successfully used ordinances to secure record amounts in settlements and judgments. For example, a former employee who filed a claim under a municipal whistleblower ordinance in Broward County, Florida, has become the first private citizen to be awarded a portion of a qui tam settlement under that law. Accountant Jason G. Wolk filed a private claim against his former employer under the Broward County False Claims Ordinance. Wolk's former employer, USA Parking, settled allegations that it had fabricated insurance invoices over a five-year span for $6 million. In qui tam actions, whistleblowers may reap as much as 30 percent of the recovery. In this case, Wolk will receive a little more than $1 million. Broward County will receive $3.4 million.
In light of this trend, employers should remain vigilant of filing requirements for federal False Claims Act claims, as well as continue to monitor any increased enforcement initiatives in their particular states and municipalities.