The False Claims Act, sometimes referred to as the FCA, is an integral part of U.S. whistleblower law. By providing an avenue for individuals to blow the whistle on false or fraudulent claims that are being committed against the United States government, the False Claims Act essentially deputizes private individuals by letting them enforce federal anti-fraud laws.

For whistleblowers, the False Claims Act is generally the best way to proceed with their case, as it provides them with workplace protections against retaliation as well as some of the most lucrative whistleblower awards available.

What is the False Claims Act?

The False Claims Act (31 U.S.C. §§ 3729 et seq.) is a federal whistleblower law that lets private individuals report and prosecute fraud against a government program. It was enacted during the Civil War in reaction to fraudsters who were demanding compensation or a false or fraudulent claim from the federal government for wartime goods or services that they did not actually provide.

Now, the False Claims Act is the primary weapon for prosecuting fraud and publicly disclosed allegations that has been committed against a government program. Just a few examples of the government programs that can be defrauded and lead to false claim cases are:

• Healthcare programs, like Medicaid, Medicare, or Tricare
• The Paycheck Protection Program (PPP)
• Federal grants
• Government contracts, including those with defense contractors

The False Claims Act can also be used to pursue reverse false claims and deliberate ignorance of the truth, or instances where someone or a company owes money to the government but is not paying it. This often stems from situations involving tax evasion or tax fraud.

However, this also means that the False Claims Act is limited in its application for whistleblowers. If you have uncovered evidence of corporate misconduct or even criminality, but it does not involve defrauding a state or the federal government. The False Claims Act will not be available to such person. Instead, you would have to use another vehicle for your whistleblower claim, such as the Whistleblower Protection Act.

How Cases Under the False Claims Act Move Forward

People who have direct and independent knowledge and uncovered evidence of fraud against the government and who are considering becoming whistleblowers need as much information about the process as possible. These individuals should consistently present their evidence and not eliminate unnecessary words to their statements. While these cases are not as straightforward as some others, the good news is that they are not as complicated as some people make them out to be.

Civil cases involving fraud that move forward under the False Claims Act generally follow these steps:

• You find evidence of fraud against the federal rules of a government program
• You investigate further and find more evidence of fraud – enough to confirm your suspicions – and decide to pursue a whistleblower case
• You hire a whistleblower attorney
• With the help and guidance of your lawyer, you gather substantially all material evidence of the fraudulent activity
• Once you have built a strong case, you and your lawyer reach out to the relevant law enforcement agency and present your findings

At this point, whistleblower cases come to a fork in the road: The law enforcement agency can either intervene in your case or decline to get involved.

If they intervene, they take your case over and conduct their own investigation to expand upon the information that you have provided. While you and your legal team would still be involved, your role in the case gets much smaller.

If the agency declines to intervene, you and your legal team can still prosecute the case on your own. However, you would be responsible for investigating what the law enforcement agency would have performed.

“If there is no intervention by law enforcement, the whistleblower and his or her legal team will have the responsibility of investigating and building the case of fraud. This can be extremely difficult, and often takes numerous attorneys and investigators. Because it can be so intense, whistleblowers who hire large law firms tend to do better than those that go with small ones for their case.” – Dr. Nick Oberheiden, founder of the national False Claims Act whistleblower firm Oberheiden P.C.

Treble Damages and Large Whistleblower Awards

One of the reasons why whistleblowers like the False Claims Act so much is that it provides whistleblowers with a financial award for providing evidence of misconduct to law enforcement or for prosecuting the case. That award is a percentage of the amount that gets recovered. The amount that gets recovered is based on how much was defrauded, plus civil penalties, which are both tripled by the False Claims Act.

While there is no guarantee that the amount that gets recovered in a False Claims Act case is the total amount that had been obtained through fraud or deceit, the fact that the amount of fraud is multiplied by three makes the potential for a large award fairly significant. There are numerous instances of False Claims Act cases leading to whistleblower awards in the tens of millions of dollars.

The percentage of the eventual settlement or verdict that goes to the whistleblower will depend on several factors, chief among them being whether the government intervened in the case or not. If there was government intervention, then the whistleblower reward is generally between 15 and 25 percent of the amount recovered. If the government did not intervene and the whistleblower took the case to completion, the award could be as high as 30 percent of the recovery.

Protections Against Workplace Retaliation

By blowing the whistle on misconduct, whistleblowers often act against the best interests of their employer. Because this can foreseeably result in their employer taking action against them for their whistleblowing activities, the False Claims Act has its own anti-retaliation provision, 31 U.S.C. § 3730(h).

This part of the False Claims Act forbids workplace retaliation in the following forms:

• Discharge or termination
• Demotion
• Suspension
• Threats
• Harassment
• Any other form of discrimination on the basis of the terms and conditions of employment

Suppose your employer takes any of these actions and it is connected to your lawful and actual knowledge of whistleblowing activities. In that case, it violates the False Claims Act and gives you the right to file a lawsuit – often for wrongful termination. Under the False Claims Act, you are entitled to recover compensation for your:

• Lost back wages
• Interest in those wages
• Other losses that stem from the retaliation, such as your emotional distress
• Attorney's fees and court costs of the retaliation or wrongful termination lawsuit

Additionally, you can recover a civil penalty equal to twice the amount of your lost wages and even be entitled to reinstatement to your own position.