The False Claims Act (“FCA”), especially its qui tam component, has repeatedly proven to be the most effective weapon the federal government can employ to recover payments private citizens and entities fraudulently obtain. The FCA holds accountable those who knowingly present false or fraudulent claims for payment to the United States by allowing the government to recover treble damages for such actions.
Importantly, the FCA, through its qui tam provisions, empowers private citizens, known as “relators,” to initiate FCA actions on behalf of the government when they possess inside knowledge of fraud. Through this mechanism, citizens are able to expose vast amounts of fraud perpetrated against the United States which otherwise would have gone unchecked.
Once a relator initiates a False Claims Act case, the government has the option to take over the primary litigation role in a qui tam lawsuit or to decline to intervene, after which the relator may continue litigating the case on their own but still in the name of the United States. The efficacy of the FCA is undisputed, with recoveries of over $60 billion in taxpayer dollars in the past 33 years, with the majority of those recoveries involving instances of fraud in federally funded healthcare programs.
Just this past week, the Congressional Research Service issued an updated report, and an abridged version, on the history, details, and inner-workings of the FCA’s and its qui tam provisions that can serve as a helpful introduction to the statute.
The Covid-19 pandemic has led to unprecedented levels of government spending in the United States. The federal government has spent, and will continue to spend, trillions in taxpayer dollars attempting to contain the spread of the disease, treat those who have been infected, stabilize and stimulate the economy, and develop and distribute vaccines. These payments have been made not only under newly authorized Congressional spending programs enacted in direct response to the pandemic but also under all existing federal healthcare programs, such as Medicare and Medicaid, where costs related to Covid-19 patient care are reimbursed by the federal and state governments.
Unfortunately, such expansive government spending necessarily attracts unscrupulous characters who hatch fraud schemes to line their pockets at the expense of the government’s ongoing fight against Covid-19 and the American citizens truly in need. The Department of Justice (“DOJ”) itself is hyper aware of the fraud potential arising from the Covid-19 pandemic, including fraud targeting taxpayer dollars. In just over one year since the beginning of the pandemic, the DOJ has already, and will continue, to engage in what it terms as a “[h]istoric level of enforcement action” in response to Covid-19 fraud. The DOJ has already initiated cases, including FCA cases, seeking to recover over $569 million it contends was obtained through fraudulent means.
Rigorous oversight is vital to ensure that these fraudulent actions are exposed and those responsible are punished accordingly. The trillions of dollars in federal Covid-19 spending can be partially secured by FCA liability against any entity or individual who fraudulently attempts to obtain payments under any government programs related to Covid-19. For example, a healthcare entity that intentionally falsifies billing records for its treatment of Covid-19 patients in order to receive higher Medicare or Medicaid reimbursements would be liable for three times the amount it was fraudulently reimbursed.
Further, any contractor who knowingly sells defective Personal Protective Equipment (PPE) to the United States would likewise be liable under the FCA. Such liability should act as both a powerful deterrent against future fraud and an effective means of punishing past fraud.
As such, it is vital for private citizens that become aware of fraud targeting federal Covid-19 spending to understand the crucial role the False Claims Act can play in holding fraudsters accountable. In fact, the DOJ recently stated that FCA “whistleblower complaints have been on the rise as unscrupulous actors take advantage of vulnerabilities created by the COVID-19 pandemic and the new government programs disbursing federal relief, and whistleblower cases will continue to be an essential source of new leads to help root out the misuse and abuse of taxpayer