FREQUENTLY ASKED QUESTIONS ABOUT
FRAUD & FALSE CLAIMS
What is a Qui Tam or False Claims Act case?
How is a False Claims Act case filed?
What is intervention?
How does intervention under the Act work?
Is intervention in the best interests of the claimant?
How much money can be recovered for the Federal Government?
What if I saw this on 60 Minutes and want to bring a Qui Tam
action?
I have information about unreported government fraud, what should
I do?
What are your fees?
Q. What is a Qui Tam or False Claims Act case?
A. During the Civil War, military officers had the authority to purchase supplies and equipment from local vendors and from farmers and landowners. Military quartermasters often issued receipts to these individuals who presented these receipts for payment to the United States Government. However, many unscrupulous individuals routinely marked up or falsified these claims and they were bleeding the treasury dry. As a result, President Abraham Lincoln asked for, and received from Congress, a bill which deputized every citizen of the United States as a private attorney general. The Act provided that the citizen who reports the fraud to the government could share in a portion of money that is returned to the federal treasury. Although modified several times since the 1860’s, the Qui Tam or False Claims Act still exists today and rewards “whistleblowers” who bring the existence of fraud by government contractors to the attention of the Federal Government.
Q. How is a False Claims Act case filed?
A. Under the False Claims Act, a relator or an individual with knowledge of fraud on the government, can make his or her allegations known in a lawsuit filed in a federal court. This lawsuit specifies what the government contractor did wrong. A “disclosure statement” is also filed which is a document that explains how the defendant defrauded the government of money by making false claims for payment of goods or services. This information is then communicated under seal to the United States Attorney’s Office and to the United States Department of Justice who ultimately makes a decision with respect to whether to “intervene” in the case. The term “under seal” means that the information is kept secret and is not disclosed to anyone other than the United States Attorney’s Office. This gives the government time to investigate the allegations in the Complaint prior to any public disclosure.
A. Intervention is the process by which the United States Department of Justice takes over the prosecution of a False Claims Act case on behalf of the Federal Government. Specifically, a Department of Justice lawyer will enter an appearance on behalf of the government and will undertake all of the costs and investigation necessary to litigate the claim. Intervention typically takes place several months after a case has been filed and after the government has conducted its preliminary investigation of the allegations made in the lawsuit.
Q. How does intervention under the Act work?
A. As explained above, a copy of the Complaint and all of the evidence compiled in a disclosure statement is sent to the Department of Justice. Both documents are filed “under seal”, meaning they are disclosed only to the government. The Department of Justice then makes a decision whether or not to intervene in the case after the case is filed, usually within 60 days to nine months. If the Department of Justice intervenes, they take over the case and the percentage of an award to the relator is between 15% and 25% of the amount recovered by the government. If the government does not intervene, then your lawyers have the option of prosecuting the action on your behalf. If your lawyers successfully prosecute the action and obtain a verdict at trial or settlement with the contractor, the claimant (referred to in Qui Tam cases as the relator) would be entitled to somewhere between 15% and 30% of the total amount of money recovered for the Federal Government.
Q. Is intervention in the best interests of the claimant?
A. Intervention is almost always desirable because it means that the Federal Government will undertake all of the costs of prosecuting the action. Intervention does limit the amount of money that the claimant can obtain from the Federal Government. One of the benefits of the Qui Tam or false claims provisions is that an individual who reports government fraud can obtain a reward between 15 and 25% of the amount recovered by the Federal Government.
Q. How much money can be recovered for the Federal Government?
A. The False Claims Act includes provisions that triple the amount of false claims recovered by the government plus civil penalties designed to punish the government contractor for making false claims. For example, if a contractor files a false claim with the Federal Government and cheats the treasury out of $100.00, under the tripling provisions of the False Claims Act (which multiplies the amount of the false claim by three times), the $100.00 false claim becomes a $300.00 false claim and that is the amount that the government obtains in damages. In addition to the tripling provision, a guilty party who submits a false claim to the Federal Government is liable for a civil penalty between $5,000.00 and $10,000.00 for each violation of the False Claims Act. Thus, an individual who submitted five false bills for $100.00 to the Federal Government would be liable for $1,500.00 in “tripled” damages and between $25,000.00 and $50,000.00 in civil penalties. If the full $65,000.00 was awarded by the court, the relator would obtain somewhere between 15% and 30% of that amount, depending on whether a private attorney or the Department of Justice prosecuted the action.
Q. What if I saw this on 60 Minutes and want to bring a Qui Tam Action?
A. Under the False Claims Act, publicly disclosed fraud (such as that shown in an investigative magazine) does not qualify for citizen recovery under the False Claims Act. The government may still be able to bring an action for violation of the False Claims Act, but individuals are barred from participating in a recovery because it has already been made public. The purpose of the Act is to reward those individuals with knowledge of fraud being perpetrated on the government who come forward and inform the governmental authorities of what is occurring. These individuals are often referred to as “whistleblowers” and in the past have saved taxpayers millions of dollars by reporting fraud and abuse.
Q. I have information about unreported government fraud. What should I do?
A. Contact us as soon as possible. Our firm has experience in bringing and prosecuting False Claims Act cases and we may be able to assist you in evaluating your case.
A. Balkin & Eisbrouch handle
all cases on what is called a contingency fee. This means that no fees or
costs are charged unless we collect money damages for you. We advance all
costs for investigators, court reporters, expert witness testimony, filing
fees and any other expenses related to your case. All of the consultations
with our office are absolutely free. When you recieve compensation, meaning
we have successfully concluded your case, either by settlement or litigation,
our fees are a percentage of the gross settlement. This percentage is agreed
upon before we begin work on your case and is generally between 20% and
40%. The percentage depends on the complexity and type of case.
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