How the False Claims Act Works
Serving Clients Nationwide
The False Claims Act provides individuals with knowledge of fraud committed against the government with an opportunity to bring a civil lawsuit, called a qui tam claim, against the fraudulent party in an attempt to recover the funds owed to the government. In order to provide an incentive for informants to come forward, the informant, or “relator,” is entitled to receive a percentage of all recovered funds.
Qui Tam Cases are Filed Under Seal
To initiate a qui tam claim, the relator files a Complaint in a United States Federal District Court. The lawsuit is filed under seal, which means it is not disclosed to anyone except the government prosecutors and the Court. Even the defendants charged with committing fraud are not aware of the lawsuit at this time.
By filing the lawsuit under seal, the government has an opportunity to investigate the fraud allegations without the defendant becoming aware of the investigation. The seal is left in place for 60 days; however, it is often extended by the Court for as long as two years to provide the government with ample time to conduct its investigation.
Disclosure Statement
When filing the Complaint, the relator must also provide the government with a Disclosure Statement. Both the local United States Attorney’s Office and the Department of Justice in Washington, D.C. will receive this Disclosure Statement; however, it is not filed with the Court. The preparation of the Disclosure Statement is one of the most critical aspects of a qui tam claim, and it has a significant impact on the likelihood of a successful outcome.
In the Disclosure Statement, the relator sets forth the evidence in support of his or her allegations against the defendant. This document must present a compelling narrative of the fraudulent schemes committed against the government and the evidence (including documents and witnesses) possessed by the relator supporting the charges. The Disclosure Statement essentially provides the government with a blueprint to be used when conducting its investigation into the fraud allegations.
The qui tam lawyers at Kenney & McCafferty are very familiar with the evidence that is required to prove fraud in court, and we know how to structure the Disclosure Statement in a manner which ensures that all relevant and important information is included in a concise, coherent format.
Investigation
During the government’s investigation into the allegations, the relator and his or her counsel must be prepared to cooperate with government agents and prosecutors. This participation may include:
- Reviewing documents
- Assisting in subpoena preparation
- Assisting in preparing affidavits for search warrants
- Providing information necessary to identify and locate relevant witnesses
Once the investigation is complete, the government will decide whether it wishes to join in the case. If the government believes the lawsuit has merit, it will join in the case. At this time, the defendants will be notified of the existence of a qui tam case against them. If negotiations are successful, the case could be resolved prior to being unsealed. However, if negotiations are unsuccessful, the case will be unsealed, and the government and qui tam relator will proceed as co-counsel against the defendant in the civil lawsuit.
Please read Whistleblower Protections for further understanding.
If the government decides not to join in the case, the relator may still move forward alone. However, the chances of a successful outcome are much greater when the government participates.
Qui Tam Damages and Rewards
If the defendants are found guilty of fraud, they must pay three times the government’s losses plus $5,500 to $11,000 in penalties for each false claim. When negotiating a settlement prior to trial, the government will often agree to forego the civil penalties and settle the case for two to three times the amount of the government’s losses. The defendant is also responsible for paying the fees and case-related expenses of the whistleblower’s attorney.
The False Claims Act stipulates that the whistleblower is entitled to receive 15% to 30% of the damages recovered by the government. This percentage will vary depending on a variety of factors, including whether the government intervened in the qui tam case.
If you have knowledge of a fraud or false claim against the government, please contact our qui tam lawyers today. Kenney & McCafferty attorneys will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys during these consultation services are confidential and protected by the attorney-client privilege.
