False Claims Act

THE FALSE CLAIMS ACT

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Imagine the following scenario

Imagine that you are employed by a company that has multiple and massive contracts with the United States Department of the Navy (USDN). You are really happy at your job and enjoy the camaraderie that is a hallmark of your employer. Your employer pays you well, and you have excellent benefits and retirement options. You have worked your way through the ranks and possess an intricate knowledge of your employer’s overall business and specific business operations. Because you took advantage of the educational opportunities afforded by your employer, you earned a degree in accounting with an emphasis on auditing government contracts. Shortly after receiving your degree in accounting and then becoming a certified public accountant, you receive a coveted promotion to your employer’s finance department. Your job was to oversee and audit your employer’s federal contracts. Six months after being promoted, you notice that something is amiss. You discover, that your employer is billing the USDN for a product that did not, in a significant way, conform to the specifications of the contract. As a result, the USDN is being billed for something that does not meet the specifications of the contract. Your employer sends thousands of these items to the USDN a month. By your estimate, the USDN is being overcharged $500.00 per each item that it receives from your employer. You then bring the matter to your supervisor, who then consults with a senior vice president of production for your employer. Notwithstanding the employer’s knowledge that the USDN is being overcharged as the item does not meet the contract specifications, nothing changes and the USDN continues to be overcharged with the full knowledge of your employer’s top executives. Finally, after an additional six months have passed you visit a law firm and ask what can be done to stop the unethical and fraudulent behavior of your employer. Additionally, you want to know what protections exist that will shield you against the retaliation you feel is sure to come when your employer finds out that you were the cause of the inquiry into your employer’s fraudulent behavior which could costs your employer millions of dollars and cause the employer to be suspended from receiving additional federal contracts for five years. You are then introduced to the False Claims Act.

THE ELEMENTS OF A PRIMA FACIE FCA CASE

If a qui tam plaintiff alleges a false claims violation, the complaint and a written disclosure of the evidence and information that the person possesses must be served on the Government. Once the action is filed, no person other than the Government is allowed to intervene or file a lawsuit based on the same facts. A private citizen who brings a Qui Tam claim must do so under seal to the U.S. Attorney with jurisdiction is referred to as a Relator. The Relator must establish the following:

False Claim—Plaintiff must prove the existence of a false claim;
Presented or Caused to be presented to the United States—Plaintiff must establish that the false claim or statement in support of the claim was submitted to the government for payment or approval; and
With the knowledge that the claim or statement in support of the claim is false—Plaintiff must establish that the defendant knew its claim or statement in support of the claim was false.
Damages—The plaintiff need not be personally harmed to maintain an FCA action. Although many courts recognize that proof of damages to the Government is technically not an element of a prima facie case, if the United States has suffered damages, a plaintiff should plead and prove such damages

HISTORY OF FALSE CLAIMS ACT

The False Claims Act (FCA), 31 U.S.C. §§ 3729-3733, has its origins in the nineteenth century American Civil War. The FCA was enacted to take legal action against vendors and companies who fraudulently sold supplies to the Union Army. Litigation under the FCA is often called a qui tam claim which is a carry-over from British law that allows private citizens to bring claims on behalf of the United States and receive commensurate damages for their effort. Qui tam is the abbreviation for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “[he] who sues in this matter for the king as well as for himself.” The FCA remained unchanged from its passage in 1863 through 1943 when it was amended. It was again amended in 2010.

SUCCESSFUL PLAINTIFF COMPENSATION.

If the Government prosecutes a case initiated by a qui tam plaintiff and obtains an award or settlement, the qui tam plaintiff will receive between 15 and 25 percent of the recovery, depending on his or her contribution to the case. If the case is based primarily on information other than the disclosures of the qui tam plaintiff, the award cannot be more than 10 percent of the recovery.

If the Government decides not to intervene and the qui tam plaintiff successfully litigates the action, he or she will receive between 25 and 30 percent of the award or settlement. In either case, the court will award the qui tam plaintiff reasonable expenses and attorney’s fees and costs

PROTECTION FOR RELATOR WHO BRINGS A FCA CLAIM

Per 31 U.S.C. § 3730h, an employee who has been discharged, demoted, suspended, threatened, harassed, or in any way discriminated against by his or her employer because of involvement in a false claims disclosure is entitled to all relief necessary to make the employee whole, including:

Reinstatement with the same seniority status that the employee would have had but for the discrimination;
Two times the amount of back pay plus interest; and
Compensation for any special damage sustained because of the discrimination (including litigation costs and reasonable attorney’s fees).

The protected false claims activities include investigation for, initiation of, testimony for, or assistance in a false claims action that has been or will be filed. An employee is entitled to bring an action in the district court for such relief.

CONTACT IDAHO EMPLOYMENT LAW SOLUTIONS

Idaho Employment Law Solutions is an African-American and Veteran-owned law firm providing quality and efficient legal counsel to businesses, organizations, employers/ employees, as well as individual multi-cultural clients located throughout Idaho.

Idaho Employment Law Solutions has the experience necessary to guide you through the maze of pursuing a FCA claim. Contact Idaho Employment Law Solutions by phone at (208) 401-9343 to make an appointment. Legal advice will not be provided over the telephone. There will be a small fee charged for initial consultations.

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