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How Does The False Claims Act Work?

The False Claims Act is a federal law created to hold persons or companies that defraud the government liable. Under the False Claims Act, such misdeeds are prosecuted and, ideally, those responsible are held accountable.

Knowing how the False Claims Act works can help you determine what to do if you believe you have information about government fraud.

How Does the False Claims Act Work?

A Whistleblower Initiates a Case

A whistleblower, known in the False Claims Act as a “relator,” is an insider who has knowledge that a person or company is engaging in government fraud. Often, but not always, the whistleblower is a current or former employee of the company. An accountant, for instance, might pick up on a pattern of fraudulent billing. Or an employee of a government vendor may become aware that the government is paying for services it is not receiving.

A person with inside knowledge of fraud can choose to become a whistleblower and possibly receive a percentage, usually 15 or 20 percent, of any money the government recovers in a lawsuit against the responsible party or parties.

The Whistleblower Presents His Case to the Department of Justice

For a whistleblower to make a False Claims Act complaint, he or she must be the first one to come forward with pertinent knowledge the government was previously unaware of. The first stage of the complaint is known as “presentment.” The whistleblower presents what he or she knows to the U.S. Department of Justice (DOJ) and the U.S. Attorney’s office in the state where the fraud took place.

A successful presentment includes a carefully prepared package featuring evidence, documents, and any other supporting information — as long as it is obtained legally, the more relevant information a whistleblower can include in the presentment package, the better.

The presentment phase is critical, as it creates a foundation for any False Claims Act claim. It is thus a good idea for a whistleblower to get an attorney involved from the beginning in gathering evidence and organizing the packet, making it compelling.

It is important to remember that the information should be original – it should not be information the whistleblower figured out simply by reviewing public information without adding anything material that was not publicly disclosed.

The Whistleblower Files a Formal Lawsuit Under the False Claims Act

Once the presentment phase is complete, the whistleblower can file a lawsuit in the local district court (or the court in the jurisdiction where the alleged fraud occurred). The lawsuit must be filed under seal, meaning the information is not public, and it will stay sealed until the government decides whether to intervene and take over the lawsuit.

At this point the whistleblower must keep everything in strict confidence until the government has had time to review the lawsuit. The government looks at the details of the case, reviews the packet of documents submitted, interviews witnesses and determines if enough evidence exists to step in and pursue damages against the alleged perpetrator under the False Claims Act.

The Government Decides If It Wants to Intervene in the Lawsuit

If the government elects to move forward, it effectively takes over the lawsuit while the whistleblower steps to the sidelines and acts as a partner to the government. The idea is that the government has greater firepower and more extensive resources to call upon and can put its full strength behind the lawsuit.

If the government takes over and is successful, recovering money from the fraudulent party, the whistleblower typically receives a percentage of that money. Once the government gets involved, it will inform the whistleblower of how it will allocate the settlement proceeds, should a settlement occur.

If the Government Does Not Intervene

If the government elects not to get involved and take over the lawsuit, a couple of things happen. First, the case is unsealed, and it, like most lawsuits, becomes public record. Also, the whistleblower and his or her attorney may elect to continue pursuing damages against the defendant, but in a private lawsuit without the government involved.

What Can I Do If I Believe I Have Information About Fraudulent Activity?

Anyone with inside information about fraud against the government should contact an attorney and discuss their options for filing a whistleblower suit under the False Claims Act.

For More Information, Call Newsome Melton Today at 888-808-5977

The legal team at Newsome Melton helps whistleblowers file claims and recover compensation under the Fair Claims Act. If you have information about fraudulent activity, schedule a free consultation with us today to discuss your options. Call 888-808-5977.

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