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How Does The Reward System Work For Whistleblowers Under The False Claims Act?

Under the reward system for the False Claims Act (FCA), whistleblowers whose cases lead to successful prosecution are entitled to 15% to 30% of the money the government recovers. Whistleblowers also get their attorney’s fees and costs paid by the defendant.

The government has recovered money in recent years with help from whistleblowers—people who have “inside information” about fraud taking place in government programs.

What is the False Claims Act?

Per 31 U.S.C. §§ 3729 – 3733, the False Claims Act (FCA), allows private individuals with evidence about fraud against federal government contracts and programs, to file a whistleblower lawsuit, also known as a “qui tam” lawsuit, on behalf of the government.

The FCA offers financial rewards as an incentive for individuals to disclose fraudulent activity against the federal government. Any individual with knowledge of wrongdoing can file a whistleblower lawsuit.

What Type of Actions Violate the FCA?

Violations include filing false claims and fraud against federal government programs in such areas as:

  • Healthcare (Medicare, Medicaid, and TRICARE)
  • Housing and mortgage
  • Student Aid
  • Small business loans

The FCA holds individuals and entities liable if they commit the following actions:

  • Knowingly submit a false claim to the government
  • Knowingly cause someone else to submit a false claim to the government
  • Knowingly make a false record or statement to get a claim paid by the government
  • Knowingly make a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the federal government
  • Conspiring with others to violate the FCA

Where Do You File A Whistleblower Lawsuit?

Whistleblowers must file lawsuits under seal and serve them on the U.S. Attorney for the judicial district and on the U.S. Attorney General in Washington, D.C. The lawsuit stays sealed for 60 days, after which the government must investigate allegations in the complaint.

As part of the investigation, the government’s attorneys can question the whistleblower who works, somewhat, as a partner with the federal government in the confidential case. 

What Happens After the Government Investigates the Complaint?

After the investigation, the federal government can decide to do the following:

  • Intervene in the lawsuit and prosecute the case
  • Dismiss the lawsuit
  • Settle the case

If whistleblowers object to the government dismissing or settling a case, the court can schedule a hearing to have their objections heard. When whistleblowers want to settle or dismiss a case, they must first receive the government’s permission.

If the government declines to intervene, whistleblowers and their lawyers can continue with the case and act on behalf of the federal government. The lawsuit becomes public when whistleblowers pursue their lawsuit on their own.

If the government decides to intervene, the government’s attorneys take control over the case.

Because of the complexities involved in FCA lawsuits, a whistleblower can benefit from representation by a lawyer knowledgeable of the FCA who has had success with whistleblower cases and has the resources to take on cases against corporate entities.

How Does the FCA Protect Whistleblowers?

Whistleblowers may worry about putting themselves at risk of being fired, demoted, harassed or discriminated against when they accuse their employer, individuals, or other entities of fraud or filing false claims. Because of this, the FCA calls for the employer to reinstate whistleblowers’ jobs (if termination occurred), double back pay, and compensation for any special damages.

What Are the Rewards for Whistleblowers?

If the government takes on the case and finds fraud against the defendants, a whistleblower can receive between 15% and 25% of the amount the government recovers. If the whistleblower moves forward with the case because the government failed to intervene, the whistleblowers’ share increases to 25% to 30%.

As whistleblowers receive their reward, defendants found in violation of the FCA pay up to three times the defrauded dollar amount plus a civil penalty between $5,500 to $11,000 for each false claim.

Call Newsome Melton for FCA Information

If you would like to know more about the False Claims Act, call the Newsome Melton law firm at 888-808-5977.

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