Basics of a False Claims Act (FCA) Lawsuit
Filing and Service of Complaint
The False Claims Act requires that – prior to filing his or her lawsuit – the Relator (also called a “whistleblower”) must first provide to the Government a “written disclosure of substantially all material evidence and information the person possesses” of the fraud. Thereafter, the False Claims Act lawsuit is filed, under seal, and a copy of the Complaint, along with the Disclosure Statement containing all material evidence of the fraud is then served on the United States Attorney General and on the U.S. Attorney in the judicial district where the case is filed. The defendant is not served with the Complaint or Disclosure Statement and will not be aware that a lawsuit has been instigated against them while the suit is under seal.
Under Seal - Investigation by the Government
The Complaint and Disclosure Statement remain under seal for at least 60 days, and very likely longer, while the Government investigates the allegations of fraud. During the time the case is “under seal,” the Government uses investigators, such as agents of the Office of Inspector General (OIG) for the affected federal agency, FBI agents, DCIS and/or NCIS agents, or state Medicaid investigators (all depending on the type of case and the nature of the fraud), to investigate the allegations of the Complaint. At the end of the initial 60-day “under seal” period, and any additional time extensions, the Government will either choose to proceed with the action and litigate the action itself or choose not to proceed with the action. During this period, the Government may also seek Court approval to unseal, or to partially unseal, the case in order to engage in settlement discussions with the Defendant.
The Relator's Right to Proceed After Government Declination
If the Government chooses not to litigate the action, the Relator then has the right to prosecute the action. The Federal Government typically intervenes in only a small number of cases every year (about 20%).
Damages, Penalties, and Relator's Share of the Award
If the Defendant is determined to have violated the False Claims Act by making false or fraudulent claims, the statute mandates that the fraudster pay three (3) times the amount of damages which the Government sustained because of the act of that person, as well as civil penalties ranging from $5,500 to $11,000 for each false or fraudulent claim. Pursuant to the Federal Civil Monetary Penalties Inflation Adjustment Act of 1990, as amended, the civil penalties under the False Claims Act have been adjusted to a range of $10,957 to $21,916 for each false or fraudulent claim submitted after February 3, 2017.
The Relator is entitled to an award if the Government is able to recover through a settlement or successful judgment at trial. In cases in which the Government chooses to litigate the action, the Relator is entitled to receive 15% to 25% of the amount recovered by the Government. In cases in which the Relator conducts the action, he or she is entitled to receive 25% to 30% of the amount recovered by the Government.
There are several limitations and exceptions in the False Claims Act which may affect the viability of a Relator’s case. The False Claims Act has a 6-year statute of limitations, and certain actions are barred altogether. For instance, qui tam lawsuits generally must be based on information that has not been publicly disclosed. Further, the False Claims Act does not apply to claims involving federal tax fraud. Tax fraud whistleblower cases are addressed in a separate federal statute.