The False Claims Act (FCA), 31 U.S.C. §§ 3729-3733, provides liability for any person who:
(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
(C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);
(D) has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;
(E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;
(F) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or
(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.
Damages and Penalties
Those in violation of the FCA are liable to the US Government for a civil penalty of $5,500 to $11,000 for each false claim, plus treble the amount of the government’s damages.
Qui Tam Action
The FCA allows private persons to file suit for violations of the FCA on behalf of the government. A suit filed by an individual on behalf of the government is known as a “qui tam” action, and the person bringing the action is referred to as a “Relator.”
Awards to the Relator
In the event of a successful qui tam action, the Relator is entitled to between 15%-30% of the amount recovered by the government, plus legal fees and other expenses of the action.
Protections against Retaliation
The False Claims Act protects whistleblowers against retaliation for engaging in lawful acts done in furtherance of an action under the FCA. An employer cannot retaliate against a whistleblower for engaging in protected activity to investigate the fraud and stop the violations.
Retaliation includes being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done” to report the fraud.
In 2014, Bank of America agreed to pay $16.65 billion to settle Financial Fraud claims. This was the largest civil settlement with a single entity in American history. Of the $16.65 billion, almost $10 billion were paid to settle federal and state civil claims by various entities related to RMBS, CDOs and other types of fraud. Bank of America paid a $5 billion civil penalty to settle the Justice Department claims under FIRREA. Approximately $1.8 billion was paid to settle federal fraud claims related to the bank’s origination and sale of mortgages, $1.03 billion paid to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $135.84 million paid to settle claims by the Securities and Exchange Commission. In addition, $300 million was paid to settle claims by the state of California, $45 million to settle claims by the state of Delaware, $200 million to settle claims by the state of Illinois, $23 million to settle claims by the Commonwealth of Kentucky, $75 million to settle claims by the state of Maryland, and $300 million to settle claims by the state of New York. The whistleblower collected $58.6 million.
In 2013, GlaxoSmithKline paid the largest healthcare fraud settlement to date, a record-setting $3 billion, for marketing off-label drugs. Glaxo admitted to illegally promoting Paxil for children and adolescents, wrongfully marketing Wellbutrin for weight loss and purposes other than those approved by the F.D.A., and failing to report data regarding safety of its Avandia diabetes drug to regulators. Glaxo paid $2 billion to resolve civil liabilities under the False Claims Act and $1 billion in criminal fines. The four whistleblowers received $1.042 billion for their insider information.
In 2013 Johnson & Johnson agreed to pay $2.2 BILLION to resolve state and federal charges of improper selling of prescription drugs for uses other than approved uses by the FDA and for paying kickbacks to doctors and a pharmacy to increase sales. The eight whistleblowers received approximately $168 million.
For more information on the FCA, please visit False Claims Act Case News.