Federal False Claims Act

The federal False Claims Act (“FCA”), 37 U.S.C.? 3729, et seq. encourages employees to report fraud perpetrated against the government by their employers. Both the federal government and many states, including Rhode Island, have a False Claims Act, also known as qui tam statutes. Qui Tam statutes encourage the reporting of fraud by offering the employee a percentage of the money recovered by the government. In addition, the FCA makes it unlawful for an employer to take an adverse action against an employee, such as termination and demotion, for investigating potential fraud and filing a qui tam lawsuit.

The FCA makes it unlawful to defraud the government by:

  1. mischarging for goods or services not provided;
  2. lying to the government during the negotiation of a contract;
  3. conspiring to defraud the government;
  4. not giving the government its full share of money or property;
  5. not checking the accuracy of a invoice or receipt given to the government;
  6. buying government property from a government official who is not allowed to sell the property; and,
  7. making a fake invoice or receipt to give to the government in order to get money.

An example of a qui tam case is a medical care provider overbilling the government for Medicare or Medicaid patient services. A federal qui tam action can arise from the defrauding of the federal government or an agency of the federal government. In Rhode Island, a qui tam action may also arise from the defrauding of the state, a state agency or department, a school district, a municipality, or a unit of local government, like a fire department.

Under the qui tam statutes, employers cannot retaliate against an employee who investigates a potential false claim, supplies information to the government, or actually brings a qui tam action against their employer. However, an employee is only protected from retaliation if he or she had reasonable cause to believe that the employer had defrauded the government. Additionally, an employee may not actively assist in the unlawful activity and bring a qui tam action.

An entity found liable for defrauding the government may be forced to pay damages equal to triple the amount it wrongfully acquired through its fraudulent activities, in addition to other penalties. Additionally, the employee who reports the activity to the government may receive up to 25% of the awarded damages plus accrued attorneys’ fees. If the employer has retaliated against the reporting employee, the employer may be liable to the employee for reinstatement, double back pay, interest on the back pay, special damages, and attorneys’ fees and costs.

If you or someone you know believe that an employer has defrauded the state or federal government, please contact us to discuss your matter.

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