False Claims Act (FCA)

The False Claims Act, 31 U.S.C. 3729 and following sections, dates to 1863, when it was passed to fight fraud by contractors supplying the Union Army. Today it is the federal government's main tool against fraud in health care, defense contracting, customs duties, grants, and pandemic relief programs.

The law makes it illegal to knowingly submit a false claim for payment to the government, make a false record to get a claim paid, or improperly avoid paying money owed to the government. A person or company liable under the FCA owes three times the government's damages plus a civil penalty for each false claim, starting from a statutory range of $5,000 to $10,000 that is adjusted every year for inflation. Because health care providers and contractors can submit thousands of claims, penalties add up quickly.

The FCA's most distinctive feature is its qui tam provision. A private person, called a relator, can file suit on behalf of the United States. The complaint is filed under seal while the Department of Justice investigates and decides whether to intervene. A successful relator generally receives 15% to 25% of the recovery if the government intervenes, and 25% to 30% if it does not. The law also protects employees from retaliation for reporting fraud.

Many states have their own false claims acts, especially for Medicaid fraud. If you have inside knowledge of fraud against the government, do not take documents you are not authorized to have, and talk to a lawyer before reporting. Our whistleblower and qui tam page explains the process.