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What is the False Claims Act?

False Claims Act

The False Claims Act is a federal law located at 31 U.S.C. §§ 3729-3733 intended to protect the federal government from fraud. Also known as the “Lincoln Law,” Congress first enacted the False Claims Act during the Civil War to protect the federal government from fraudulent overbilling by wartime contractors. More than 150 years later, the False Claims Act continues to serve as a vital tool to protect the government from dishonest contractors, vendors and other recipients of government money.

The False Claims Act works so well because it encourages those who know about fraud to blow the whistle and report wrongdoing. In general terms, the False Claims Act prohibits people or companies who do business with the Government from doing the following:

  1. Submitting, or causing to be submitted, false or fraudulent claims for direct or indirect payment by the Government.
  2. Making, or causing to be made, false statements or records material to a false of fraudulent claim.
  3. Making a “reverse false claim.” This is when a person or company knowingly under-reports an obligation to pay money to the Government or improperly keeps money after an over-payment from the Government.
  4. Conspiring to do any of the above.

If a private citizen knows that somebody has committed one of the above violations, the False Claims Act allow that person to become a whistleblower by filing a lawsuit in federal court. The lawsuit remains under seal for at least 60 days, usually longer. During that time, the Government investigates the allegations of the lawsuit and then makes a decision whether to intervene, which means to take over the case. If the Government declines to intervene, the whistleblower has the option to continue the lawsuit on his or her own in order to prosecute the fraud on behalf of the Government.

The False Claims Act provides powerful remedies for the Government. If a Defendant violates the Act, the Defendant can be held liable for up to three times the amount of damages suffered by the Government, as well as penalties.

The False Claims Act also provides for substantial rewards for whistleblowers, also called relators. In intervened cases, the relator is entitled to an award of at least 15% but not more than 25% of the Government’s recovery. In non-intervened cases, the relator is entitled to a larger share, at least 25% but not more than 30% of the Government’s recovery.

To view the entire False Claims Act, click here.

Please Note: Rabin Kammerer Johnson provides these FAQ’s for informational purposes only, and you should not interpret this information as legal advice. If you want advice as to how the law might apply to the specific facts and circumstances of your case, click here to contact one of our attorneys.

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