Highlights of the Federal False Claims Act ("FCA") for Whistleblower & Qui Tam

Fraud Plaintiffs, Relators & their Lawyers/Attorneys/Law Firms

By Attorney Joseph P. Griffith, Jr.

A suit under the federal False Claims Act (FCA), also known as a “qui tam” action,
allows people who have insider information of fraud against the Government, known
as a “relator” or “whistleblower,” to file a suit to help stop the perpetrators
from defrauding the United States Government. The False Claims Act seeks to deter
fraud against the United States Government by providing for penalties of up to
three times the amount of the fraud in addition to fines of $5,000 to $11,000 per
violation. It is estimated that the United States has collected almost $8 billion
in fines and penalties in False Claims Act cases since 1986. The FCA is codified
as 31 United States Code Sections 3729 - 3732.

It is critical that the whistleblower come forward with his information as soon as
possible. The False Claims Act requires that the relator be an “original source”
of the information, which generally means that he has direct and independent
knowledge of the fraudulent conduct and he has voluntarily provided this
information to the Government before filing the qui tam suit. Information about
fraudulent conduct which is in the public domain prior to the time the
whistleblower reports the same to the Government generally precludes the
prosecution of a qui tam suit.

If the qui tam suit alleging false claims is successful, the whistleblower or
relator will also be entitled to 15-30% of the government's total recovery, which
includes damages for the false claims, treble damages, plus civil penalties of
from $5,000 to $10,000 per false claim. To recover this bounty, the relator must
have complied with the complex and unusual statutory requirements, however. Merely
providing information to a hotline will not entitle the relator to a recovery
under the False Claims Act.

31 U.S.C.A. § 3729, entitled “False Claims,” provides as follows: (a) Liability

for certain acts.--Any person who-- (1) knowingly presents, or causes to be
presented, to an officer or employee of the United States Government or a member
of the Armed Forces of the United States a false or fraudulent claim for payment
or approval; (2) knowingly makes, uses, or causes to be made or used, a false
record or statement to get a false or fraudulent claim paid or approved by the
Government; (3) conspires to defraud the Government by getting a false or
fraudulent claim allowed or paid; (4) has possession, custody, or control of
property or money used, or to be used, by the Government and, intending to defraud
the Government or willfully to conceal the property, delivers, or causes to be
delivered, less property than the amount for which the person receives a
certificate or receipt;(5) 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; (6) 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 the property; or (7) knowingly makes, uses, or causes to be made or used, a
false record or statement to conceal, avoid, or decrease an obligation to pay or
transmit money or property to the Government, is liable to the United States
Government for a civil penalty of not less than $5,000 and not more than $10,000,
plus 3 times the amount of damages which the Government sustains because of the
act of that person....

Unlike most other lawsuits, a complaint under the False Claims Act must be served
upon the government but must not be served on the defendant until ordered by the
court, must be filed under seal, and must be supported by a detailed disclosure
memorandum, not filed in court, but served on the government, setting forth the
factual underpinnings of the complaint, together with copies of all relevant
documents. The attorney for the plaintiff/relator to discuss the case or to
disclose its existence to anyone, including the defendant and the media, as to do
so could impair the government's ability to investigate the allegations in secret.
A whistleblower or qui tam plaintiff's failure to follow these unique statutory
requirements of the False Claims Act (FCA) can result in dismissal of the action.

After the complaint is filed under seal, and a disclosure memorandum and related
documents are served on the government, the government has 60 days to intervene or
decline to intervene, move for an extension of time to determine whether to
intervene, seek dismissal of the action, or settle the case per §3730(b)(4). The
government will usually request numerous extensions of the 60-day initial
investigatory period, however, as 60 days typically is too short a time period for
the government to complete an investigation. Upon completion of its investigation,
the government has the option to take over, or intervene in, the case. Regardless
of whether the government intervenes, the relator or whistleblower who has
complied with the proper procedures and is not otherwise barred from recovery, is
still entitled to a share of the recovery, and may pursue the case on behalf of
the government.

The statute of limitations for an FCA qui tam/whisltleblower action is found in

Title 31, Section 3731(b) of the United States Code.“A civil action under section
3730 may not be brought—(1) more than 6 years after the date on which the
violation of section 3729 is committed, or (2) more than 3 years after the date
when facts material to the right of action are known or reasonably should have
been known by the official of the United States charged with responsibility to act
in the circumstances, but in no event more than 10 years after the date on which
the violation is committed, whichever occurs last.” In determining which
limitations period applies to an FCA action, courts examine the time at which
either the relator or the Government became aware or knew of the violation.

The qui tam or whistleblower plaintiff should contact an experienced FCA

litigation attorney. Few attorneys handle qui tam or False Claims Act
whistleblower cases on a regular basis. Contacting a former Assistant U.S.
Attorney or U.S. Department of Justice fraud litigator is highly recommended.

Joseph P. Griffith, Jr., Esquire

Joe Griffith Law Firm, LLC
7 State Street
Charleston, South Carolina (SC) 29401
(843) 225-5563 (tel)
(843) 722-6254 (fax)
www.joegriffith.com
www.joegriffith.com/qui-tam-whistleblower-claims.html

Attorney Joseph Griffith is a former prosecutor for the U.S. Department of Justice
who focuses on qui tam/whistleblower law suits.