False Claims Act
Encyclopedia
The False Claims Act is an American federal law
that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. The law includes a "qui tam
" provision that allows people who are not affiliated with the government to file actions
on behalf of the government (informally called "whistleblowing
"). Persons filing under the Act stand to receive a portion (usually about 15–25 percent) of any recovered damages
. Claims under the law have typically involved health care, military, or other government spending programs. The government has recovered nearly $22 billion under the False Claims Act between 1987 (after the significant 1986 amendments) and 2008.
(1861–1865) was marked by fraud on all levels, both in the Union
north and the Confederate
south. During the war, unscrupulous contractors sold the Union Army
decrepit horse
s and mule
s in ill health, faulty rifle
s and ammunition
, and rancid rations and provisions, among other unscrupulous actions. In response, Congress passed the False Claims Act on March 2, 1863, .
Importantly, a reward was offered in what is called the "qui tam
" provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery. Qui tam is an abbreviated form of the Latin legal phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur ("he who brings a case on behalf of our lord the King, as well as for himself") In a qui tam action, the citizen filing suit is called a "relator". As an exception to the general legal rule of standing
, courts have held that qui tam relators are "partially assigned" a portion of the government's legal injury, thereby allowing relators to proceed with their suits.
The most commonly used of these provisions are the first and second, prohibiting the presentation of false claims to the government and making false records to get a false claim paid. By far the most frequent cases involve situations in which a defendant—usually a corporation but on occasion an individual—overcharges the federal government for goods or services. Other typical cases entail failure to test a product as required by the rigorous government specifications or selling defective products.
The False Claims Act was amended in 1943 to, most notably, reduce the relator's share of the recovered proceeds.* The law was again amended in 1986. By that time, there was great concern that the national deficit had risen dangerously and President Ronald Reagan
had declared that a vast amount of government spending was being misused through waste and fraud.
After the 1986 amendments strengthening the Act were passed (see below), the Act was used primarily against defense contractors. By the late 1990s, however, the focus had shifted to health care fraud, which now accounts for the majority of cases filed by whistleblower
s and by the government.
Under the False Claims Act, the Department of Justice
is authorized to pay rewards to those who report fraud against the federal government in an amount of between 15 and 30 percent of what it recovers based upon the whistleblower's report.
Certain claims are not actionable, including:
There are unique procedural requirements in False Claims Act cases. For example:
With this revision, the FCA now prohibits knowingly (changes are in bold):
must be filed in U.S. District Court (federal court) in camera (under seal). After an investigation by the Department of Justice
within 60 days, or frequently several months after an extension is granted, the Department of Justice decides whether it will pursue the case.
If the case is pursued, the amount of the reward is less than if the Department of Justice decides not to pursue the case and the plaintiff/relator continues the lawsuit himself. However, the success rate is higher in cases that the Department of Justice decides to pursue.
Technically, the government has several options in handing cases. These include:
In practice, there are two other options for the Department of Justice:
There is case law where claims may be prejudiced if disclosure of the alleged unlawful act has been reported in the press, if complaints were filed to an agency instead of filing a lawsuit, or if the person filing a claim under the act is not the first person to do so. Individual states in the U.S. have different laws regarding whistleblowing involving state governments.
held that a private individual may not bring suit in federal court on behalf of the United States against a State (or state agency) under the FCA. In Stevens, the Supreme Court also endorsed the "partial assignment" approach to qui tam relator standing (law)
to sue, which had previously been articulated by the Ninth Circuit Federal Court of Appeals and is an exception to the general legal rule for standing.
In a 2007 case, Rockwell International Corp. v. United States
, the United States Supreme Court
considered several issues relating to the "original source" exception to the FCA's public-disclosure bar. The Court held that (1) the original source requirement of the FCA provision setting for the original-source exception to the public-disclosure bar on federal-court jurisdiction is jurisdictional; (2) the statutory phrase "information on which the allegations are based" refers to the relator's allegations and not the publicly disclosed allegations; the terms "allegations" is not limited to the allegations in the original complaint, but includes, at a minimum, the allegations in the original complaint as amended; (3) relator's knowledge with respect to the pondcrete fell short of the direct and independent knowledge of the information on which the allegations are based required for him to qualify as an original source; and (4) the government's intervention did not provide an independent basis of jurisdiction with respect to the relator.
In a 2008 case, Allison Engine Co. v. United States ex rel. Sanders
, the United States Supreme Court
considered whether a false claim had to be presented directly to the Federal government, or if it merely needed to be paid with government money, such as a false claim by a subcontractor to a prime contractor. The Court found that the claim need not be presented directly to the government, but that the false statement must be made with the intention that it will be relied upon by the government in paying, or approving payment of, a claim. The Fraud Enforcement and Recovery Act of 2009
reversed the Court's decision and made the types of fraud to which the False Claims Act applies more explicit.
In a 2009 case, United States ex rel. Eisenstein v. City of New York
, the United States Supreme Court
considered whether, when the government declines to intervene or otherwise actively participate in a "qui tam
" action under the False Claims Act, the United States is a "party" to the suit for purposes of Federal Rule of Appellate Procedure 4(a)(1)(A) (which requires that a notice of appeal in a federal civil action generally be filed within 30 days after entry of a judgment or order from which the appeal is taken). The Court held that when the United States has declined to intervene in a privately initiated FCA action, it is not a "party" for FRAP 4 purposes, and therefore, petitioner's appeal filed after 30 days was untimely.
provisions, which enables them to recover money at state level. Many of these statutes mirror the federal False-Claims Act. Michigan has limited its false-claims act to its Medicaid system.
The California False Claims Act was enacted in 1987, but lay relatively dormant until the early 1990s, when public entities, frustrated by what they viewed as a barrage of unjustified and unmeritorious claims, began to employ the False Claims Act as a defensive measure. Recent developments in the California False Claims Act reduce the defenses contractors have to false claim prosecutions, by stripping away immunities that were believed to apply to certain classes of statements and claims. As a result, contractors can expect to see their payment claims answered by false claims accusations with increasing frequency.
It has recently be argued that legislation modeled on the False Claims Act should be introduced in Australia and apply to the tobacco industry and carbon pricing schemes
Two qui tam lawsuits brought by whistleblowers (“Relators”) under the provisions of the Federal False Claims Act (FCA) has resulted in a significant recovery for taxpayers. The $22 Million state and federal recovery resolves the Relators allegations that Schwarz Pharma Inc. and its subsidiary Kremers Urban, LLC sold drugs to Medicaid that had never been approved by the FDA for safety and effectiveness as required by law. Pursuant to the settlement, the two whistleblowers will receive a total of $1,836,575 from the federal share and additional amounts from the states. The settlement resolves allegations against Schwarz in two separate multi-defendant whistleblower actions captioned United States ex rel. Constance Conrad v. Schwarz Pharma, et al., No. 02-11738-NG (D. Mass.), and United States ex rel. James Conrad v. Kremers Urban, et al., Civil No. 08-cv-428 (S.D. Tex.).
Federal law
Federal law is the body of law created by the federal government of a country. A federal government is formed when a group of political units, such as states or provinces join together in a federation, surrendering their individual sovereignty and many powers to the central government while...
that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. The law includes a "qui tam
Qui tam
In common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
" provision that allows people who are not affiliated with the government to file actions
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
on behalf of the government (informally called "whistleblowing
Whistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
"). Persons filing under the Act stand to receive a portion (usually about 15–25 percent) of any recovered damages
Damages
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
. Claims under the law have typically involved health care, military, or other government spending programs. The government has recovered nearly $22 billion under the False Claims Act between 1987 (after the significant 1986 amendments) and 2008.
History
The American Civil WarAmerican Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
(1861–1865) was marked by fraud on all levels, both in the Union
Union (American Civil War)
During the American Civil War, the Union was a name used to refer to the federal government of the United States, which was supported by the twenty free states and five border slave states. It was opposed by 11 southern slave states that had declared a secession to join together to form the...
north and the Confederate
Confederate States of America
The Confederate States of America was a government set up from 1861 to 1865 by 11 Southern slave states of the United States of America that had declared their secession from the U.S...
south. During the war, unscrupulous contractors sold the Union Army
Union Army
The Union Army was the land force that fought for the Union during the American Civil War. It was also known as the Federal Army, the U.S. Army, the Northern Army and the National Army...
decrepit horse
Horse
The horse is one of two extant subspecies of Equus ferus, or the wild horse. It is a single-hooved mammal belonging to the taxonomic family Equidae. The horse has evolved over the past 45 to 55 million years from a small multi-toed creature into the large, single-toed animal of today...
s and mule
Mule
A mule is the offspring of a male donkey and a female horse. Horses and donkeys are different species, with different numbers of chromosomes. Of the two F1 hybrids between these two species, a mule is easier to obtain than a hinny...
s in ill health, faulty rifle
Rifle
A rifle is a firearm designed to be fired from the shoulder, with a barrel that has a helical groove or pattern of grooves cut into the barrel walls. The raised areas of the rifling are called "lands," which make contact with the projectile , imparting spin around an axis corresponding to the...
s and ammunition
Ammunition
Ammunition is a generic term derived from the French language la munition which embraced all material used for war , but which in time came to refer specifically to gunpowder and artillery. The collective term for all types of ammunition is munitions...
, and rancid rations and provisions, among other unscrupulous actions. In response, Congress passed the False Claims Act on March 2, 1863, .
Importantly, a reward was offered in what is called the "qui tam
Qui tam
In common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
" provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery. Qui tam is an abbreviated form of the Latin legal phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur ("he who brings a case on behalf of our lord the King, as well as for himself") In a qui tam action, the citizen filing suit is called a "relator". As an exception to the general legal rule of standing
Standing (law)
In law, standing or locus standi is the term for the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case...
, courts have held that qui tam relators are "partially assigned" a portion of the government's legal injury, thereby allowing relators to proceed with their suits.
Provisions
The Act establishes liability when any person or entity improperly receives from or avoids payment to the Federal government (tax fraud is excepted). The Act prohibits:- Knowingly presenting, or causing to be presented a false claim for payment or approval;
- Knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim;
- ConspiringConspiracy (civil)A civil conspiracy or collusion is an agreement between two or more parties to deprive a third party of legal rights or deceive a third party to obtain an illegal objective....
to commit any violation of the False Claims Act; - Falsely certifying the type or amount of property to be used by the Government;
- Certifying receipt of property on a document without completely knowing that the information is true;
- Knowingly buying Government property from an unauthorized officer of the Government, and;
- Knowingly making, using, or causing to be made or used a false record to avoid, or decrease an obligation to pay or transmit property to the Government.
The most commonly used of these provisions are the first and second, prohibiting the presentation of false claims to the government and making false records to get a false claim paid. By far the most frequent cases involve situations in which a defendant—usually a corporation but on occasion an individual—overcharges the federal government for goods or services. Other typical cases entail failure to test a product as required by the rigorous government specifications or selling defective products.
The False Claims Act was amended in 1943 to, most notably, reduce the relator's share of the recovered proceeds.* The law was again amended in 1986. By that time, there was great concern that the national deficit had risen dangerously and President Ronald Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
had declared that a vast amount of government spending was being misused through waste and fraud.
After the 1986 amendments strengthening the Act were passed (see below), the Act was used primarily against defense contractors. By the late 1990s, however, the focus had shifted to health care fraud, which now accounts for the majority of cases filed by whistleblower
Whistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
s and by the government.
Under the False Claims Act, the Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
is authorized to pay rewards to those who report fraud against the federal government in an amount of between 15 and 30 percent of what it recovers based upon the whistleblower's report.
Certain claims are not actionable, including:
- certain actions against armed forces members, members of Congress, members of the judiciary, or senior executive branch officials;
- claims, records, or statements made under the Internal Revenue Code of 1986 which would include tax fraud;
There are unique procedural requirements in False Claims Act cases. For example:
- a complaint under the False Claims Act must be filed under seal;
- the complaint must be served on the government but must not be served on the defendant;
- the complaint must be buttressed by a comprehensive memorandum, not filed in court, but served on the government detailing the factual underpinnings of the complaint.
1986 changes
(False Claims Act Amendments- The elimination of the "government possession of information" bar against qui tamQui tamIn common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
lawsuits; - The establishment of defendant liability for "deliberate ignorance" and "reckless disregard" of the truth;
- Restoration of the "preponderance of the evidence" standard for all elements of the claim including damages;
- Imposition of treble damages and civil fines of $5,000 to $10,000 per false claim;
- Increased rewards for qui tam plaintiffs of between 15–30 percent of the funds recovered from the defendant;
- Defendant payment of the successful plaintiff's expenses and attorney's fees, and;
- Employment protection for whistleblowers including reinstatement with seniority status, special damages, and double back pay.
2009 changes
On May 20, 2009, the Fraud Enforcement and Recovery Act of 2009 ("FERA") was signed into law. It includes the most significant amendments to the FCA since the 1986 amendments. FERA enacted the following changes:- Expanded the scope of potential FCA liability by eliminating the "presentment" requirement (effectively overruling the Supreme Court's opinion in Allison Engine Co. v. United States ex rel. SandersAllison Engine Co. v. United States ex rel. SandersAllison Engine Co. v. United States ex rel. Sanders, No. 07-214, 553 U.S. 662 , was a decision by the Supreme Court of the United States holding that plaintiffs under the False Claims Act must prove that the false claim was made with the specific intent of inducing the government to pay or approve...
, 128 S. Ct. 2123 (2008)); - Redefined "claim" under the FCA to mean "any request or demand, whether under a contract or otherwise for money or property and whether or not the United States has title to the money or property" that is (1) presented directly to the United States, or (2) "to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest" and the government provides or reimburses any portion of the requested funds;
- Amended the FCA's intent requirement, and now requiring only that a false statement be "material to" a false claim;
- Expanded conspiracy liability for any violation of the provisions of the FCA;
- Amended the "reverse false claims" provisions to expand liability to "knowingly and improperly avoid[ing] or decreas[ing] an obligation to pay or transmit money or property to the Government;"
- Increased protection for qui tam plaintiffs/relators beyond employees, to include contractors and agents;
- Procedurally, the government's complaint will now relate back to the qui tam plaintiff/relator's filing;
- Provided that whenever a state or local government is named as a co-plaintiff in an action, the government or the relator "shall not [be] preclude[d] . . . from serving the complaint, any other pleadings, or the written disclosure of substantially all material evidence;"
- Increased the Attorney General's power to delegate authority to conduct Civil Investigative Demands prior to intervening in an FCA action.
With this revision, the FCA now prohibits knowingly (changes are in bold):
- Submitting for payment or reimbursement a claim known to be false or fraudulent.
- Making or using a false record or statement material to a false or fraudulent claim or to an ‘obligation’ to pay money to the government.
- Engaging in a conspiracy to defraud by the improper submission of a false claim.
- Concealing, improperly avoiding or decreasing an ‘obligation’ to pay money to the government.
2010 changes under the Patient Protection and Affordable Care Act
On March 23, 2010, the Patient Protection and Affordable Care Act (also referred to as the health reform bill or "PPACA") was signed into law by President Barack Obama. The Affordable Care Act made further amendments to the False Claims Act, including:- Changes to the Public Disclosure Bar. Under the previous version of the FCA, cases filed by private individuals or “relators” could be barred if it was determined that such cases were based on a public disclosure of information arising from certain proceedings, such as civil, criminal or administrative hearings, or news media reports. As a result, defendants frequently used the public disclosure bar as a defense to a plaintiff’s claims and grounds for dismissal of the same. PPACA amended the language of the FCA to allow the federal government to have the final word on whether a court may dismiss a case based on a public disclosure. The language now provides that “the court shall dismiss an action unless opposed by the Government, if substantially the same allegations or transaction alleges in the action or claim were publicly disclosed.” See 31 U.S.C. 3730(e)(4)(A).
- Original Source Requirement. A plaintiff may overcome the public disclosure bar outlined above if they qualify as an “original source,” the definition of which has also been revised by PPACA. Previously, an original source must have had “direct and independent knowledge of the information on which the allegations are based.” Under PPACA, an original source is now someone who has “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions.” See 31 U.S.C. 3730(e)(4)(B).
- Overpayments. FERA redefined “obligation” under the FCA to include “retention of any overpayments.” Accordingly, such language imposed FCA liability on any provider who received Medicare/Medicaid overpayments (accidentally or otherwise) and fails to return the money to the government. However, FERA also raised questions as to what exactly is involved in the “retention of overpayments” – for example, how long a provider had to return monies after discovering an overpayment. PPACA clarified the changes to the FCA made by FERA. Under PPACA, overpayments under Medicare and Medicaid must be reported and returned within 60 days of discovery, or the date a corresponding hospital report is due. Failure to timely report and return an overpayment exposes a provider to liability under the FCA.
- Statutory Anti-Kickback Liability. The federal Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b) (“AKS”) is a criminal statute which makes it improper for anyone to solicit, receive, offer or pay remuneration (monetary or otherwise) in exchange for referring patients to receive certain services that are paid for by the government. Previously, many courts had interpreted the FCA to mean that claims submitted as a result of AKS violations were false claims and therefore gave rise to FCA liability (in addition to AKS penalties). However, although this was the “majority rule” among courts, there were always opportunities for courts to hold otherwise. Importantly, PPACA changed the language of the AKS to provide that claims submitted in violation of the AKS automatically constitute false claims for purposes of the FCA. Further, the new language of the AKS provides that “a person need not have actual knowledge … or specific intent to commit a violation” of the AKS. Accordingly, providers will not be able to successfully argue that they did not know they were violating the FCA because they were not aware the AKS existed.
Practical application of the law
The False Claims Act has a detailed process for making a claim under the Act. Mere complaints to the government agency are insufficient to bring claims under the Act. A complaint (lawsuit)must be filed in U.S. District Court (federal court) in camera (under seal). After an investigation by the Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
within 60 days, or frequently several months after an extension is granted, the Department of Justice decides whether it will pursue the case.
If the case is pursued, the amount of the reward is less than if the Department of Justice decides not to pursue the case and the plaintiff/relator continues the lawsuit himself. However, the success rate is higher in cases that the Department of Justice decides to pursue.
Technically, the government has several options in handing cases. These include:
- 1) intervene in one or more counts of the pending qui tam action. This intervention expresses the Government’s intention to participate as a plaintiff in prosecuting that count of the complaint. Fewer than 25% of filed qui tam actions result in an intervention on any count by the Department of Justice.
- 2) decline to intervene in one or all counts of the pending qui tam action. If the United States declines to intervene, the relator may prosecute the action on behalf of the United States, but the United States is not a party to the proceedings apart from its right to any recovery. This option is frequently used by relators and their attorneys.
- 3) move to dismiss the relator’s complaint, either because there is no case, or the case conflicts with significant statutory or policy interests of the United States.
In practice, there are two other options for the Department of Justice:
- 4) settle the pending qui tam action with the defendant prior to the intervention decision. This usually, but not always, results in a simultaneous intervention and settlement with the Department of Justice (and is included in the 25% intervention rate).
- 5) advise the relator that the Department of Justice intends to decline intervention. This usually, but not always, results in dismissal of the qui tam action, according to the U.S. Attorneys' Office of the Eastern District of Pennsylvania.
There is case law where claims may be prejudiced if disclosure of the alleged unlawful act has been reported in the press, if complaints were filed to an agency instead of filing a lawsuit, or if the person filing a claim under the act is not the first person to do so. Individual states in the U.S. have different laws regarding whistleblowing involving state governments.
Relevant decisions by the United States Supreme Court
In a 2000 case, Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000), the United States Supreme CourtSupreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
held that a private individual may not bring suit in federal court on behalf of the United States against a State (or state agency) under the FCA. In Stevens, the Supreme Court also endorsed the "partial assignment" approach to qui tam relator standing (law)
Standing (law)
In law, standing or locus standi is the term for the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case...
to sue, which had previously been articulated by the Ninth Circuit Federal Court of Appeals and is an exception to the general legal rule for standing.
In a 2007 case, Rockwell International Corp. v. United States
Rockwell International Corp. v. United States
Rockwell International Corp. v. United States, No. 05-1272, 549 U.S. 457 , was a case in which the Supreme Court of the United States that examined the "original source" exception to the "public-disclosure" bar of the False Claims Act...
, the United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
considered several issues relating to the "original source" exception to the FCA's public-disclosure bar. The Court held that (1) the original source requirement of the FCA provision setting for the original-source exception to the public-disclosure bar on federal-court jurisdiction is jurisdictional; (2) the statutory phrase "information on which the allegations are based" refers to the relator's allegations and not the publicly disclosed allegations; the terms "allegations" is not limited to the allegations in the original complaint, but includes, at a minimum, the allegations in the original complaint as amended; (3) relator's knowledge with respect to the pondcrete fell short of the direct and independent knowledge of the information on which the allegations are based required for him to qualify as an original source; and (4) the government's intervention did not provide an independent basis of jurisdiction with respect to the relator.
In a 2008 case, Allison Engine Co. v. United States ex rel. Sanders
Allison Engine Co. v. United States ex rel. Sanders
Allison Engine Co. v. United States ex rel. Sanders, No. 07-214, 553 U.S. 662 , was a decision by the Supreme Court of the United States holding that plaintiffs under the False Claims Act must prove that the false claim was made with the specific intent of inducing the government to pay or approve...
, the United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
considered whether a false claim had to be presented directly to the Federal government, or if it merely needed to be paid with government money, such as a false claim by a subcontractor to a prime contractor. The Court found that the claim need not be presented directly to the government, but that the false statement must be made with the intention that it will be relied upon by the government in paying, or approving payment of, a claim. The Fraud Enforcement and Recovery Act of 2009
Fraud Enforcement and Recovery Act of 2009
The Fraud Enforcement and Recovery Act of 2009, or FERA, , is a public law in the United States enacted in 2009. The law enhanced criminal enforcement of federal fraud laws, especially regarding financial institutions, mortgage fraud, and securities fraud or commodities fraud.-Legislative history:U.S...
reversed the Court's decision and made the types of fraud to which the False Claims Act applies more explicit.
In a 2009 case, United States ex rel. Eisenstein v. City of New York
United States ex rel. Eisenstein v. City of New York
United States ex rel. Eisenstein v. City of New York, No. 08-660, 556 U.S. ___ , was a recent case in which the Supreme Court of the United States held that where the Government has not intervened or actively participated, private plaintiffs under the False Claims Act must filed an appeal within 30...
, the United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
considered whether, when the government declines to intervene or otherwise actively participate in a "qui tam
Qui tam
In common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
" action under the False Claims Act, the United States is a "party" to the suit for purposes of Federal Rule of Appellate Procedure 4(a)(1)(A) (which requires that a notice of appeal in a federal civil action generally be filed within 30 days after entry of a judgment or order from which the appeal is taken). The Court held that when the United States has declined to intervene in a privately initiated FCA action, it is not a "party" for FRAP 4 purposes, and therefore, petitioner's appeal filed after 30 days was untimely.
State False Claims Acts and Application in Other Jurisdictions
Several states have also created false-claims statutes to protect their publicly funded programs from fraud by including qui tamQui tam
In common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
provisions, which enables them to recover money at state level. Many of these statutes mirror the federal False-Claims Act. Michigan has limited its false-claims act to its Medicaid system.
The California False Claims Act was enacted in 1987, but lay relatively dormant until the early 1990s, when public entities, frustrated by what they viewed as a barrage of unjustified and unmeritorious claims, began to employ the False Claims Act as a defensive measure. Recent developments in the California False Claims Act reduce the defenses contractors have to false claim prosecutions, by stripping away immunities that were believed to apply to certain classes of statements and claims. As a result, contractors can expect to see their payment claims answered by false claims accusations with increasing frequency.
It has recently be argued that legislation modeled on the False Claims Act should be introduced in Australia and apply to the tobacco industry and carbon pricing schemes
ACLU et al. v. Holder
The American Civil Liberties Union (ACLU), Government Accountability Project (GAP) and OMB Watch commenced the lawsuit seeking to have the provision of the law that permits whistleblowers to file their cases confidentially declared unconstitutional. The Department of Justice and other whistleblower protection groups opposed the lawsuit. The Appeals Court rejected the plaintiffs' claims on March 28, 2011. The National Whistleblowers Center (NWC) publicly asked the three plaintiffs in the court case ACLU et al. v. Holder not to appeal the decision of the U.S. Court of Appeals for the Fourth Circuit dismissing their challenge to a key provision of the False Claims Act (FCA)Examples
In 2010, a subsidiary of Johnson & Johnson agreed to pay over $81 million in civil and criminal penalties to resolve allegations in a FCA suit filed by two whistleblowers. The suit alleged that Ortho-McNeil-Janssen Pharmaceuticals, Inc. (OMJPI) acted improperly concerning the marketing, promotion and sale of the anti-convulsant drug Topamax. Specifically, the suit alleged that OMJPI "illegally marketed Topamax® by, among other things, promoting the sale and use of Topamax® for a variety of psychiatric conditions other than those for which its use was approved by the Food and Drug Administration, (i.e. "off-label" uses)." It also states that "certain of these uses were not medically-accepted indications for which State Medicaid programs provided coverage" and that as a result "OMJPI knowingly caused false or fraudulent claims for Topamax® to be submitted to, or caused purchase by, certain federally-funded healthcare programs.Two qui tam lawsuits brought by whistleblowers (“Relators”) under the provisions of the Federal False Claims Act (FCA) has resulted in a significant recovery for taxpayers. The $22 Million state and federal recovery resolves the Relators allegations that Schwarz Pharma Inc. and its subsidiary Kremers Urban, LLC sold drugs to Medicaid that had never been approved by the FDA for safety and effectiveness as required by law. Pursuant to the settlement, the two whistleblowers will receive a total of $1,836,575 from the federal share and additional amounts from the states. The settlement resolves allegations against Schwarz in two separate multi-defendant whistleblower actions captioned United States ex rel. Constance Conrad v. Schwarz Pharma, et al., No. 02-11738-NG (D. Mass.), and United States ex rel. James Conrad v. Kremers Urban, et al., Civil No. 08-cv-428 (S.D. Tex.).
See also
- Fr. John CorapiFr. John CorapiJohn Anthony Corapi, S.O.L.T. is a Catholic priest from the United States who was removed from public ministry in 2011. Throughout the last decade, he gained in popularity from his regular appearances on Catholic television, his syndicated daily Catholic radio show, published instructional media...
, who successfully sued under the Act for unnecessary heart surgery - Qui tamQui tamIn common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
- Medicare FraudMedicare FraudIn the United States, Medicare fraud is a general term that refers to an individual or corporation that seeks to collect Medicare health care reimbursement under false pretenses...
- War profiteeringWar profiteeringA war profiteer is any person or organization that profits from warfare or by selling weapons and other goods to parties at war. The term has strong negative connotations. General profiteering may also occur in peace time.-International arms dealers:...