The False Claims Act has a very detailed process for the filing and pursuit of frauds against the government. The whistleblower complaint is filed under seal, with copies of the complaint being given to the United States Department of Justice, including the local United States Attorney, and to the assigned judge of the District Court. The government will investigate the allegations of violations of the False Claims Act, bringing to bear all its investigative expertise, both at the federal, and often at the state level as well.
The investigation will often involve specific investigative techniques, including subpoenas for documents or electronic records, witness interviews, compelled oral testimony from one or more individuals or organizations, and consultations with experts. If there is a parallel criminal investigation, search warrants and other criminal investigation tools may be used to obtain evidence as well.
At the conclusion of the investigation, the Department of Justice will decide whether to intervene in one or all counts of the pending whistleblower 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.
When deciding if a potential whistleblower case is worthwhile, a whistleblower should review the False Claims Act Statute, and specifically needs to consider the following:
- The whistleblower should have actual knowledge of the fraud, not just a suspicion. The whistleblower should be able to provide specific evidence of the fraud, including the “who, what, when and where” of the fraud.
- The whistleblower’s evidence of the fraud cannot come from a publicly disclosed source such as a newspaper, TV, magazine, radio, court record, administrative hearing, Congressional hearing, U.S. General Accounting Office report, or Freedom of Information Act request.
- Federal money must be involved, or, in a state with a state False Claims Acts, state money must be involved.
- The fraud cannot involve a state defrauding the Federal government, though it can involve a County or City defrauding the Federal government.
- The company or entity that submitted false claims to the government must have done so knowingly.
- Generally, the case needs to be filed within six years of the violation.
- The fraud needs to rise to a sizeable level, and there has to be a reasonable expectation that the entity engaged in the fraud will be able to pay back the stolen money and the associated fines.
Originally enacted in 1863, the False Claims Act was sponsored by President Lincoln in response to widespread fraud committed by government contractors during the Civil War. Under the False Claims Act, a private citizen, the whistleblower, brings a lawsuit on behalf of himself and the United States against anyone who presented a false or fraudulent claim to the government.
Whistleblowers under the False Claims Act can recover a reward ranging from 15% to 30% of the government’s recovery.
The False Claims Act was not widely used over the next century, and therefore was not an effective deterrent against fraud on the government. Congress drastically overhauled the False Claims Act in 1986, passing a number of amendments designed to make it a more effective tool in combating fraud.