False Claims Act – Employee Rights

Where there is a Wrong there is a Remedy

Do you know of a company or individual that is defrauding the government? Under the Federal False Claims Act, you may be able to bring a qui tam action. If the action is successful, you may be entitled to a significant portion of the recovery.

The attorneys of Begelman & Orlow, P. C. can guide you through the process. To answer general question about qui tam actions, we have provided the following information. However, each case depends upon the particular facts of the situation.

If you think you have a qui tam action under the Federal False Claims Act, contact our firm today for a free initial consultation. We’ll help you understand your options.

What is The Federal False Claims Act?

The federal False Claims Act (the “Act”) permits a person with knowledge of fraud against the United States Government, known as the “qui tam plaintiff,” to file a lawsuit on behalf of the Government against the person or business that committed the fraud (the defendant). The plaintiff is also referred to as the “whistleblower” or “relator.” If the action is successful the qui tam plaintiff is rewarded with a percentage of the recovery, known as a Relator’s Share.

Prior to filing the “qui tam lawsuit” the plaintiff must voluntarily provide the U.S Department of Justice (“DOJ”) with all available information about the fraud. After the lawsuit is filed, but before the defendant is notified of the lawsuit, the qui tam plaintiff serves the lawsuit on the DOJ.

The DOJ then has the option of intervening and taking over prosecution of the lawsuit from the qui tam plaintiff. If the DOJ decides not to intervene, the qui tam plaintiff may pursue the lawsuit on behalf of the Government. The Act provides that if the fraud is proven, the defendant in a qui tam action is may be liable for three times the damages sustained by the Government because of the fraud.

In addition, the defendant is liable for an additional $5,500 to $11,000 for each false claim it made to the Government. The qui tam plaintiff’s share of the damages recovered depends on whether the Justice Department intervenes and takes over the case. If the Justice Department takes over, the qui tam plaintiff is entitled to between 15% and 25% of the recovery. If the Justice Department does not intervene, and the qui tam plaintiff pursues the action individually, the qui tam plaintiff is entitled to between 25% and 30% of the recovery.

Why did Congress enact the False Claims Act?
In introducing amendments to the False Claims Act in 1985, Senator Charles Grassley explained the purpose behind the Act:

The government needs help – lots of help – to adequately protect the Treasury against growing and increasingly sophisticated fraud … Part of the solution — something I consider essential to any meaningful improvements in cutting down fraud – is the establishment of a solid partnership between public law enforcers and public taxpayers. The Federal government has a big job on its hands as it attempts to ensure the integrity of the nearly $1 trillion we spend each year on various programs and procurement. That job is simply too big if government officials are working alone.

Thus, the False Claims Act is aimed at establishing a law enforcement “partnership” between law enforcement and public taxpayers.

Who can be a “qui tam” plaintiff?
If the fraud has not already been publicly disclosed, any person may bring a qui tam action regardless of whether he or she has “direct” or first-hand knowledge of the fraud. Thus, where there has been no public disclosure, an employee that learns from a colleague of fraud by his or her employer at work may bring a qui tam action, even if the qui tam plaintiff personally has no first-hand knowledge.

If the fraud has already been publicly disclosed, a person may still bring a qui tam action if he or she has direct knowledge of the fraud, independent of the publicly disclosed information. Thus, if an employee personally observes or uncovers fraud by his or her employer, or another person or company, the employee may bring a qui tam action even if the information has already been publicly disclosed.

What constitutes public disclosure? Obviously, information is publicly disclosed if it is printed or broadcast in the news media. However, public disclosure may also occur if the information has been disclosed in another criminal or civil lawsuit or in a Government Accounting Office report or hearing, even if the general public does not have access to the information. Anyone who has knowledge of fraud against the Government should seek legal advice to determine whether he or she qualifies to bring a qui tam action. Contact our offices today to discuss your potential legal claims with one of our attorneys.

What types of fraud qualify?
When a person deliberately uses a misrepresentation or other deceitful means to obtain something to which he or she is not otherwise entitled, that person has committed fraud. However, under the False Claims Act, fraud has a much wider and more inclusive meaning.

Under the Act, the defendant need not have actually known that the information it provided to the Government was false. It is sufficient that the defendant supplied the information to the Government either: (i) in “deliberate ignorance” of the truth or falsity of the information; or (ii) in “reckless disregard” of the truth or falsity of the information.

In other words, the Act is not limited solely to those who intentionally misrepresent facts to obtain payments or other benefits from the Government; it also covers reckless conduct. Thus, if a defendant should have known that its representations to the Government were not true or accurate, but did not bother to check, such recklessness may constitute a violation of the Act. Likewise, if a defendant deliberately ignores information which may reveal the falsity of the information submitted to the Government, such “deliberate ignorance” may constitute a violation of the Act.

The Act also permits recovery from those who “cause” others to make misrepresentations to the federal Government. In other words, a person may violate the law even if he or she does not actually submit the false information to the Government, but instead creates or provides false information that someone else then submits to the Government.

The following example of this type of fraud is taken from an actual case.
The Government contracted with a company AAA, to purchase widgets for the U.S. Army. AAA subcontracted with XXX to supply it with parts that were required as components of the widgets.

The Government contract with AAA called for the parts to be of a certain specification. However, XXX supplied parts of inferior quality, and affixed false markings to them. XXX also certified that the parts conformed to the required specifications. As a result, AAA unknowingly supplied the Government with widgets that contained parts that failed to meet the Government specifications. A federal court in New Jersey found that XXX violated the False Claims Act by causing AAA to submit false claims to the Government. The court specifically stated:

  • It is immaterial that XXX Labs did not deal directly with the Government. That they were one step removed from direct contact with the Government does not excuse or diminish their liability.

The False Claims Act has been used to successfully recover for fraud against the Government in many areas, including military contract fraud, fraud against HUD by builders of federally subsidized housing, and Medicare/Medicaid fraud.

In fact, claims may arise in virtually every area in which federal Government money is spent. Common types of qui tam claims come from such diverse areas as education, welfare, social security and purchases by any federal government department or agency.

What protection is there for a qui tam plaintiff who brings an action against his or her employer?

The False Claims Act provides protection to employees who are retaliated against by an employer because of the employee’s participation as a whistleblower in a qui tam action. The protection is available to any employee who is fired, demoted, threatened, harassed or otherwise discriminated against by his or her employer because the employee investigates, files or participates in a qui tam action.

This “whistleblower” protection includes reinstatement and damages of double the amount of lost wages if the employee is fired, and any other damages sustained if the employee is otherwise discriminated against. At Begelman & Orlow, P. C., our attorneys provide skilled legal representation for employees who need protection after acting as whistleblowers.

How can a qui tam plaintiff afford a lawyer?

If the qui tam plaintiff has the financial resources, he or she can simply hire a lawyer and pay that lawyer’s hourly fees for all the time the lawyer spends on the case. However, an experienced lawyer may charge anywhere between $250 and $500 per hour.

Thus, the cost of pursuing a qui tam action can quickly amount to tens of thousands of dollars. Moreover, the cost will be greater if the Department of Justice (DOJ) does not intervene and the qui tam plaintiff must pursue the case to completion, especially if the defendant hires a large law firm to defend the action.

Consequently, the qui tam plaintiff may want to hire a law firm that will take the case in return for a “contingency fee.” Under this arrangement, the law firm will not charge the qui tam plaintiff any legal fees unless the qui tam plaintiff recovers damages from the defendant, whether through settlement or a verdict. If the qui tam plaintiff does recover, the law firm will take a percentage of the qui tam plaintiff’s share of the recovery as its legal fees.

At Begelman & Orlow, P. C., our experienced lawyers will evaluate your case at no cost. If we believe that you have a viable case, we will represent you on a full contingency fee arrangement.

Contact Begelman & Orlow, P. C.

If you have knowledge of fraud being perpetrated against the federal government, please contact our offices today. Our whistleblower lawyers represent clients throughout the United States, but primarily in New Jersey and Pennsylvania.

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