How the False Claims Act (FCA) Empowers Whistleblowers

The False Claims Act (FCA)—first passed in during the Civil War out of concerns that people were defrauding the Union Army—makes it illegal for an individual or entity to submit false records, statements, or claims in order to get paid by the federal government. Additionally, the False Claim Act provides that whistleblowers receive compensation for revealing false claims and protects the whistleblowers from retaliation. In 2020, the federal government recovered more than $2.2 billion from FCA litigation. Of that, roughly half ($1.6 billion) came from cases begun by whistleblowers.

While the FCA originally applied to defense-related expenses, the modern version of it applies more broadly. It can include other types of false demands for payment from the government, from securities and tax fraud to nutrition assistance to a doctor’s billing Medicare for services they did not provide.

Whistleblowers are Entitled to an Award Under FCA

Under the FCA, a person who knows of fraud can file a “qui tam” lawsuit, alleging the fraudulent behavior. A qui tam suit is filed under seal, so only the government and the plaintiff are aware of the allegations. At this point, the government can decide to take over the suit, investigate the allegations, and pursue a recovery. If it does and prevails, the original plaintiff is entitled to 15-25% of the amount the government recovered.

If the government does not take up the case, then the plaintiff can continue the litigation on their own. If the plaintiff prevails in this case, then the plaintiff would be entitled to 30% of the government’s recovery.

Whistleblowers are Protected Under FCA

Under the FCA, eligible whistleblowers may not be demoted, discharged, or harassed for catalyzing an investigation into an employer’s fraud against the government. If they prove that they are a covered employee and retaliation has occurred, they may be entitled to:

  1. reinstatement
  2. double back pay
  3. additional compensatory damages
  4. litigation costs and attorneys’ fees
The False Claim Act v. SEC Whistleblower Program

The FCA, also known as qui tam actions, are unique claims focused on people or corporations who defraud the government. FCA are very complex and require following complex rules and procedures including working with the government. Although many similarities exist, SEC whistleblower claims are governed by a different set of rues and do not require the filing of a federal court lawsuit. Our experienced fraud attorneys are familiar with the many nuanced rules under these programs and can help you navigate procedurally through the process.

If you are considering becoming a whistleblower relating to a false claim or other corporate wrongdoing, contact experienced securities attorneys to review your case and help you decide on the best course of action. The attorneys at the Silver Law Group and the Law Firm of David R. Chase have many years of experience in representing our clients in securities and related issues. For a free, confidential consultation, email us or call today at 800.975.4345.