Federal False Claims Act FAQ

A “whistleblower” is somebody who has the courage to inform the government that their employer or any other business or person has violated the law in some way or has ripped off either the federal government or the State of California, or one of the state’s political subdivisions, such as a California county, city, or the University of California.

A company can even blow the whistle on another company that has ripped off the government. Both California law and federal law make it illegal for an employer to retaliate against an employee who blows the whistle on the employer for ripping off the government. If you know that a company has ripped off the State of California or one of its political subdivisions you may be able to blow the whistle on the fraud and get financially rewarded with a percentage of the money recovered. To do that you must become a “qui tam plaintiff” by filing a lawsuit under the California False Claims Act seeking to recover the money or property that was ripped off. Attorneys who represent qui tam plaintiffs normally will handle such cases on a contingency. You should promptly consult with an attorney who has experience handling qui tam cases and try to get the case filed in court as quickly as possible since only the first person to file a qui tam action will be entitled to a percentage of the recovery on that fraud.

A “qui tam plaintiff” is a whistleblower who brings a lawsuit under the California False Claims Act to recover money or property ripped off from the State of California or from one of the state’s political subdivisions, such as a county, a city or the University of California.

In a successful case a qui tam plaintiff is entitled to an award of a percentage of the proceeds recovered plus reasonable expenses necessarily incurred, court costs and attorney’s fees. Attorneys who represent qui tam plaintiffs normally will handle such cases on a contingency. The California False Claims Act contains protective mechanisms to prevent an employer from retaliating against an employee who blows the whistle on the employer for ripping off the State of California or one of its political subdivisions.

A “relator ” is a person who brings a whistleblower lawsuit (also called a qui tam action) under the federal False Claims Act in the name of the United States Government and the relator to recover money or property ripped off from the federal government.

In a successful case the relator is entitled to an award of a percentage of the proceeds recovered plus reasonable expenses necessarily incurred, court costs and attorney’s fees. Attorneys who represent relators in qui tam actions under the federal False Claims Act normally will handle such cases on a contingency. The federal False Claims Act contains protective mechanisms to prevent an employer from retaliating against an employee who blows the whistle on the employer for ripping off the government.

A qui tam action under the federal False Claims Act normally must be brought within six years after the wrongdoer committed the violation of the FCA or, if later, within three years after the official in the Justice Department responsible for bringing suit under the False Claims Act knew or reasonably should have known of the violation. In no event can such a suit be brought anymore than ten years after the wrongdoer committed the violation.

Yes, it does proceed differently from other types of court cases in several important respects. Such a case is normally filed in federal court. The lawsuit is filed “under seal,” which means that the lawsuit is not made public when filed. It remains under seal for up to 60 days or even more. While the case is under seal the U.S. Attorney General’s office reviews the lawsuit and the evidence and information furnished by the Relator supporting the case to determine whether the Attorney General’s office wants to assume primary responsibility for prosecuting the case.

If the Attorney General’s office declines to take over the action the Relator proceeds with it. If the Attorney General’s office takes over the action that office will have primary responsibility for the case although the Relator continues as a full party to it. Once the Attorney General’s office announces its decision on whether it will assume responsibility for prosecuting the case the seal on the court case is lifted. The defendant/wrongdoer is then served with a summons and must file a response to the lawsuit within 20 days. From that point the lawsuit proceeds forward similarly to other types of cases, although there are some other procedural differences. For example, a qui tam case can only be dismissed or settled with the consent of the court and the government.

The wrongdoer is liable for three times the amount ripped off from the government by the wrongdoer in violation of the False Claims Act and for a civil penalty of between $5,000 and $10,000 (adjusted upward for inflation as required by law) for each violation, for the reasonable expenses necessarily incurred by the Relator, for the Relator’s court costs and for the Relator’s reasonable attorney’s fees.

There is no provision in the Federal False Claims Act that authorizes a reduction in the civil penalties a wrongdoer is liable for. The FFCA does provide that a wrongdoer may be required to pay a lower multiple of damages (but not less than two times the amount of damages sustained by the United States Government) if all of the following mitigating circumstances are found to be present:

• The wrongdoer furnished the government officials responsible for investigating the false claims violation with all information known to the wrongdoer about the violation within 30 days after the wrongdoer first obtained the information;
• The wrongdoer fully cooperated with any government investigation into the violation; and,
• At the time the wrongdoer furnished the information about the violation there was no criminal, civil or administrative action pending with respect to it, and the wrongdoer did not know of the existence of any investigation into the violation.

In a successful qui tam case, If the U.S. Government elected to take over and proceed with the case, the Relator will receive a minimum guaranteed compensation of at least 15%, and could receive up to 25%, of the “proceeds” (the double or treble damages and civil penalties) recovered in the case from the wrongdoer depending upon the court’s determination of the extent of the Relator’s contribution to the case. Provided, that if the court determines that the case is primarily based on information the Relator obtained from disclosures in the news media or from a criminal, civil or administrative hearing or from a report, hearing, audit or investigation conducted by congress, a government agency or the GAO, then the Relator’s award cannot exceed 10% of the proceeds recovered. The Relator will also receive an award against the defendant/wrongdoer of its reasonable expenses, the Relator’s court costs and the Relator’s reasonable attorney’s fees.

If the U.S. Government declined to take over the case and the Relator proceeded with it, the Relator will receive a minimum guaranteed compensation of at least 25%, and could receive up to 30%, of the “proceeds” (the double or treble damages and civil penalties) recovered in the case from the wrongdoer depending on the court’s determination of what is reasonable for the Relator’s efforts. The Relator will also receive an award against the defendant/wrongdoer of its reasonable expenses, the Relator’s court costs and its reasonable attorney’s fees.

However, if the Relator “planned or initiated” the fraud that was the subject of the qui tam action the court has the discretion to reduce the Relator’s compensation (percentage of the proceeds recovered) “to the extent the court considers appropriate.” (A Relator is barred from receiving any share of the recovery if the Relator has been convicted of criminal conduct arising from his or her role in the fraud.)

No. The Federal False Claims Act bars subsequently filed qui tam lawsuits based on the same facts as a pending case.

Yes. The federal False Claims Act prohibits retaliation by an employer against an employee, contractor or agent for any lawful acts done to stop a violation of the federal False Claims Act. Protected activity would include disclosing information about the fraud to the government, filing a qui tam lawsuit, or giving information, testimony or assistance in support of a false claim action brought by the employee, contractor or agent. Any kind of discrimination against an employee, contractor or agent in the terms and conditions of her employment is prohibited, including discharge, suspension, denial of promotion, harassment or any other kind of retaliation.

If an employer does retaliate against an employee, contractor or agent for bringing or supporting a qui tam lawsuit the federal False Claims Act allows the employee contractor or agent to bring a discrimination lawsuit to recover whatever relief is necessary to make the employee, contractor or agent “whole,” e.g. restoration of their job and seniority, etc. The person who suffered the retaliation can recover two times lost back pay plus prejudgment interest on the back pay, any special damages resulting from the discrimination (such as compensation for emotional distress), litigation costs and an award of reasonable attorneys’ fees.

The most frequent types of false or fraudulent acts by a person that can be the basis for a qui tam lawsuit against the wrongdoer under the California False Claims Act include:

• Knowingly submitting to the government or to a government contractor a false or fraudulent invoice or other false or fraudulent request for the payment of money, property or services;
• Knowingly making or using a false record or statement in support of a false or fraudulent claim submitted to the government or to a government contractor;
• Conspiring with another person to get a false claim paid by the government or by a government contractor; and,
• Knowingly and improperly concealing or avoiding or decreasing an obligation to pay money to the government.

Some other types of false or fraudulent acts by a person that can also be the basis for a qui tam lawsuit under the California False Claims Act include:

• Knowing failure to return all of the government’s money or property that a person has in his possession, custody or control;
• Making a receipt for property used or to be used by the government that is false;
• Knowingly buying government property or receiving it as a pledge from anyone who is not authorized to sell or pledge the property.
• Discovering that one is the beneficiary of an inadvertent false claim submitted to the government and then failing to disclose the false claim to the government within a reasonable time after the discovery.

In most instances a qui tam case under the California False Claims Act seeks recovery of money or property fraudulently ripped off by a wrongdoer FROM the State of California or from one of its political subdivisions. A “reverse false claim” seeks recovery of money or property from a wrongdoer who has fraudulently avoided or covered up an obligation to pay money or return property TO the government.

For example, suppose a company fraudulently understates the amount of water it has drawn from a river to irrigate crops, resulting in an understatement of the company’s obligation to pay the government for the water used. Such an understatement of what the company owes to the government for water usage could be the basis of a “reverse false claim” qui tam action under the California False Claims Act.

Yes. The following types of frauds and rip-offs of the government cannot be the basis of a qui tam action under the California False Claims Act:

• Qui tam actions based upon fraudulent claims that have already been publicly disclosed by the news media or that were disclosed in a criminal, civil or administrative hearing, or in an investigation, report, hearing or audit conducted by the Senate, Assembly, auditor, or governing body of a political subdivision ARE BARRED, UNLESS the person bringing the qui tam action is an “original source” of the information (for this purpose, “original source” means the qui tam plaintiff: (a) had direct and independent knowledge of the information on which the qui tam action is based; (b) voluntarily provided the information to the state or political subdivision before filing the qui tam action; and, (c) the qui tam plaintiff’s information was the catalyst for the proceeding, audit or report that led to the public disclosure.)
• Qui tam actions based upon information discovered by an employee, or former employee, of the government during the course of their public employment ARE BARRED, UNLESS (a) the person first, in good faith, exhausted their public employer’s internal procedures for reporting and seeking to recover the falsely claimed sums; and (b) their public employer failed to act on the information within a reasonable period of time.
• Neither the State of California nor any state or local government agencies can be sued as a wrongdoer under the California False Claims Act;
• Qui tam actions based upon fraudulent claims made by a wrongdoer under the state tax laws are barred;
• Qui tam actions based upon fraudulent claims submitted by the same person that collectively total less than $500 in value are barred;
• Qui tam actions based upon fraudulent claims made under the workers’ compensation laws or upon fraudulent claims and statements submitted to the government under the California Tort Claims Act are barred;
• Qui tam actions based upon fraudulent claims made against the assets of a person doing insurance business that have been transferred to the Insurance Commissioner under Ins. Code §1011 are barred;
• Qui tam actions based upon fraudulent claims alleged to have been made by key elected officials (members of the state senate or assembly, the state judiciary, executive branch elected officials and members of governing bodies of political subdivision) are barred if based on evidence or information known to the state or political subdivision when the action was brought;
• Qui tam actions based upon fraudulent claims that are already the subject of a civil suit or an administrative civil money penalty proceeding in which the state or political subdivision is already a party are barred.