Fraud against taxpayers is everywhere. The first to file gets rewarded.

What the False Claims Act Is (and Why It Matters)

The federal False Claims Act is a civil anti-fraud statute designed to protect U.S. government funds and property. In plain terms: if someone causes the government to pay money (or give approval) based on false information—or improperly keeps money that should be returned—the FCA can impose significant civil liability.

The FCA is enforced in two main ways:

• By the Department of Justice (DOJ) (the Attorney General investigates and may file suit).
• By private whistleblowers ("relators") through a qui tam lawsuit, filed in the name of the United States, with the government given a chance to intervene.

What Conduct Creates FCA Liability

Under 31 U.S.C. § 3729, a person can be liable if they knowingly do any of the following:

1. Submit (or cause submission of) a false claim for payment or approval
   Example: billing Medicare for services not actually provided.
2. Use a false record or statement that is material to a false claim
   Example: falsifying test results to get a contract paid.
3. Conspire to commit certain FCA violations
   Example: coordinated scheme among vendor + subcontractor to inflate invoices.
4. Short-deliver government money or property you control
   Example: a contractor knowingly delivers less government-owned property than required.
5. Issue a receipt/certification to the government without knowing it's true, intending to defraud
   Example: signing a certification of receipt/inspection while intentionally not verifying accuracy.
6. Knowingly buy/receive public property from someone not allowed to sell or pledge it
   Example: knowingly purchasing government property from an employee who cannot lawfully sell it.
7. "Reverse false claims" (improperly avoiding an obligation to pay the government)
   This includes knowingly making a material false statement about an obligation to pay money/property to the government, or knowingly concealing/improperly avoiding/decreasing an obligation to pay.

Key Definitions That Drive Most FCA Cases

"Knowingly" does not require proving specific intent to defraud. A person acts knowingly if they:

• have actual knowledge, or
• act in deliberate ignorance, or
• act in reckless disregard of truth or falsity.

"Claim" is broader than many people realize. It includes requests/demands for money or property:

• presented directly to the U.S., or
• made to a contractor/grantee/other recipient if the funds are used on the government's behalf or to advance a government program/interest and the U.S. provides or reimburses any portion.

It excludes certain payments to individuals (e.g., federal compensation or unrestricted income subsidies).

"Material" means capable of influencing payment/receipt of money or property.

"Obligation" (for reverse false claims) includes duties arising from contracts, grants, fees, statutes/regulations, and also retention of an overpayment.

Penalties and Damages (Why FCA Exposure Is So Serious)

If liability is proven, the statute provides for:

• A per-claim civil penalty (statutory range stated in the law and adjusted for inflation under federal rules), plus
• Treble damages (3× the government's damages), plus
• Costs of the civil action.

Whistleblower (Qui Tam) Lawsuits: How They Work

The FCA allows a private person (the relator) to sue on behalf of the United States for FCA violations. 31 U.S.C. § 3730

Step 1: Filing Under Seal + Disclosure to the Government

A qui tam complaint is:

• filed in camera and kept under seal for at least 60 days, and
• not served on the defendant until the court orders.

The relator must also serve the government with:

• a copy of the complaint, and
• a written disclosure of substantially all material evidence/information they possess.

The government can request seal extensions for good cause.

Step 2: Government Decision to Intervene (or Decline)

Before the seal period expires (including extensions), DOJ will either:

• intervene and proceed (government conducts the action), or
• decline (the relator may proceed).

Step 3: Control of the Case and Practical Dynamics

If the government intervenes, it has primary responsibility for prosecuting and is not bound by the relator's actions—though the relator generally remains a party.

Even over a relator's objections:

• the government may dismiss the action (after notice and an opportunity for a hearing),
• or settle if the court finds the settlement fair, adequate, and reasonable (hearing may be in camera for good cause).

Courts can also limit a relator's participation to avoid interference, undue delay, harassment, or unnecessary burden.

Step 4: "First-to-File" and Related-Action Limits

Whistleblower Awards (What Relators Can Receive)

If the case results in a recovery, the relator may receive a share of the proceeds:

In both scenarios, relators may also recover reasonable expenses plus attorneys' fees and costs, typically assessed against the defendant.

Limits and "Case Blockers" You Should Understand

The FCA contains several important gatekeeping rules—especially for qui tam suits:

These provisions are fact-intensive and often litigated early in a case.

Anti-Retaliation Protections for Whistleblowers

The FCA provides a retaliation remedy for employees, contractors, or agents who suffer adverse actions (discharge, demotion, suspension, threats, harassment, discrimination) because of lawful acts in furtherance of an FCA action or efforts to stop violations.

Timing, Venue, and Procedure: The "Rules of the Road"

Statute of Limitations (key timing rule): An FCA civil action generally must be brought:

• within 6 years of the violation, or
• within 3 years after the responsible U.S. official knew/should have known material facts, but not more than 10 years after the violation—whichever is later. 31 U.S.C. § 3731

Where a case can be brought / service of process: FCA actions can be brought in districts tied to the defendant or where acts occurred; summons may be served broadly (including outside the U.S., per the statute). 31 U.S.C. § 3732

Government Investigative Tools: Civil Investigative Demands (CIDs)

Before filing a civil FCA case (or before deciding whether to intervene in a qui tam), DOJ may use Civil Investigative Demands to gather information. 31 U.S.C. § 3733

A CID may require a person to:

• produce documentary material,
• answer written interrogatories,
• give oral testimony,
• or provide a combination of these.

CIDs cannot compel privileged/protected material beyond standards similar to subpoenas/grand jury or civil discovery standards (as applicable).

Bottom Line

The FCA is powerful because it combines:

• broad definitions of "claims" and "knowing" conduct,
• steep financial consequences (penalties plus multipliers),
• and a structured whistleblower mechanism that can reward insiders who bring high-quality evidence to the government.

Legal References:

• 31 U.S.C. § 3730 - Civil actions for false claims
• 31 U.S.C. § 3731 - False claims procedure
• 31 U.S.C. § 3732 - False claims jurisdiction
• 31 U.S.C. § 3733 - Civil investigative demands

All State Laws Directory

Find your state's False Claims Act provisions and contact information.

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• Document the fraud with dates, amounts, locations, people involved
• Gather all available evidence: documents, emails, invoices, photos
• Do NOT confront the fraudsters or tell anyone except your attorney
• Research and contact qualified qui tam attorneys (most offer free consultations)
• Verify this is "original information" not already public or filed
• Let your attorney handle all filings and government communications
• Be prepared for a multi-year process
• Understand the potential rewards and risks