What is the False Claims Act?
The False Claims Act is the governments primary civil remedy to redress false claims for federal money or property, such as Medicare benefits, federal subsidies and loans and payments under contracts for goods and services. Amendments in 1986 strengthened the act and increased incentives for whistle-blowers to file lawsuits on behalf of the government, leading to more investigations and greater recoveries.
What is a qui tam action? In a qui tam action, a private party brings a suit on the governments behalf. The government, not the private party, is considered the real plaintiff. If the government succeeds, the private party receives a share of the award. The federal False Claims Act authorizes qui tam actions against parties who have defrauded the federal government. If successful, a private party in a False Claims Act qui tam action may receive up to 30 percent of the governments award.
Are qui tam actions common? In fiscal year 2012, which ended Sept. 30, 2012, whistle-blowers filed 647 qui tam suits. Of the $4.9 billion the Justice Department recovered from settlements and judgments in civil cases involving fraud against the government, a record $3.3 billion was recovered in the whistle-blower suits.
Sources: U.S. Department of Justice, Cornell University Law School