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Private citizens in any state may bring a False Claims Act case for recovery of fraud against the federal government. In addition, many state legislatures have established state False Claims Act applicable to state funds.
False Claims Act Violations
False Claims Act liability may attach where the defendant knowingly made, or caused to be made, a false claim for payment to the United States government. 31 USC § 3729(a). In order to “knowingly” make a false claim, the defendant may specifically intend to defraud the government, or may just act with reckless disregard for the truth or falsity of the claim. 31 USC § 3729(b).
Section 3729(a)(1) provides seven different causes of actions through which individuals actions may fall within the scope of False Claims Act liability. The seven forms of conduct identified by the statute encompass a wide variety of behavior and activity to ensure adequate applicability of the statute to all instances where a fraud has been made upon the government through means of a false claim to money or property held by the government.
First, and perhaps the most well known application of the statute, involves violations arising from the presentment of a false or fraudulent claim for payment or approval to the government, or actions causing a false or fraudulent claim to be submitted.
Second, an individual may be held liable for violations of the False Claims Act for making, using, or causing to made or used, a false document, record, or statement material to a false or fraudulent claim.
Third, liability may also attach in instances where an individual attempts to reduce or conceal an obligation owed to the government. Such violations, commonly referred to as “reverse false claims” may include making, using, or causing to be made a false record or statement material to an obligation to pay the government, but which also may include concealing, avoiding, or decreasing an obligation to the government in money or property.
Fourth, underpayments and acts of failure to escheat implicate the False Claims Act where an individual delivers or causing to be delivered less than all of money or property owned by the government, if in possession, custody or control of the money or property.
Fifth, making or delivering a receipt of property used by the government without knowing that the information on the receipt is completely true, if done with intent to defraud (regardless of whether the receipt is false).
Sixth, the False Claims Act prohibits buying, or receiving in satisfaction of an obligation or debt, public property from a government officer or member of the armed forces who is not authorized to sell it.
Lastly, False Claims Act cases have occasionally focused on conspiracies to commit violations of any of the above six types of conduct.
Identifying a “False Claim”
Section 3729(b) of Title 31 of the False Claims Act defines a “claim” as “any request or demand, whether under a contract or otherwise, for money or property” which is either presented to the government or made to a recipient who will in turn be reimbursed by the government for use of the money on behalf of the government or to advance a government program or interest.
Obligation is also defined under the section as an “established duty” arising from an express or implied relationship created between the individual and the government through, among other means, a contractual or fee-based agreement, a statutory or regulatory basis, or the retention of any overpayment from the government.
Whistleblower Protection Against Employer Retaliation
An employer may not retaliate against an employee because of lawful acts taken by the employee in furtherance of an action under the False Claims Act or in an effort to stop one or more violations of the False Claims Act. Recent amendments to the statute expanded the scope of protected employees to include contractors and agents.
The statute broadly defines “retaliation” to include instances where the employee has been “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.”
An employer’s violation of the employer protection sections of the False Claims Act entitles the employee to all relief necesscary to make that employee whole, including reinstatement with seniority, double back pay with interest, and compensation for any special damages sustained due to discrimination, including reasonable litigation costs and attorney fees.
Statute of Limitations
Pursuant to section 3731(b) of the False Claims Act, an action must be filed within 6 years of the alleged violation or 3 years after the fraudulent action if the United States official charged with investigating fraud knew of, or should have known of, the alleged violation. Although the statute of limitations has been extended where extenuating circumstances necessitate a longer period, A case may never be filed more than 10 years after the violation.
State False Claims Acts
Although an individual in any U.S. state or territory may bring a qui tam action for fraud against the federal government, many states have enacted state laws based upon the federal False Claims Act to enable recovery of state funds implicated in fraudulent actions arising from false claims. State False Claims Acts have proven particularly effective in recovering state funds lost to health care fraud, where operation of state Medicaid programs implicate both state and federal funds.
Over half of all states nationwide presently have a state False Claims Act modeled after a federal law, though individual state laws do tend to vary from state-to-state. Additional information and a comprehensive director of presently enacted state False Claims Acts may be accessed here.
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