Can I get rich under the False Claims Act?

Maybe, though you may want to buy lottery tickets as a hedge. Before you decide whether you may have a claim under the federal law known as the False Claims Act, you need to know the basics of what the law is, how it works, and how some bold or lucky citizens while earning billions of dollars for the government, have earned millions for themselves.

The False Claims Act is a statute that encourages people to report fraud against the United States government. Claimants are rewarded by being given a percentage of the money the government recovers because of the information provided by the claimant. The types of fraud that most commonly result in False Claims Act recoveries are health care fraud, such as false or exaggerated medicare or medicaid claims, and fraud by companies doing business with the defense department. As the commission of health care and defense contracting fraud often involves spectacular levels of avarice, recoveries can be correspondingly enormous. False Claims Act claimants are often people with inside information such as disgruntled current or former employees of the allegedly corrupt company though anyone can file a complaint under the Act.

The law has certain requirements that must be followed to the letter. Failure to comply with the Act's strict requirements will lose the claimant the right to compensation, even if their information results in a huge recovery by the government. The claimant must file a Complaint under seal in the appropriate federal court. The Complaint is then served on the government, but must not be served on the party alleged to have committed the fraud. A memorandum detailing the basis for the allegations of fraud must also be served on the government.

After the government investigates the case, the U.S. Justice Department decides whether or not it wants to pursue it. If it does, then the United States becomes the plaintiff. If the Justice Department declines, the plaintiff can continue on his own, and will still receive compensation under the Act if he recovers money for the government. As a practical matter, most plaintiffs lack the resources to pursue the case if the Justice Department declines to do so.

False Claims Act claimants do not have to retain attorneys, but almost always do because of the law's complexity. In order to be successful, the information provided by the complainant must not be information that the government already possessed. The claimant must be an "original source." If, for example, the Justice Department was already investigating the fraud that was the subject matter of the Complaint, the claimant will not be able to recover. From all that I have been able to read, the government appears to play it straight in determining whether the claimant's information was sufficiently new to qualify for recovery under the law. When the Justice Department decides to pursue a case, most defendants eventually settle.

Amendments made to the False Claims Act last year made it somewhat easier for a claimant to qualify as an original source of information, as long as it substantially aids the government in is investigation of the alleged fraud. Only a relatively small percentage of False Claims Act complaints result in compemsation for the citizen-whistle blower, but some of those recoveries have been enormous, including last years $670 million settlement with Pfizer. Last year a claimant was awarded more than $19 million for providing information to the government that led to a $128 million dollar settlement with a company that sold high-tech. products to various government agencies.

If you think that you have non-public information about large scale fraud against the federal government, it could be worth your while to consider making a claim under the False Claims Act.