The Federal False Claims Act (FCA) is a primary enforcement tool used by the U.S. Department of Justice (DOJ) to prevent fraud on the government relating to federal programs.
The statute imposes both criminal and civil penalties for violation of standards governing making claims on the government for payment. The statute permits the DOJ as well as qui tam relators (sometimes known as whistleblowers) – individuals who claim to have direct and independent knowledge of fraud – to bring civil suits against government contractors, health care providers, medical device and pharmaceutical manufacturers, financial institutions, and other federal program participants to recover damages and penalties. In most cases, the DOJ (often with the assistance of agency inspectors general (IGs)) conduct extensive investigations about potential false claims allegations (including those filed under seal by whistleblowers) prior to litigation. In some instances, the government also may conduct parallel criminal investigations or seek to pursue solely a criminal investigation and bring criminal indictments for FCA violations.
As compensation for the risk and effort of filing a complaint, a whistleblower may be awarded a portion of the recovered funds, typically between 15 and 25 percent of the recovery if the DOJ intervenes in the whistleblower’s litigation and takes over defense of the case, and between 25 and 30 percent if the DOJ does not intervene. The DOJ intervenes in approximately 22 percent of the FCA cases filed, but a whistleblower may continue to pursue a case even without DOJ intervention. Whistleblower recoveries under the FCA exceeded $1.2 billion for fiscal years 2009-11.
FCA enforcement activities are sharply increasing, creating greater risks for government contractors and federal program participants. The DOJ recovered more than $3 billion under the FCA in 2011. From 2009 to 2011, the DOJ recovered a total of $8.9 billion under the FCA, the largest three-year total in the department’s history.
These enforcement activities are not limited to the federal realm. At least 36 states and the District of Columbia have enacted state false claims acts. Other major municipalities have promulgated similar laws. Over the next several years we anticipate significant increases in investigations and litigation under state and local false claims acts.
Practice OverviewK&L Gates has extensive experience investigating and defending FCA matters. We have more than 30 lawyers across the United States who focus on representing companies, officers and directors, and individuals in every phase of FCA matters, including conducting internal investigations, defending DOJ and IG investigations relating to FCA allegations, designing and implementing remedial measures and compliance programs which may be required as a result of such allegations, and of course defending FCA actions. Our team includes seasoned trial lawyers from our government enforcement and white-collar crime practices, with substantial experience in related substantive areas of the law such as government contracts, health care/FDA, and financial institutions, as well as dedicated compliance practitioners. This combined experience enables the firm to anticipate and respond to the many demands created by FCA allegations and the related investigations and proceedings that often accompany such allegations. As a result, our clients are able to navigate the otherwise daunting process of investigating, litigating, and settling FCA claims while continuing to compete in the global marketplace.