Federal False Claims Act Attorney: Facing Qui Tam Lawsuit

Federal False Claims Act Attorney: Facing Qui Tam Lawsuit

The False Claims Act has created something unique in federal law: a system where your own employees have a financial incentive to document your fraud and report it to the government. Whistleblowers – called “relators” under the statute – receive between 15% and 30% of any recovery. When those recoveries reach into the hundreds of millions, whistleblowers become millionaires. Since 1986, qui tam cases have brought $46.5 billion to the U.S. Treasury, with $7.8 billion paid to relators. The employee you fired last month might be the whistleblower whose sealed complaint has been sitting with the DOJ for two years while investigators build the case against you. You don’t know. The complaint is under seal. The investigation is secret. And by the time you find out, they already have everything they need.

The DOJ recovered over $2 billion in False Claims Act settlements in fiscal year 2022. In 2024, nearly 1,000 qui tam actions were filed – a 37% increase over the prior year. These numbers reflect a deliberate government strategy: incentivize insiders to report fraud, then use their knowledge and documents to build cases that would otherwise be impossible to prove. Philip Esformes received 20 years in federal prison for the largest healthcare fraud case ever prosecuted – $1.3 billion in false claims. Dr. Jacques Roy received 35 years for the largest single-physician home health fraud in history. The False Claims Act isn’t just about civil penalties. When the fraud is serious enough, it becomes criminal prosecution with sentences measured in decades.

Here’s the trap that catches healthcare providers, government contractors, and anyone else who bills the federal government: the False Claims Act doesn’t require specific intent to defraud. The “knowing” standard is enough – and “knowing” includes deliberate ignorance and reckless disregard for the truth. If you should have known your billing was improper, that’s enough for liability. If you set up systems to avoid learning about problems, that’s enough for liability. You don’t have to intend to defraud the government. You just have to submit claims you knew or should have known were false. That standard makes criminal prosecution possible in cases that defendants never expected would be anything but civil disputes.

Your Employees Are Building The Case Against You Right Now

Heres the system revelation that should terrify anyone who bills the federal government. Under the False Claims Act’s qui tam provision, private citizens can file lawsuits on behalf of the government – and collect a percentage of any recovery. These lawsuits are filed under seal. The defendant dosent know they exist. The complaint sits with the DOJ while investigators decide wheather to intervene. This process can take years. During those years, your business operates normally while the government builds its case using your own employees documents and testimony.

The qui tam process works like this. An employee – current or former – suspects fraud. They gather documents. They consult a lawyer. The lawyer files a complaint under seal in federal court. The complaint and all supporting materials are served on the government. The seal prevents anyone from knowing the case exists except the whistleblower, there lawyer, and the government. The DOJ has 60 days to investigate and decide wheather to intervene, but that period is routinely extended. Cases remain sealed for months or years while the investigation proceeds.

OK so look at what this means for employers. The person sitting in your billing department might be documenting every questionable claim. The compliance officer you fired might have taken copies of internal reports before leaving. The salesperson who saw kickback arrangements might be compiling evidence right now. You have no way of knowing. The seal provisions ensure complete secrecy during investigation. By the time the seal is lifted and you learn about the case, the government may have already interviewed witnesses, subpoenaed records, and decided to prosecute.

Heres why the financial incentives make this inevitable. If the government intervenes and the case succeeds, the whistleblower receives 15-25% of the recovery. If the government declines to intervene but the whistleblower wins anyway, they receive 25-30%. On a $100 million recovery, thats $15-30 million to the whistleblower. On Philip Esformes’ $1.3 billion case, those percentages would mean hundreds of millions to a relator. The financial reward for reporting fraud is life-changing. The incentive to document, report, and cooperate with investigators is overwhelming.

The “Knowing” Standard – Why Intent To Defraud Isn’t Required

Heres the paradox that surprises defendants who thought False Claims Act liability required criminal intent. Unlike most fraud statutes, the FCA dosent require proof that you specifically intended to defraud the government. The statute uses a “knowing” standard – and “knowing” is defined expansively. It includes actual knowledge that information is false, deliberate ignorance of the truth or falsity of information, and reckless disregard of the truth or falsity of information.

Think about what “deliberate ignorance” means for healthcare providers. If you structure your billing operation to avoid learning about problems – if you dont audit, dont review, dont want to know what your billing staff is doing – that deliberate ignorance satisfies the knowing requirement. You cant escape liability by closing your eyes. The law treats willful blindness the same as actual knowledge. If you should have known, you knew.

Heres the uncomfortable truth that catches many defendants off guard. They expected civil liability – fines and settlements that insurance might cover. They didnt expect criminal prosecution. But the same “knowing” conduct that creates civil FCA liability can also support criminal charges under 18 USC 287. Criminal penalties include up to 5 years in prison and $250,000 in fines per violation. Healthcare fraud under 18 USC 1347 carries up to 10 years – or 20 years if the fraud results in serious bodily injury. Defendants who thought they were facing a civil investigation discover there also facing criminal exposure.

And heres the trap for compliance programs. The existence of a compliance program can actually hurt you. If your compliance program identified the problematic billing but you continued anyway, that proves you knew. Training materials that warned employees about false billing become evidence that everyone understood what was wrong. The compliance infrastructure designed to prevent fraud becomes evidence of knowledge when fraud occurs anyway.

Philip Esformes and the $1.3 Billion Healthcare Fraud

Heres the named example that shows what happens when False Claims Act prosecution goes to its maximum. Philip Esformes operated a network of nursing homes and assisted living facilities in Florida. The government alleged he orchestrated a massive scheme to defraud Medicare and Medicaid – $1.3 billion in false claims. He was convicted in the largest healthcare fraud case ever prosecuted by the Department of Justice. His sentence: 20 years in federal prison.

The Esformes case involved everything prosecutors look for in major healthcare fraud. Kickbacks to patient recruiters who steered Medicare beneficiaries to his facilities. Unnecessary services billed to maximize reimbursement. Bribes to hospital employees for patient referrals. The scheme operated for years before whistleblowers and investigators brought it down. The case demonstrated that healthcare fraud is treated as serious crime – not just regulatory violations, but conduct worthy of decades in prison.

OK so look at what made this case prosecutable as criminal rather then just civil. The kickback payments proved intent beyond mere billing errors. The bribes to hospital employees showed organized corruption. The scale and duration demonstrated deliberate ongoing fraud, not isolated mistakes. When prosecutors can show that defendants knew exactly what they were doing and did it anyway for years, the civil False Claims Act becomes the criminal False Claims Act. The nursing home operator becomes the federal inmate.

Dr. Jacques Roy received 35 years for home health fraud – the largest single-physician case in history. Dr. Javaid Perwaiz received a sentence extending past 2070 for performing unnecessary surgeries billed to Medicare. A Missouri man received 10 years for genetic testing fraud involving $174 million in false claims. These arent outliers. There examples of what happens when healthcare fraud crosses the line from civil liability to criminal prosecution. The False Claims Act provides civil remedies, but serious fraud results in prison sentences measured in decades.

15-30% – The Whistleblower Reward That Creates Millionaires

Heres the specific number reality that drives False Claims Act enforcement. Whistleblowers receive a percentage of any recovery – 15-25% if the government intervenes and takes over the case, 25-30% if the government declines to intervene and the whistleblower wins alone. On major healthcare fraud cases, these percentages translate into tens or hundreds of millions of dollars. The False Claims Act has created more whistleblower millionaires then any other statute.

The reward structure creates a powerful incentive dynamic. Employees who witness fraud face a choice: stay quiet and risk being implicated when the fraud is discovered, or report and potentially receive a fortune. The financial calculus strongly favors reporting. Even if the case takes years to resolve – and many do – the potential reward justifies the wait. Whistleblower attorneys work on contingency, meaning the employee dosent pay anything upfront. The entire system is designed to encourage reporting.

The “first to file” rule adds urgency to this calculation. Only the first person to file a qui tam complaint can receive the whistleblower reward. If two employees witness the same fraud and both consider reporting, the one who files first wins. The second gets nothing. This creates a race among potential whistleblowers. Employees cant afford to wait and deliberate. If they suspect someone else might file, they need to file immediately or lose there chance at the reward.

Since 1986, qui tam cases have generated $46.5 billion in recoveries for the government, with $7.8 billion paid to whistleblowers. Thats an average of roughly 17% going to relators. For individual cases, rewards have reached into the hundreds of millions. The record rewards involve pharmaceutical companies, healthcare systems, and government contractors – industries were billing fraud can reach billions of dollars. The whistleblower who reports fraud at a major hospital system isnt just performing a civic duty. There potentially setting themselves up for life.

Parallel Proceedings – When Civil Cooperation Becomes Criminal Evidence

Heres the hidden connection that destroys defendants who dont understand how False Claims Act investigations actualy work. Civil and criminal investigations often run simultaneously. The same conduct that triggers civil FCA liability can trigger criminal prosecution under healthcare fraud statutes. And the statements you make, the documents you produce, the cooperation you provide in the civil investigation – all of it can become evidence in the criminal case.

The government dosent have to tell you a criminal investigation is running parallel to the civil one. You might think your cooperating to resolve a civil matter while simultaneously providing evidence for your own prosecution. Your civil lawyer might be focused on settlement while criminal prosecutors are building a case. By the time you realize criminal charges are coming, youve already made statements under oath, produced documents, and created a record that prosecutors will use against you.

Think about what this means for defense strategy. The instinct in civil litigation is often to cooperate – produce documents, answer questions, negotiate settlement. In criminal cases, defendants have Fifth Amendment rights. But if youve already talked extensively in the civil case, those statements exist. Settlement of the civil case dosent prevent criminal prosecution. You can pay hundreds of millions in civil penalties and still face prison time. The civil and criminal tracks are separate. Resolution of one dosent buy peace in the other.

Heres the uncomfortable truth about civil settlements. Companies often announce settlements proudly – “$100 million to resolve False Claims Act allegations with no admission of wrongdoing.” What they dont announce is that individual executives may still face criminal charges. The company pays to make the civil case go away. The executives face prosecution anyway. Corporate settlement protects the corporation. It dosent protect the people who made the decisions that created the liability.

The Investigation That Takes Years – Why Cases Stay Sealed Forever

Heres the system revelation about investigation timelines that defendants never appreciate until there living it. The statute gives the government 60 days to decide wheather to intervene in a qui tam case. In practice, courts grant extensions routinely. Cases remain under seal for one year, two years, five years – while the government investigates, interviews witnesses, reviews documents, and builds its case. The defendant operates normally, completely unaware that a federal investigation has been running for years.

The average False Claims Act case takes 2-4 years to resolve. Complex cases involving multiple defendants, multiple schemes, or large healthcare systems can take 5-10 years. During the sealed investigation period, the government has complete control. They interview your current employees. They review your billing records. They depose former employees who have no reason to protect you. By the time you learn about the case, the government has assembled evidence you never knew they were gathering.

And heres what happens during those years. The whistleblower’s lawyer works with the government. Documents are produced in response to civil investigative demands. Interviews are conducted. Expert witnesses are retained. The entire case is built before you know it exists. When the seal finally lifts, your not at the beginning of an investigation. Your at the end of one. The government has already decided what they think happened. Now there ready to either settle or prosecute.

Per-Claim Penalties – How $28,619 Multiplies Into Hundreds of Millions

Heres the consequence cascade that turns routine billing fraud into catastrophic financial exposure. Civil penalties under the False Claims Act are assessed per claim – currently between $14,308 and $28,619 for each false claim submitted. Healthcare providers submit thousands of claims. Government contractors submit thousands of claims. Each false claim is a separate violation. The math produces exposure that seems impossible until you see it in actual cases.

Imagine a healthcare practice that submits 100 claims per day. Over a year, thats 36,500 claims. Over five years – a typical investigation lookback period – thats 182,500 claims. If those claims are false, the per-claim penalty exposure at $28,619 each is over $5 billion – before treble damages. The civil FCA also provides for three times actual damages. If the government paid $50 million on those false claims, treble damages add $150 million to the exposure. The per-claim penalties then add billions more.

OK so look at how this actualy plays out in settlements. Healthcare systems settle for hundreds of millions of dollars. These settlements arent based on what the defendants can afford to pay – there based on the astronomical exposure created by per-claim penalties and treble damages. Defendants settle becuase trial could result in judgments far exceeding there ability to pay. The settlement that seems massive is actualy a discount from calculated exposure that reaches into the billions.

And heres the sentencing guideline connection. Criminal sentencing under the fraud guidelines uses “intended loss” – the amount the defendant intended to obtain through the fraud. If you submitted $100 million in false claims, thats the intended loss even if only $10 million was actually paid. The sentencing guidelines calculate your offense level based on the full amount you tried to get, not just the amount you received. This produces sentences far longer then defendants expect based on what they actualy received.

What To Do If You’re Facing False Claims Act Charges

If your facing False Claims Act investigation or charges – wheather civil under 31 USC 3729 or criminal under 18 USC 287 or 18 USC 1347 – heres what you need to understand immediatly.

Determine wheather criminal investigation is running parallel. The existence of a civil qui tam case dosent mean thats all you face. Ask directly wheather criminal charges are being considered. The answer may be “we cant tell you,” which itself is informative. Treat the case as potentially criminal until you know otherwise.

Understand the “knowing” standard. False Claims Act liability dosent require intent to defraud. Deliberate ignorance and reckless disregard satisfy the knowledge requirement. Your defense that you didnt know needs to address why you didnt know – and wheather your failure to know was itself culpable.

Calculate per-claim exposure. Count the claims. Multiply by penalty amounts. Add treble damages. The number will be terrifying. Thats the leverage the government has in settlement negotiations. Understanding your actual exposure helps you evaluate settlement offers that might otherwise seem unreasonable.

Consider the whistleblower’s identity and information. Qui tam cases are filed by people with inside knowledge. Former employees, current employees, business partners – someone provided the information that started this investigation. Understanding who had access to what information helps you understand the governments case.

Recognize the exclusion consequences. Healthcare providers convicted of federal healthcare offenses face mandatory exclusion from Medicare and Medicaid. This isnt discretionary – its automatic upon conviction. For healthcare providers, exclusion often matters more then prison time becuase it permanently destroys the ability to practice.

Philip Esformes received 20 years for $1.3 billion in false claims. Dr. Jacques Roy received 35 years for the largest single-physician home health fraud. The per-claim penalties multiply into billions. The whistleblower rewards create millionaires from your former employees. Nearly 1,000 qui tam actions were filed in 2024 alone. The False Claims Act investigation that starts with a sealed complaint you dont know exists can end with decades in federal prison and financial penalties that exceed any ability to pay. The system is designed to catch fraud through insider reporting. Right now, someone might be building the case against you.