Government fraud implies illegal acts that are funded by government through scams or deception. Whenever government funds are used inappropriately, the taxpayers bear the greatest burden. Defrauding the government is a serious crime that results in both civil and criminal charges. Whistleblowers, also known as qui tam relators, are the first to report the crime and usually have a share in the damages awarded in these cases.
Types of Government Fraud
Government fraud takes many forms. The most significant include false claims and statements, procurement and contractor fraud, and Medicaid fraud.
False Claims and Statements
According to the Federal False Claims Act, it is illegal for someone to make a false claim with the intention of defrauding the government or conspiring to do so. False claims pertain to defense contracts, healthcare fraud, social security, or other cases where the government pays an individual or company for an invalid reason.
Procurement and Contractor Fraud
An example of procurement fraud is where a company uses bribes to win contracts even when it did not make the best or lowest bid. Other examples include inflating the price of supplies and cost of labor, issuing kickbacks, and charging the government for unfinished projects.
Medicaid and Medicare fraud happens when healthcare firms seek reimbursement for procedures or lab tests that they have not performed, inflate clinical costs, and engage in other activities that defraud the government. In most cases, whistleblowers are the ones who report Medicaid fraud.
Under the False Claims Act, anyone or company that defrauds the government using a false claim is required to pay three times the value of the funds stolen plus an additional fine ranging from $5,000-$10,000. Additional penalties include disqualification from all future government contracts.
The False Claims Act provides that whistleblowers or qui tam relators have a right to share in the awards for cases in which they report government fraud. The Act also protects employees who expose their unscrupulous employers. Although many qui tam cases involve defense fraud or government healthcare, a qui tam relator can expose any other case of government fraud.
Whistleblower’s Potential Reward
A whistleblower is usually awarded a share ranging from 15%-30% for any recovery made by the government in false claim cases. Several factors affect the share that a whistleblower will receive in any case. The more a whistleblower contributes to the case, the higher the chances that they will get a larger share of recovery collected by the government. Apart from sharing in the government’s recovery, the accused party should pay for the whistleblower’s attorney costs and fees.
How Government Fraud Cases are Filed
Whistleblowers who report cases under the False Claims Act should file their claims under seal at the District Court. The requirements include a copy of the claim and a written statement detailing all material evidence that supports the allegations. These documents should be provided to the attorney general. Since the claim is sealed, neither the public nor the defendant are aware of the complaint. The claim stays under seal for 2 months pending investigations by the government. The seal can be delayed for a couple of months or even years depending on the complexity of the investigations.
Before the public knows about the complaint, the government will notify the court and the whistleblower whether it will intervene in the case. If the government chooses to intervene, it will assume the role of prosecuting the accused. In such cases, the whistleblower and their lawyer serve as partners to the prosecution. If the government chooses not to intervene, the whistleblower litigates the case on their own.
There are many procedural and substantive provisions of the False Claims Act that affect the success of a whistleblower’s case. For example, only the first whistleblower can pursue a fraud case on behalf of the government and share in the awards that may be given. Additionally, failing to serve and file the complaint according to the False Claims Act can lead to a dismissal of the lawsuit.
Statute of Limitations
Whistleblowers should bear in mind that the False Claims Act has a statute of limitation that, in some cases, may be as brief as six years. This means that potential whistleblowers should report a case of government fraud within a period of six years from the time they discovered the scheme. For an accurate determination of the statute of limitation for a particular case, it is advisable to seek the counsel of an experienced government fraud attorney.
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