The anti-retaliation provision of the False Claims Act provides robust protection to any employee, contractor, or agent who suffers retaliation “because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.” 31 U.S.C. § 3730(h).
The False Claims Act whistleblower protection provision protects not only individuals who bring qui tam actions, but also individuals who take steps to expose fraud, including investigating a potential qui tam action or supplying information that could prompt an investigation.
A whistleblower who prevails in an FCA whistleblower retaliation action can recover:
For more information about False Claims Act whistleblower protection in the defense industry, see our FAQs about the False Claims Act whistleblower protection law. And call our experienced whistleblower lawyers today for a free consultation at 202-262-8959.
See our tips to get the maximum recovery in your whistleblower retaliation case.
The Defense Contractor Whistleblower Protection Act provides robust protection for whistleblowers in the defense industry. Our article in Practical Law summarizes the elements of a DCWPA claim.
Whistleblower Protections Under the National Defense Authorization Act (w-008-5821)As illustrated in a DOD OIG investigation in Valiant Integrated Services, Limited Liability Company U.S. Embassy, Baghdad, Iraq DODIG-2020-004, the scope of DCWPA whistleblowing is broad:
FAR clause 52.203.13, establishing a code of business ethics and conduct, requires contractors to exercise due diligence to “prevent and detect criminal conduct,” and to promote a culture emphasizing ethical conduct and commitment to compliance with the law. The clause further requires that contractors disclose to an agency OIG whenever a principal, employee, agent, or subcontractor of the contractor has committed a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 U.S.C. or a violation of the civil False Claims Act (31 U.S.C. 3729- 3733). These requirements are distinct. Additionally, FAR clause 52.203-13 (c)(2)(ii)(D) also requires that a contractor’s internal control system provide for an internal reporting mechanism, such as a hotline, by which employees may report suspected instances of “improper conduct”, and to prevent such conduct. Finally, paragraph 52.203-13(c)(2)(ii)(F) establishes the internal control system requirements to ensure timely reporting to the OIG of specific criminal violations under Title 18 U.S.C., or violation of the False Claims Act.
Accordingly, reporting a contractor’s failure to disclose criminal conduct is protected. And reporting the hiring of the underage armed security guard is protected whistleblowing under the DCWPA. See Whistleblower Reprisal Investigation: Willowheart, Limited Liability Company Fort Bragg, North Carolina DODIG-2019-104.
Whistleblowers disclosing DoD contractor fraud can pursue claims both under the FCA and the NDAA. The following table summarizes key distinctions between Section 3730(h) of the False Claims Act and Sections 827 and 828 of the NDAA:
| False Claims Act Whistleblower Protection | NDAA/Defense Contractor Whistleblower Protection Act | |
|---|---|---|
| Coverage | Employee, contractor, or agent of federal contractor | Employee of a contractor, subcontractor grantee, or subgrantee, or a personal services contractor |
| Scope of Protected Conduct (protected whistleblowing) | Protects lawful acts done by the employee, contractor, agent, or associated others (1) in furtherance of an action under the FCA or (2) other efforts to stop 1 or more violations | Protects disclosures to employer or the government concerning: -Violation of law, rule, or regulation related to a federal contract -Gross mismanagement of a federal contract or grant -Gross waste of federal funds -Abuse of authority relating to a federal contract or grant -Substantial and specific danger to public health or safety |
| Administrative Exhaustion | No exhaustion requirement; file directly in federal court | Must file initially at OIG and after 210 days, can remove claim to federal court |
| Causation Standard | "But for" causation | Contributing factor causation |
| Damages | Double back pay, reinstatement, uncapped special damages (emotional distress and harm to reputation), attorney’s fees | Back pay, reinstatement, uncapped special damages, attorney’s fees |
| Statute of Limitations | 3 years | 3 years |
In FY2021, the federal government obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government. Of the $5.6 billion in settlements and judgments, over $1.6 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.
This FAQ summarizes the key aspects of a False Claims Act lawsuit:
What is a qui tam whistleblower lawsuit? Expand
The False Claims Act authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam ” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui ] sues in this matter for the king as well as [tam ] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).
False Claims Act whistleblowers (also known as relators) are eligible to receive 10% to 30% of the recovery. In an intervened case, the relator can obtain 15% to 25% of the recovery, depending upon the extent to which the person substantially contributed to the prosecution of the action.
In a non-intervened case, the relator can obtain between 25% to 30% of the recovery. Additionally, a qui tam relator (whistleblower) who prevails in an FCA action-regardless of whether the government intervenes-is entitled to “reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730(d). Qui tam whistleblower lawsuits have enabled the government to recover more than $60 billion.
In 2022, a qui tam relator obtained $266.4 million in whistleblower awards from a $900 million settlement with Biogen Inc. Mr. Bawduniak alleged that Biogen, to prevent its multiple sclerosis drugs from losing market share to newer drugs, knowingly paid its largest prescribers for services Biogen did not need and never intended to use, and which payments served no legitimate business purpose.
The False Claims Act also protects whistleblowers from retaliation.
What types of false claims are prohibited by the False Claims Act? Expand
The False Claims Act prohibits:
To prevail, a qui tam whistleblower must prove that:
What is the first-to-file bar in False Claims Act qui tam cases? Expand
The first-to-file bar prohibits a whistleblower from bringing suit based on a fraud already disclosed through identified public channels, unless the whistleblower is “an original source of the information.” Pursuant to the first-to-file bar, “[w]hen a person brings an action under [the False Claims Act], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). The first-to-file bar encourages prompt filing.
The first-to-file bar underscores the importance of reporting fraud promptly and seeking counsel to evaluate potential claims.
What is the requirement to file a False Claims Act qui tam action under seal? Expand
The False Claims Act requires that a qui tam action must be filed under seal and remain sealed for at least 60 days. This procedure enables the government to investigate the matter, so that it may decide whether to take over the relator’s action or to instead allow the relator to litigate the action in the government’s place. The purpose of the seal provision is to avoid alerting defendants to a pending federal criminal investigation. State Farm Fire and Cas. Co. v. US, 137 S. Ct. 436 (2016).
Failure to file under seal could potentially jeopardize a relator’s ability to recover a whistleblower bounty, but the False Claims Act does not require automatic dismissal for a seal violation
The “sealing period, in conjunction with the requirement that the government, but not the defendants, be served, was ‘intended to allow the Government an adequate opportunity to fully evaluate the private enforcement suit and determine both if that suit involves matters the Government is already investigating and whether it is in the Government’s interest to intervene and take over the civil action.” United States ex rel. Pilon v. Martin Marietta Corporation, 60 F.3d 995, 998-99 (quoting S. Rep. No. 345, 99th Cong., 2d Sess. 24, reprinted in 1986 U.S.C.C.A.N. 5266, 5289).
A False Claims Act retaliation claim can also be filed under seal (in conjunction with a qui tam action).
To initiate a False Claims Act qui tam action, the relator (whistleblower) must serve a copy of the qui tam complaint along with a “written disclosure of substantially all material evidence and information the [relator] possesses” on the Government. 31 U.S.C. § 3730(b)(2). The complaint remains under seal for at least 60 days, and shall not be served on the defendant. During this 60-day period, the Government is charged with investigating the allegations and “may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal.” 31 U.S.C. §§ 3730(b)(2), (3).
Before the 60-day period (or any extensions obtained) expire, the Government shall either “(A) proceed with the action, in which case the action shall be conducted by the Government; or (B) notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.” 31 U.S.C. § 3730(b)(4).
What is a reverse false claim? Expand
Reverse false claims liability arises where an entity or individual avoids the payment of money due to the government, e.g., failing to pay royalties owed to the government for mining on public lands.
Section 3729(a)(1)(G) creates liability for a person who “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government,” or who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G).
To establish reverse false claim liability, a qui tam relator must show:
Reverse FCA liability can be supported by “`proof that the defendant made a false record or statement at a time that the defendant owed to the government an obligation’ . . . to pay money or property.” Chesbrough v. VPA, P.C., 655 F.3d 461, 473 (6th Cir. 2011)).
The term “obligation,” as it is used in the FCA’s reverse false claims provision, expressly includes any “established duty, whether or not fixed, arising from. . . . the retention of any overpayment. 31 U.S.C.A. § 3729(b)(3). By statute, Medicare requires that “[a]n overpayment must be reported and returned” to the program no later than “the date which is 60 days after the date on which the overpayment was identified.” 42 U.S.C. § 1320a-7k(d)(2). CMS has provided the following guidance regarding what it means to have “identified” an overpayment:
A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. A person should have determined that the person received an overpayment and quantified the amount of the overpayment if the person fails to exercise reasonable diligence and the person in fact received an overpayment.
42 C.F.R. § 401.305(a)(2). Internal audits can provide evidence that a provider knew about overpayments and chose not to return the overpayments to CMS.
What is the statute of limitations for a False Claims Act qui tam action? Expand
The statute of limitations for a qui tam action is the longer of 1) six years from when the fraud is committed, or 2) three years after the United States knows or should know about the material facts, but not more than 10 years after the violation. Under § 3731(b)(2), the Government may bring an FCA action within up to 10 years of an FCA violation, provided that the suit was commenced within three years of the date that “the official of the United States charged with responsibility to act in the circumstances” knew or reasonably should have known of the facts material to the right of action.
In Cochise Consultancy Inc. v. United States, ex rel. Hunt, the Supreme Court held that both Government-initiated suits under § 3730(a) and relator-initiated suits (qui tam actions) under § 3730(b) are civil actions under section 3730 and therefore the longer limitations period applies in non-intervened qui tam actions.
The relevant “official” whose knowledge triggers the three-year limitations period of § 3731(b)(2) is the Attorney General or his or her designees within the Department of Justice.
The statute of limitations for a False Claims Act whistleblower retaliation case is three years.
What is the public disclosure bar in the False Claims Act? Expand
The public disclosure bar prohibits a qui tam relator from bringing a False Claims Act lawsuit based on a fraud that has already been disclosed through certain public channels, unless the relator is an “original source” of the information. 31 U.S.C. § 3730(e)(4)(A).
An original source is “an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing [suit].” § 3730(e)(4)(B).
The public disclosure bar asks whether the relator’s allegations are “substantially similar” to publicly available information. United States ex rel. Davis v. District of Columbia, 679 F.3d 832, 836 (D.C. Cir. 2012). “Where a public disclosure has occurred, [the government] is already in a position to vindicate society’s interests, and a qui tam action would serve no purpose.” United States ex rel. Feingold v. AdminaStar Federal, Inc., 324 F.3d 492, 495 (7th Cir. 2003).
But the public disclosure bar does not dictate that a relator must “possess direct and independent knowledge of all of the vital ingredients to a fraudulent transaction.” United States ex rel. Springfield Terminal Railway Co. v. Quinn, 14 F.3d 645, 656 (D.C. Cir. 1994). Rather, “direct and independent knowledge of any essential element of the underlying fraud transaction” is sufficient to give the relator original-source status under the Act. Id. at 657.
In Springfield Terminal, the D.C. Circuit set forth specific criteria to evaluate whether the public disclosures bars a qui tam action:
A September 2018 Third Circuit decision in Pharamerica clarifies that the FCA’s public disclosure bar is not triggered when a relator relies upon non-public information to make sense of publicly available information, where the public information – standing alone – could not have reasonably or plausibly supported an inference that the fraud was in fact occurring. Similarly, the D.C. Circuit has held that the public disclosure bar is not triggered where the relator “supplied the missing link between the public information and the alleged fraud” by “rel[ying] on nonpublic information to interpret each [publicly disclosed] contract,” and where “[w]ithout [relator’s] nonpublic sources . . . there was insufficient [public] information to conclude” that the defendant actually engaged in the alleged fraud. United States ex rel. Shea v. Cellco P’ship, 863 F.3d 923, 935 (D.C. Cir. 2017).
Courts in the Fifth Circuit apply a three-part test to determine whether the public disclosure bar applies, asking: “(1) whether there has been a `public disclosure’ of allegations or transactions, (2) whether the qui tam action is `based upon’ such publicly disclosed allegations, and (3) if so, whether the relator is the `original source’ of the information.” U.S. ex rel. Reagan v. E. Tex. Med. Ctr. Reg’l Healthcare Sys., 384 F.3d 168, 173 (5th Cir. 2004) (quotations omitted). The Court is not required to rigidly follow the three steps. U.S. ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 327 (5th Cir. 2011). Indeed, the Fifth Circuit has recognized that “combining the first two steps can be useful, because it allows the scope of the relators’ action in step two to define the `allegations or transactions’ that must be publicly disclosed in step one.” Id.; see also U.S. ex rel. Fried v. W. Indep. Sch. Dist., 527 F.3d 439, 442 (5th Cir. 2008) (combining the first two steps).
What is the original source exception to the public disclosure bar? Expand
The public disclosure bar prohibits a relator from bringing a False Claims Act lawsuit based on a fraud that has already been disclosed through certain public channels, unless the relator is an “original source” of the information. 31 U.S.C. § 3730(e)(4)(A).
An “original source” is “an individual who either (1) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntary provided the information to the Government before filing an action.” § 3730(e)(4)(B).
If you have original information about fraud, it is important to retain counsel promptly. For example, if a government investigator interviews you before you have voluntarily come forward to disclose the fraud, your disclosure to the investigator will likely not qualify for any whistleblower award. See City of Chicago ex rel. Rosenberg v. Redflex Traffic Systems, 884 F.3d 798, 805 (7th Cir. 2018), citing United States ex rel. Paranich v. Sorgnard, 396 F.3d 326 (3d Cir. 2005) (voluntary requirement of federal False Claims Act “is designed to reward those who come forward with useful information and not those who provide information in response to a governmental inquiry”); Barth v. Ridgedale Electric, Inc., 44 F.3d 699, 704 (8th Cir. 1994) (qui tam relator did not “voluntarily provide” information to the government where government began its investigation first and investigator initiated interview with relator; “rewarding [relator] for merely complying with the government’s investigation is outside the intent of the Act.”)
What is materiality under the False Claims Act? Expand
The False Claims Act (FCA) defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4). In United States ex rel. Escobar v. Universal Health Servs., Inc., the Supreme Court held that FCA liability can attach for violating statutory or regulatory requirements, whether or not those requirements were designated in the statute or regulation as conditions of payment.
In particular, the Escobar Court held that “liability can attach when the defendant submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory or contractual requirement. In these circumstances, liability may attach if the omission renders those representations misleading.” 136 S. Ct. 1989, 1995 (2016). A Fifth Circuit decision summarizes the core holding of Escobar:
A violation is material if a reasonable person “would attach importance to [it] in determining his choice of action in the transaction” or “if the defendant knew or had reason to know that the recipient of the representation attaches importance to the specific matter `in determining his choice of action,’ even though a reasonable person would not.”
United States ex rel. Lemon v. Nurses To Go, Inc., 924 F.3d 155, 163 (5th Cir. 2019) (quoting Escobar I, 136 S. Ct. at 2002-03 (alteration in original) (quoting Restatement (Second) of Torts § 538 (1976))).
In Escobar, the Court articulated the following factors governing the materiality analysis, with no one factor being necessarily dispositive:
Examples of material false claims include:
The federal government’s payment of a claim after it learns of untruthful certifications or attestations about compliance with regulatory or contractual duties is not a shield from liability. See Campie v. Gilead Sciences, Inc., 862 F.3d 890, 906 (9th Cir. 2017).
What is “Scienter” Under the False Claims Act? Expand
An ordinary breach of a government contract caused by an honest mistake ordinarily does not give rise to False Claims Act liability. To prevail in a qui tam action, a relator must prove the defendant acted knowingly, i.e., that the defendant “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b). But proof of specific intent to defraud is not required. Therefore, a person who acts in deliberate ignorance or reckless disregard of a false or fraudulent claim can be liable under the False Claims Act.
As amended by the Fraud Enforcement and Recovery Act of 2009, a person is liable under the False Claims Act if he “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” There is no requirement to prove that a false statement was made with the intent that it would result in the federal government paying the claim.
Is a Violation of the Anti-Kickback Law Also a Violation of the False Claims Act? Expand
Note that opposing kickbacks or raising concerns about kickbacks is protected conduct under the False Claims Act anti-retaliation provision. For more information about False Claims Act whistleblower protection, click here.
For more information about the False Claims Act, Anti-Kickback Statute, Physician Self-Referral Law, and Exclusion Statute, see the HHS OIG’s roadmap for physicians about fraud and abuse laws.
As explained in a recent DOJ press release, “The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. The Physician Self-Referral Law, commonly known as the Stark Law, prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement, including the payment of compensation that exceeds the fair market value of the services actually provided by the physician. Both the Anti-Kickback Statute and the Stark Law are intended to ensure that physicians’ medical judgments are not compromised by improper financial incentives and instead are based on the best interests of their patients. Claims submitted under the Anti-Kickback Statute and the Stark Law violate the False Claims Act.”
Does the False Claims Act Prohibit Bid-Rigging? Expand
Bid rigging can violate the False Claims Act (FCA) under a fraudulent inducement theory. In a seminal FCA case, electrical contractors entered into a collusive bidding scheme in which they averaged the price of the prospective bids and then chose from among the contractors one who would submit a bid for the averaged amount, while the others submitted higher bids. U. S. ex rel. Marcus v. Hess, 317 U.S. 537 (1943). The Court found that this type of collusive bidding qualified as a false claims violation.
Recently Concept Schools, a charter school management company, paid $4.5M to settle a False Claims Act case alleging that it rigged the bidding for E-Rate contracts between 2009 and 2012 in favor of chosen technology vendors so that its network of charter schools located in several states selected the chosen vendors without a meaningful, fair and open bidding process. Additionally, the government alleged that Concept Schools’ chosen vendors provided equipment at higher prices than those approved by the FCC for equipment with the same functionality.
Does the False Claims Act Prohibit Fraudulent Inducement of a Contract? Expand
Where a contract is “procured by fraud,” False Claims Act liability flows from fraudulent inducement. Examples of fraudulent inducement include:
Yes, and indeed drug manufacturer Ranbaxy pleaded guilty to seven felonies related to Good Manufacturing Practices violations at facilities in India and paid $500 million in penalties. Good Manufacturing Practices (“GMPs”) are the standards for quality control and product testing set forth at 21 C.F.R. pt. 211.
A GMP violation can be sufficient to give rise to FCA liability if the drug’s strength materially differed from, or the purity or quality fell below, the strength, purity or quality specified in the drug’s FDA-approved New Drug Application, the drug’s labeling, and/or the standards set forth in an official compendium. Similarly, manufacturing deficiencies affecting the strength, purity and/or quality of the affected drug such that the drug is essentially “worthless” and not eligible for payment by the government can give rise to FCA liability. The defect must be so significant that what was provided was “understood to be different” from the approved drug.
But there are limitations:
Is there a heightened pleading requirement for False Claims Act qui tam cases? Expand
False Claims Act qui tam actions must meet the heightened pleading requirement set forth in Federal Rule of Civil Procedure 9(b). In other words, a quit tam relator must “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The complaint must “identify ‘the who, what, when, where, and how of the misconduct charged,’ as well as ‘what is false or misleading about [the purportedly fraudulent] statement, and why it is false.'” Cafasso ex rel. United States v. General Dynamics C4 Systems, Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)
Note though that in the Ninth Circuit, the relator need not “identify representative examples of false claims to support every allegation.” Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010). Similarly, in the Eleventh Circuit, there is no requirement for a qui tam relator to provide exact billing data. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1312 & n.21 (11th Cir. 2002). Rather, a complaint must contain “some indicia of reliability” that a false claim was actually submitted. Clausen, 290 F.3d at 1311. “For instance, a relator with first-hand knowledge of the defendant’s billing practices may possess a sufficient basis for alleging that the defendant submitted false claims.” United States ex rel Patel v. GE Healthcare, Inc., No. 8:14-cv-120-T-33TGW, 2017 WL 4310263, at *6 (M.D. Fla. Sept. 28, 2017).
“An FCA claimant is not required to show `the exact content of the false claims in question’ to survive a motion to dismiss, as `requiring this sort of detail at the pleading stage would be one small step shy of requiring production of actual documentation with the complaint, a level of proof not demanded to win at trial and significantly more than any federal pleading rule contemplates.'” United States v. Executive Health Resources, Inc., 196 F.Supp.3d 477, 492 (E.D.Pa. 2016) (citing Foglia, 754 F.3d at 156); Gohil, 96 F.Supp.3d at 519 (“[A relator] is not required to plead the details of any false claim submitted for payment[.]”)
But it is critical to connect the fraud scheme to the submission of false claims. In United States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52, 58 (1st Cir. 2017), the First Circuit held that “aggregate [information] reflecting the amount of money expended by Medicaid” on off-label prescriptions was “insufficient on its own to support a[] [False Claims Act] claim” because it did not show “an actual false claim made to the [G]overnment.”
To satisfy Rule 9(b), the whistleblower “must provide ‘particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted'”; “[d]escribing a mere opportunity for fraud will not suffice.” See Foglia v. Renal Ventures Mgmt., 754 F.3d 153, 157-58 (3d Cir. 2014).
As summarized in United States of America ex rel. Donna Rauch v. Oaktree Medical Centre, P.C., No. 6:15-cv-01589 (D.SC March 5, 2020), the Fourth Circuit applies the following Rule 9(b) standard:
“To satisfy Rule 9(b), a plaintiff asserting a claim under the [FCA] `must, at a minimum, describe the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.'” Nathan, 707 F.3d at 455-56 (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008)). The Fourth Circuit has held that “allegations of a fraudulent scheme, in the absence of an assertion that a specific false claim was presented to the government for payment” are insufficient to meet Rule 9(b)’s heightened pleading standard. Id. at 456. “Instead, the critical question is whether the defendant caused a false claim to be presented to the government, because liability under the [FCA] attaches only to a claim actually presented to the government for payment, not the underlying fraudulent scheme.” Id. (citing Harrison, 176 F.3d at 785). In the event a relator does not plead with particularity that specific false claims actually were presented to the government for payment, a relator’s complaint may still survive a Rule 9(b) challenge only if it “allege[s] a pattern of conduct that would `necessarily have led[ ] to submission of false claims’ to the government for payment.” Grant, 912 F.3d at 197 (quoting Nathan, 707 F.3d at 457) (alteration and emphasis in original).
A good example of meeting the Rule 9(b) requirement without pleading actual submission of invoices to the government is United States ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc., 906 F. Supp. 2d 1264, 1269 (N.D. Ga. 2012), a case in which the relator worked for a dialysis service provider and managed the facility’s inventory of two drugs. Based upon the relator’s observations of the inventory, he believed the facility submitted “fraudulent reimbursement claims” by “bill[ing] the government for doses of [drugs] that it received for free.” Id. Although the relator did not work in the billing department, the court found the relator satisfied Rule 9(b) because his belief was based upon his observation of the facility’s inventory documents and a conversation with “his clinical manager inform[ing] him that those documents were used as the basis upon which [the facility] billed for reimbursement.” Id. at 1277. Does the False Claims Act authorize treble damages? Expand
The False Claims Act provides that any entity violating 31 U.S.C. § 3729(a)(1) is liable for three times the amount of damages that the Government sustains because of the fraud.
In addition, the False Claims Act imposes a penalty for each violation or each false claim. As of December 13, 2021, the minimum False Claims Act penalty is $11,803 per claim and the maximum penalty is $23,607 per claim.
Must a False Claims Act qui tam relator have firsthand knowledge of all aspects of the fraud? Expand
Generally, the qui tam relator (the whistleblower) need not have firsthand knowledge of every aspect of the fraud scheme. The First, Third, Fifth, and Ninth Circuits have taken a more nuanced reading of the Rule 9(b) heightened pleading requirement, holding that it is sufficient for a plaintiff to allege “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that [false] claims were actually submitted.”
Recently the First Circuit held that “nothing in the statutory text limits ‘direct knowledge’ to knowledge gained from participation in or observation of the fraud. The statute requires only that the person have ‘direct and independent knowledge of the information on which the allegations are based,’ not direct and independent knowledge of the fraudulent acts themselves.” United States ex rel. Banigan v. PharMerica, Inc., 2020 WL 813258 (1st Cir. Feb 19, 2020).
In U.S. ex rel. Galmines v. Novartis Pharm. Corp., 88 F.Supp.3d 447, 456 (E.D.Pa. 2015). the court indicated “that Third Circuit appellate precedent does not require [relator] to have firsthand knowledge of `all the relevant information’ on which his allegations are based, and that “a relator’s allegations need not be strictly limited to the information as to which she has direct and independent knowledge, provided that the relator has direct and independent knowledge of the critical elements of the alleged fraudulent scheme.” The court in Galmines found that it should “allow original-source relators to pursue the entire fraudulent scheme for which they have direct and independent knowledge of the operative substantive facts, and not to limit relators to the specific time periods for which they have direct and independent knowledge, particularly where the relator has alleged the scheme was `continuing’ as of the day they lost their direct and independent knowledge by reason of a cessation of employment or equivalent development.” An “original source” is “an individual who has direct and independent knowledge of the information on which the allegations are based.” 31 U.S.C. §3730(e)(4)(B).
There are many factors to consider in deciding whether to blow the whistle directly to the government in the form of a qui tam whistleblower lawsuit and which laws offer the best remedy to combat retaliation. It is important to assess your options at an early stage to avoid waiving claims or rights. For example, entering into a global release or global waiver with your employer to resolve a retaliation claim could waive your right to recover a qui tam whistleblower award.
The experienced whistleblower attorneys at leading whistleblower law firm Zuckerman Law have represented whistleblowers in the defense industry disclosing fraud and other wrongdoing at government contractors and grantees. To schedule a free preliminary consultation, click here or call us at 202-262-8959.
Our experience includes:
In addition, we have substantial experience representing whistleblowers under the Whistleblower Protection Act (WPA) and enforcing the WPA, the law that the NDAA whistleblower provisions are based upon.
The following client reviews are from whistleblowers at federal contractors:
- “I was in a very difficult work situation dealing with the National Defense Authorization Act (NDAA) and whistleblower claims, and I needed legal representation. I was referred to Mr. Zuckerman by an attorney for a major corporation, who indicated that if they were in a similar situation, they would want Mr. Zuckerman on their side. From the get-go, Mr. Zuckerman listened to the details of my situation and believed in the merits of my case. He quickly dug into the details of my case and asked me thought-provoking questions, providing his legal expertise to help to build and shape my case. In doing so, he led me to see clearly how the employer wronged me. With his probing questions and knowledge of the relevant and applicable laws/statues, we filed a very strong NDAA and whistleblower claim, and combined with his tenacity, I was eventually able to settle with my employer and avoid a lengthy lawsuit. Mr. Zuckerman was very knowledgeable, professional, and always in my corner. He was always accessible, and always very responsive to my questions and needs. He accompanied me and represented me in official meetings, and he was always available to provide guidance, even emailing and responding to me very late in the evening. Mr. Zuckerman is competent, fair, ethical, and honest, and it was a pleasure working with him. I would not hesitate in recommending him to anyone who has experienced whistleblower retaliation.”
- “I hired Mr Zuckerman to pursue an action against a former employer that was attempting to use deceit in its pursuit of federal contracts, and which fired me for not participating in its schemes. Jason was not just very responsive, he was also engaging, spending a good deal of time and effort with me on the phone and by email learning the ins and outs of the case, discussing strategy, laying out alternatives, anticipating counter-arguments, etc, all with the highest integrity. In the end, Jason was able to negotiate a substantial settlement for me, and I believe the company learned not to fire employees for failing to participate in lying to the government. All in all, a very good outcome. I have had the opportunity in my career to interact with numerous attorneys. Jason truly stands out. I wholeheartedly recommend him to anyone seeking a lawyer for wrongful termination and related employment issues.”
We have also written extensively about whistleblower protections for employees of government contractors and grantees, including the following articles and blog posts:
