False Claim Act
When an individual encounters fraud against the federal government, the False Claim Act often provides the best way of: 1) stopping the fraud; 2) compelling repayment to the government; and 3) protecting the individual against retaliation, while at the same time allowing him or her to share in the recovery.
The so-called "qui tam" provisions of the statute allow private individuals to actually commence suit on behalf of the federal government to address fraud. In exchange for this service, such individuals, commonly called "relators," can receive between 15% and 30% of the government recovery.
Madsen Prestley & Parenteau LLC is experienced counsel for relators in these cases. Peter B. Prestley, one of the partners, is the author of the treatise New Practical Guide to Representing False Claim Act Plaintiffs, which is scheduled to be issued in 2006 by Juris publishing. Madsen Prestley & Parenteau LLC is also sponsor of the public interest web site Connecticut Center for Stopping Fraud against the Government. The firm is also involved in efforts to enact a Connecticut False Claim Act aimed at fraud ageist the State of Connecticut.
Operation of the Statute
What is involved in bringing a case under the Act?
The False Claim Act empowers people to bring causes of action on behalf of the federal government against any person or entity defrauding the federal government, and to share substantially in the recovery. It also protects such people, called "relators", from retaliation.
These cases involve a specialized area of legal practice and people who file suit under the Act typically utilize experienced counsel, since these cases involve many unique aspects. In general, the person filing the suit does so under seal, and also supplies the government with a disclosure statement, a document that sets out the facts and evidence that the person has to support the allegations in the complaint.
Once the case is filed, the government has an initial 60 day period in which to decide whether or not to intervene, that is to take over as lead counsel in the case. Practically speaking, this 60 day statutory period is routinely extended, so that the intervention decision is often made over a year after the case is initially filed. Often complex strategic decisions need to be made up front, since there may be other potent statutory causes of action that the individual(s) can bring that may have shorter deadlines than the duration of the seal period.
If the government intervenes, your lawyer assists the government in developing and prosecuting the case, as well as looks out for your interests, as the case moves forward and resolves. If the government chooses not to intervene, your counsel is entitled to continue to prosecute the case on behalf of the government and to continue representing your interests. Hence, people bringing these cases often seek out experienced counsel with demonstrated complex litigation and large case experience success who can take over if the government declines for some reason to allocate the necessary resources. Also, since potent state law causes of action are often involved, it most often makes sense to retain a lawyer who is experienced with the laws of the jurisdiction in which the case is brought.
Who can bring a lawsuit under the False Claim Act?
In general, anyone who has knowledge of a fraud against the federal government can bring an action on behalf of the government.
Most often suits under the Act are commenced by employees or former employees of an enterprise that has defrauded the federal government. However, suppliers, contractors, customers, competitors, service providers and others who come across fraud often initiate the suits as well.
When should a False Claim Act action be brought?
Each situation is unique and requires an analysis of all the facts and circumstances. However, you should be aware that these cases have a "first to file" component, and so if you think you might have information which supports a False Claim Act case, you should contact a qualified attorney as soon as possible. Also, in some cases a statute of limitations of as little as six years applies.
Why are False Claim Act cases brought?
There are many reasons.
First, many people believe it is right to bring fraudulent activity against the federal government to light. The False Claim Act was passed because such fraud is so widespread and costs the government and the taxpayers so much money.
Second, "relators" are irreplaceable and invaluable resources for the government, since many of the frauds that the Act allows to be uncovered would continue and compound if concerned citizens did not make the government aware of such activity. Also, these cases have a deterrent effect on other would be frauds.
Third, some "relators" utilize the Act to protect themselves from potential retaliation, another feature of the Act.
Forth, "relators" are given incentives to take the time trouble to notify and work with the government on such cases that are very significant. For instance, the law provides that the government can recover three times its actual damages, as well as civil penalties of between $5000 and $11,500 per each false claim. The relator can be entitled to as much as 30% of all that is recovered, plus an award of attorneys fees. Since the frauds often involve several millions and more of dollars defalcated from the government over many years, as well as thousands of transactions, each one of which constitutes a separate fraud, the cases can involve huge sums for a successful "relator."