Key Takeaways

  • A false claim involves knowingly submitting fraudulent information to obtain money or property from the government.
  • The False Claims Act (FCA) holds individuals and companies liable for knowingly presenting false claims, even if no payment was made.
  • Examples of false claims include inflated invoices, billing for unprovided services, or false certification of compliance.
  • Whistleblowers can bring qui tam lawsuits under the FCA and may be entitled to a portion of recovered funds.
  • Penalties under the FCA can include treble damages and significant civil penalties per false claim.
  • The definition of a “claim” under the FCA includes requests made to contractors or grantees that lead to government payments.
  • The FCA’s scope has expanded over time to cover more types of fraudulent conduct.

The false claim definition is important to understand when dealing with a claim. A claim involves the assertion of your rights of government property or money. A false claim is classified as an attempt to get the government to pay money to anyone that was not intended to benefit. There are many ways to file a claim, and by definition, it is done in a way to claim entitlement to money or property. Some claims involve:

  • Invoicing for goods or services
  • Calling to certify that a person is owed an incremental payment
  • An assertion that a person is in some way entitled to keep the money they have already received from the government

What is a Claim?

While most claims are made in writing, this is not a legal requirement. When a claim is filed, it will be directed to the government or someone who is authorized to act on the behalf of the government

Not everyone can assert a right to money owed by the government. For a claim to be made, the assertion will have to come from someone who will have access to the government's money. This can take the form of invoices or payment demands to an agency official.

Claims can also be made by general contractors and subcontractors that were involved in a government project even if the money does not come directly from the government. In situations where a subcontractor asserts a claim that is false to the general contractor who in turn passes the claim along to be paid by the government, the subcontractor would still hold general liability.

It is important to note that just because a claim is made does not mean the government needs to pay it.

Examples of Typical Claims

There are many types of claims from a number of industries that the government will receive each year. Some of the examples of claims that the government may receive include:

  • The producer of automobiles gives the government an invoice for vehicles sold to the General Services Administration.
  • An electronics company issues an invoice to an aerospace company that provides electronics for a NASA program.
  • A laundry service contractor demands payment for laundry service for the U.S. military.
  • A subcontractor gives a general contractor an invoice for a product, such as soap, that the general contractor then bills a military base for.
  • A physician submits a reimbursement from Medicaid or Medicare.
  • A researcher or scientist requests the renewal of a federal grant.
  • An expert witness gives a testimony for a federal lawsuit, sending an invoice for expenses.

Defining a "Claim" Under the False Claims Act

Under the False Claims Act, a “claim” is broadly defined. It refers to any request or demand for money or property made directly to the government, or to a contractor, grantee, or other recipient if the government will reimburse the entity. Importantly, a claim does not need to be submitted directly to a federal agency; it may pass through intermediaries like general contractors before reaching the government.

Courts have interpreted “claim” expansively to cover many interactions, emphasizing that liability can arise even without direct contact with the government. This ensures that the FCA captures indirect fraud schemes and subcontractor misrepresentations that ultimately affect federal funds.

Penalties for Making a False Claim

Individuals or entities found liable under the False Claims Act can face substantial penalties. Penalties typically include:

  • Treble damages (three times the government’s losses)
  • Civil penalties ranging from $13,000 to over $27,000 per false claim, depending on inflation adjustments
  • Exclusion from federal contracts or programs
  • Reputational damage that can impact future business

In addition, whistleblowers who initiate successful qui tam actions may receive 15–30% of the recovered funds, incentivizing reporting of fraudulent activities.

What are False Claims?

The Supreme Court of the United States has broadly defined a fraudulent, or false, claim as all types of fraud that can result in a financial loss for the government. So, if a claim is misrepresented in any way, it could be deemed a false or fraudulent claim. This can include implying that something is true when it is actually false. For a claim to be considered false under the False Claims Act, the claim only needs to be fraudulently presented even if payment had not been made.

The False Claims Act was broadened by amendments in 1986 to include more transactions. Under the new amendments, a claim would be considered any demand or request for money from the government which was made directly through a contractor, grantee, or other parties who could receive federal funds.

Therefore, an individual can be charged with making a false claim just by the act of attempting to claim money that they are not legally owed, as well as depriving the government of their funds. This act was created by Congress in an attempt to prevent fraud by allowing individuals to be liable for filing a false claim regardless of whether or not the claim was paid yet. To prove in court that the claim was false, it has to be proven that a statement was made to induce a wrongful payment.

You can be held liable under the False Claims Act when:

  • You knowingly present a false claim for payment.
  • You knowingly make or use a false record to make a false claim.
  • You knowingly use or make a false record or statement to avoid, conceal, or change the amount of money to be paid.
  • You conspire with another to commit a violation of the act.

Whistleblower Protections and Qui Tam Lawsuits

The FCA empowers whistleblowers, known as “relators,” to file qui tam lawsuits on behalf of the government. If the government recovers funds based on their claims, whistleblowers may be awarded a percentage of the recovery. The law also protects whistleblowers from retaliation by their employers, including termination, harassment, or demotion. Remedies for retaliation can include reinstatement, double back pay, and compensation for legal fees.

Common Examples of False Claims

False claims can occur in a variety of industries and scenarios. Common examples include:

  • Billing the government for services that were never provided
  • Overcharging for goods or services beyond what was delivered
  • Submitting false certifications of compliance with contract terms or regulations
  • Using falsified records to support a payment request
  • Failing to return overpayments or mistakenly received funds
  • Double billing for the same service or product
  • Misrepresenting qualifications to obtain government contracts

These examples show that false claims aren’t limited to overt lies but can include omissions or misleading statements intended to secure government funds.

History and Purpose of the False Claims Act

The False Claims Act (FCA) was originally enacted during the Civil War to combat fraud by suppliers who sold defective goods to the Union Army. Known as the “Lincoln Law,” it empowered private citizens to sue on behalf of the government to recover funds obtained through fraud. Over the years, amendments expanded its reach, particularly in 1986, making it a stronger tool against fraud in industries like healthcare, defense contracting, and government procurement. Today, the FCA remains the primary legal framework for addressing fraud against federal programs, encouraging whistleblowers to report misconduct with protections and potential financial rewards.

Frequently Asked Questions

  1. What is the False Claims Act?
    The False Claims Act is a federal law that holds individuals and companies liable for knowingly submitting false claims for payment to the U.S. government.
  2. What are examples of false claims?
    Examples include billing for unprovided services, overcharging, false certifications of compliance, and using fake records to obtain payment.
  3. What penalties can result from a false claim?
    Penalties include treble damages, civil fines per violation, exclusion from government programs, and reputational harm.
  4. How does a whistleblower benefit under the False Claims Act?
    Whistleblowers can receive 15–30% of recovered funds if their qui tam lawsuit leads to a successful recovery.
  5. Does a claim have to be made directly to the government to qualify as false?
    No. Claims submitted to contractors, grantees, or intermediaries that result in government payments can also fall under the False Claims Act.

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