The False Claims Act provides, in pertinent part, that:

• (a) Any person who:
  • (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;
  • (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
  • (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;
  • (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government,
• is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.
• (b) For purposes of this section, the terms "knowing" and "knowingly" mean that a person, with respect to information:
  • (1) has actual knowledge of the information;
  • (2) acts in deliberate ignorance of the truth or falsity of the information; or
  • (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.

31 U.S.C. § 3729. While the False Claims Act imposes liability only when the claimant acts "knowingly," it does not require that the person submitting the claim have actual knowledge that the claim is false. A person who acts in reckless disregard or in deliberate ignorance of the truth or falsity of the information also can be found liable under the Act. 31 U.S.C. § 3729(b).

Summary of the False Claims Act

In sum, the False Claims Act imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false. Examples include:

• A physician who submits a bill to Medicare for medical services she knows she has not provided.
• A government contractor who submits records that he knows (or should know) are false and indicate compliance with certain contractual or regulatory requirements.
• "Reverse false claims" such as a hospital that obtains interim payments from Medicare throughout the year and knowingly files a false cost report at the end of the year to avoid making a refund to the Medicare program.

Qui Tam Provisions

In addition to its substantive provisions, the FCA allows private parties, known as “qui tam relators,” to bring an action on behalf of the United States. 31 U.S.C. § 3730(b). Qui tam relators may share in a percentage of the proceeds from an FCA action or settlement. The provisions include:

• When the Government intervenes in the lawsuit, the relator shall receive at least 15% but not more than 25% of the proceeds, depending on the relator's contribution to the action. (31 U.S.C. § 3730(d)(1))
• When the Government does not intervene, the relator shall receive an amount deemed reasonable by the court, not less than 25% and not more than 30%. (31 U.S.C. § 3730(d)(2))

Protections for Qui Tam Relators

The FCA provides protections for qui tam relators who are discharged, demoted, suspended, threatened, harassed, or discriminated against due to their actions under the FCA. Remedies include:

• Reinstatement with comparable seniority.
• Two times the amount of any back pay, plus interest.
• Compensation for any special damages sustained, including litigation costs and reasonable attorney's fees. (31 U.S.C. § 3730(h))

State Plans for Medical Assistance

Sec 1902 [42 USC 1396a(a)] requires state plans for medical assistance to:

• Provide that any entity receiving annual payments under the State plan of at least $5,000,000 must:
  • (A) Establish written policies for all employees (including management), contractors, and agents, detailing the False Claims Act (31 U.S.C. §§ 3729-3733), administrative remedies for false claims (31 U.S.C. Chapter 38), state laws on civil/criminal penalties, and whistleblower protections.
  • (B) Include detailed provisions regarding the entity's policies and procedures for detecting and preventing fraud, waste, and abuse.
  • (C) Include in employee handbooks a specific discussion of the laws described above, the rights of employees as whistleblowers, and the entity's policies and procedures for detecting and preventing fraud, waste, and abuse.