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  • July 24, 2014

What is the False Claims Act?

What is the False Claims Act?

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What is the False Claims Act?

The False Claims Act allows people with knowledge of suspected false claims to sue on the government’s behalf.  If the Justice Department joins one of these “qui tam” lawsuits, the plaintiff can receive 15% to 25% of recoveries. If the department doesn’t join, the plaintiff can pursue the case and keep up to 30% of any recovery. Some of the largest settlements have involved allegations that drug makers overcharged or illegally promoted medicines in ways that led to improper billings to Medicaid or Medicare.  The False Claims Act is also known as the Lincoln Law because Congress enacted it during the Civil War to combat suppliers’ fraud on the Union Army.

Who can file a qui tam lawsuit?

Many persons that file qui tam lawsuits are current or former employees of the companies that have allegedly defrauded the government.  Suits can involve any industry, but most are in the health-care industry. In 2010, a former employee at GlaxoSmithKline PLC received about $96 million of the federal share of $750 million that the drug maker agreed to pay the government to settle allegations it sold substandard drugs. The company denied the allegations but pleaded guilty to a related criminal charge.  A smaller percentage of qui tam suits are filed by company outsiders, such as doctors or pharmacists who interact with the companies.

Why are False Claims Act lawsuits on the rise?

People filed 500 False Claims Act lawsuits in 2013 alleging health-care fraud, more than double the number in 2008. Some legal experts attribute this to increased public awareness of health-care fraud and of the potential of large rewards for reporting – especially following the publicity surrounding a series of large health-care fraud settlements such as a $2.3 billion Pfizer Inc. settlement in 2009. That yielded a $102 million reward to whistleblowers who accused it of improperly marketing drugs for uses that weren’t supposed to be covered by government health programs. Pfizer denied most of the civil allegations but pleaded guilty to a criminal charge. A Pfizer spokesman says its comments at the time of the settlement still stand, when it said it regretted certain actions taken in the past.

Why don’t many qui tam suits go to trial?

Companies frequently settle their cases with the government. Trials carry the risk of treble damages and potential exclusion from selling drugs to federal health programs. When companies settle, they generally don’t admit wrongdoing in connection with the civil allegations. But several bigger False Claim Act settlements have been attached to company agreements to plead guilty to criminal charges that arose from conduct related to the civil allegations.

How does the Affordable Care Act affect the False Claims Act?

The Affordable Care Act, often called Obamacare, made certain amendments to the False Claims Act, including provisions that make it harder for defendants to get a lawsuit dismissed on the grounds that the plaintiff relied on publicly available information. Obamacare also instituted stricter requirements for health-care organizations to return overpayments from federal health programs to avoid False Claims Act liability.

If you have a potential False Claims Act case contact Denver Whistleblower Attorney Gregory A. Hall at:

Gregory A. Hall
Law Office of Gregory A. Hall
3570 E. 12th Avenue, Suite 200
Denver, CO 80206
Phone: 303-320-0584

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