How Does It Work?
The False Claims Act allows private persons (known as “relators”) to file a lawsuit against those individuals/entities that have defrauded the federal government. Whistleblowers must file their Complaints under seal in a United States District Court. A copy, as well as a written statement of all material evidence supporting their allegations is provided to to the Attorney General of the United States and the local United States Attorney. Because the Complaint is filed under seal, neither the defendants nor the public are aware that a Complaint has been filed. The Complaint remains under seal for 60 days, while the government investigates. This seal may be extended for months or years. Before the whistleblower’s Complaint becomes public, the government notifies the whistleblower and the Court of whether it will intervene (become formally involved) in the case. If the government intervenes, it takes the lead role in litigating the case. The relator, however, and his or her attorney remain involved. If the government declines to intervene, the whistleblower may continue to litigate the case on his or her own on behalf of the government.
Filing a case under the False Claims Act is complex and there are many pitfalls. For example, the False Claims Act provides that only the first whistleblower who files a lawsuit raising the defendant’s fraud can continue on behalf of the government, and share in any recovery that might result.
Defendants who are found to have violated the False Claims Act are required to pay the federal government three times the amount of damages sustained by the government and civil penalties of between $5,500 and $11,000 for each false or fraudulent claim. As a reward for reporting fraud, the whistleblower is awarded a share of 15% to 30% of any recovery that the government receives. In addition to a share of the government’s recovery, the whistleblower is entitled by the False Claims Act to reasonable attorney’s fees and costs, to be paid by the Defendant.
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