False Claims Act

The federal government, through the Department of Justice (“DOJ”), uses the False Claims Act (“FCA”) as their main tool to recover losses from individuals or companies who defraud federal government programs. The federal government has even enacted recent legislation to combat it more aggressively (e.g., the 2009 Fraud Enforcement Recovery Act and the 2010 Patient Protection and Affordable Care Act). In 2015, the DOJ recovered more than $3.5 billion in settlements and judgments involving fraud and false claims against the government. Many states, including New York, have their own FCA regulations that handle fraud related to state government programs and funding. Anyone that receives payments from government programs or operates a government program can be subject to FCA liability. Under both systems, FCA violations are enforced civilly, but related criminal statutes are usually also triggered that could result in criminal prosecution. Both individuals and companies can be subject to FCA liability. The New York and federal FCAs have “whistleblower,” or qui tam provisions, which allow individuals to bring suits on behalf of the government. In fact, many of the recent FCA claims have been initiated by whistleblowers, who are entitled to a portion of any monetary recovery. A substantial number of FCA claims come from the health care industry. These FCA violations include overcharging for goods and services paid for by government health care programs such as Medicare and Medicaid. A service provider in a defense contract could also be subject to a FCA claim for billing a less skilled employee on a higher skilled employee’s pay structure, or for billing unnecessary services to the government.