How the False Claims Acts Work

When corporations cheat the government, they cheat everyone who pays taxes. But the federal and state false claims acts are powerful tools to assist taxpayers in recovering the dollars stolen from the government each year through fraud committed by all sorts of government contractors. The federal and state false claims acts are targeted at those who knowingly submit, or cause someone else to submit, false claims to the government to be paid from government funds. State false claims acts are generally similar to the federal act. The federal false claims act explains that its purpose is threefold: to deter the submission of fraudulent claims at the outset; to reimburse the government for monies paid out as a result of any false claims; and to punish those who engage in fraudulent conduct against the government. The penalties are stiff. A person who submits a false claim will be liable for treble damages—three times the government’s actual damages. Further, the wrongdoer must pay civil penalties of $5,500 to $11,000 for each false claim or fraudulent bill that was submitted to the government for payment.

A person acts “knowingly” under the statute in three circumstances: when he or she has “actual knowledge” of the false claim; or “acts in deliberate ignorance of the truth or falsity of the information;” or “acts in reckless disregard of the truth or falsity of the information.” It is not necessary, however, to show that someone had a specific intent to defraud the government. In this regard, a claim under the False Claims Act is easier to prove than one brought under common law fraud.

The False Claims Act does not define the term “claim,” but courts have generally defined it as a demand for money payment or for some other transfer of public property. A false claim would also include the circumstance where someone makes a misrepresentation to the government in an attempt to avoid paying money owed.