How the False Claims Act Helps Fight Fraud in Government Benefits Programs

What the Law Says

The FCA makes it illegal to knowingly submit false claims to the government for payment. For instance, a health care provider cannot bill Medicare for services that were never performed. A defense contractor cannot double-bill the Department of Defense for equipment. And an individual cannot claim benefits from programs like food stamps or unemployment insurance that they don’t qualify for or didn’t earn.

Under the FCA, violators face stiff penalties – three times the amount of damages the government sustains, plus fines of $5,500 to $11,000 per false claim. The law also allows private citizens to file whistleblower lawsuits on behalf of the government and collect a portion of any funds recovered.

How It Combats Benefits Fraud

Government benefits programs are frequent targets of fraud. Criminals try to game programs like Medicare, Medicaid, SNAP (food stamps), Social Security, and veterans benefits to line their own pockets. The FCA is one of the top tools for catching and deterring this type of fraud.

Here are some examples of FCA cases involving government benefits programs:

• A health clinic bills Medicaid for services it never provided to patients.
• A medical device company pays kickbacks to doctors to get them to use their products and bill Medicare.
• A defense contractor double-bills the Department of Veterans Affairs for equipment.
• A SNAP recipient lies about their income to receive higher food stamp benefits.
• A Social Security beneficiary conceals outside employment while collecting disability payments.

In cases like these, the FCA allows prosecutors to recover three times the amount of damages to the government program, plus hefty penalties. The threat of triple damages and fines that can quickly add up to millions of dollars serves as a powerful deterrent against defrauding government programs.

Qui Tam Lawsuits

A unique aspect of the FCA is that it allows private citizens to bring lawsuits on behalf of the government, known as qui tam suits. These whistleblowers – often employees who discover fraud by their company – can collect 15 to 30% of any funds recovered for reporting the fraud.

Qui tam suits have become an important means of uncovering complex fraud schemes against government programs. Whistleblower cases typically provide the government with more detailed evidence and first-hand insider accounts of the fraud.

Since 1986, qui tam lawsuits have recovered more than $40 billion for federal and state governments, with whistleblowers collecting billions in rewards. Qui tam cases routinely involve fraud against government health care programs like Medicare and Medicaid.

References

• The False Claims Act – Civil Division – Department of Justice
• [PDF] A Primer The False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733 was enacted in 1863 by a Congress concerne – Department of Justice
• 31 U.S. Code § 3729 – False claims – Law.Cornell.Edu
• 31 U.S. Code § 3730 – Civil actions for false claims – Law.Cornell.Edu
• [PDF] NEW YORK FALSE CLAIMS ACT