False Claims Act Defense
Trusted False Claims Act & Qui Tam Defense Attorneys Serving Healthcare Professionals Nationwide
Last Updated: 2021-07-09
Oberheiden P.C. has significant prosecution and defense experience with False Claims Act / whistleblower cases. Our team of former Department of Justice prosecutors and experienced lawyers has represented clients across the United States in Healthcare Laws, Tax Whistleblower, and Environmental Cases.
False Claims Act Explained
- The federal False Claims Act applies to any individual or business that directly or indirectly contracts with and is paid for services by the United States government. It creates liability against any person, organization, corporation, or prime contractor that knowingly submits or causes to be submitted a false or fraudulent claim with intent to procure payment or approval from the government.
- The submission of an inaccurate claim occurs knowingly if it was submitted with actual knowledge or even when the person or entity failed to conduct due diligence. In other words, liability under the False Claims Act already arises if an actor should-have-known that, for example, a billing code had changed, but lacking diligence, nonetheless submitted an obsolete (false) code.
What Are the Penalties?
These investigations present severe challenges to any business because the statute contains both civil and criminal penalties and it is often not clear at the beginning of a case whether the government investigates the matter civilly or intends to press felony charges against the business owners.
- Civil Liability: Triple damages and a penalty of up to $ 11,000 per claim for anyone who knowingly submits or causes submission of a false or fraudulent claim to the United States.
- Criminal Liability (18 U.S.C. § 287): Healthcare providers who intentionally present fraudulent claims to the government for reimbursement with the knowledge that such claims were false, fictitious, or fraudulent are exposed to five year imprisonment and a fine of $ 250,000 (individuals) or $ 500,000 (companies) for federal felony convictions and $ 100,000 (individuals) or $ 200,000 (companies) for misdemeanor convictions— for each claim.
What Is a Qui Tam Lawsuit?
Most of these investigations are not initiated by the government but by former employees and competitors. The False Claims Act contains a provision that allows private citizens (so-called “relator”) to file so-called qui tam lawsuits (short for the Latin expression: “he who sues for the king and himself“) to recover monies on behalf of the United States by simply alleging that an individual or a business defrauded the federal government, see 31 U.S.C. § 3729.
Complaint. The qui tam relator (the plaintiff) files a complaint against an individual, a business, or both (the defendants) with a federal court. To protect the anonymity of the plaintiffs, qui tams are filed under seal and the court’s clerk will provide a copy of the complaint only to the assigned judge and certain government officials at the U.S. Attorney’s Office. Extensions to keep the case sealed are regularly granted for segments of six months and can be renewed until the government had a chance to investigate the matter.
Evidence. The government will immediately reject entirely unsubstantiated complaints. If the complaint appears promising, the government may investigate the facts with the help of federal law enforcement agencies such as the FBI, the DEA, or the U.S. Attorney’s Office. This factual investigation is typically done through OIG subpoenas that require the accused wrongdoers to produce specified corporate, financial, billing, business, and communications records.
Government Intervention. Upon review of those records and negotiations with the healthcare defense attorneys, the government must decide if it will support the plaintiff and intervene in the case or whether it will drop out and let the realtor continue on its own. Interventions require an approval process that involves the Department of Justice’s Washington D.C. headquarters. If the government does intervene, the Department of Justice will typically amend the complaint to include additional causes of actions such as the Anti-Kickback Act and the Truth in Negotiation Act.
Case Settlement. Parallel to the government serving subpoenas and thereby notifying the defendants about the pending investigation, negotiations between the government and defendants’ lawyers take place. Depending on the complexity of the case and the difficulty of the analysis, it may take several months before the government starts evaluating a qui tam and even longer before an opened matter is fully resolved.
Liability and Rewards. If found liable, the individuals and companies accused of fraud in the qui tam lawsuit may be ordered to pay as much as three times the government’s losses plus penalties of up to $ 11,000, per claim, which can quickly amount to millions of dollars. The law incentivizes qui tam plaintiffs by allowing them keep up to 25 percent of any amount collected if the government participates in the litigation and up to 30 percent if the plaintiffs collect on their own without the government’s intervention.
Simplifying the Qui Tam / False Claims Act Legal Process
The potential civil penalties associated with qui tam cases pursuant to the False Claims Act can be significant. The maximum allowable penalties under the statute include a payment of three times the government’s expenditures (commonly referred to as “treble” damages) in addition to finds of up to $11,000 per false claim the defendant is deemed liable for. What exactly constitutes an independent “false claim” in qui tam litigation is often construed by the court quite narrowly – meaning defendants can potentially face hundreds of thousands or millions of dollars in civil liability debt.
Mounting an Effective Qui Tam Litigation Defense
For corporate entities and individuals facing the threat of qui tam litigation, organizing a sound defense strategy is essential to mitigating the risk for disruptive government intervention and costly financial repercussions in the form of fines and drawn-out trial proceedings. Qui tam suits are those associated with claims filed by private citizens (also known as “relators”) on behalf of the federal government. After a suit has been submitted, the government has a statutorily-mandated obligation to conduct a formal investigation and make a subsequent determination as to whether or not to initiate prosecutorial action pertaining to the alleged fraudulent activity.
Qui Tam Defense Pre- & Post-Intervention Methodologies
Although it only requires a relatively bare-bones allegation of criminal fraud under the federal False Claims Act for a relator to substantiate an initial qui tam legal proceeding, far more evidence is required – both in substantive and procedural respects – for the litigation to progress past the opening pleading phases and ultimately result to a finding of criminal or civil liability against a given defendant. Substantiating liability under the False Claims Act is a notoriously difficult undertaking. Businesses and corporations facing accusations of government contract fraud, Medicare misconduct, and related statutory violations will often have several potential defenses available to them in order to minimize risk of any looming legal backlash.
Defending Qui Tam Allegations: What to Expect
Pursuant to the False Claims Act, there are two main routes that the Department of Justice can advance civil claims for reimbursement and related financial penalties against a defendant corporation.
The first is via a government-initiated investigatory scheme. The Federal Bureau of Investigation (FBI), the Department of Health and Human Services (DHHS), and several other related federal entities routinely conduct investigations of individuals and businesses for submitting inaccurate and fraudulent claims to the government. And based upon the subsequent evidence garnered during these reviews, the DOJ can either initiate a civil lawsuit under the False Claims Act or seek criminal charges against the offender, depending on the severity of the statutory violation.
The second process that individuals and businesses can encounter potential liability under the False Claims Act is through a private citizen originated legal action per the statute’s whistleblower/qui-tam clauses. This has both significant overlaps and unique distinguishing factors from government-initiated enforcement proceedings.
Some of the most commonly implemented defense strategies in qui tam cases under the False Claims Act include:
- Procedural Inconsistencies: As is the case in all categories of federal government litigation, relators in qui tam claims must remain complaint (and often strictly so) with the Federal Rules of Civil Procedure (FRCP). Relators would not be granted a free ‘pass’ on any technical and procedural shortcomings, regardless of any potential justifications they may attempt to offer. Calling out and formally challenging these deficiencies from the onset of the litigation proceedings can often, at the very minimum, slow down the legal process against a corporate defendant and start to raise questions from a judicial and governmental perspective about the legitimacy of the relator’s case – a key step in reducing the risk that the government will ultimately choose to dedicate its resources to advance the initial claim.
- Failing to File Requisite Disclosure Statement: In addition to the initial formal complaint (which is the document that is filed in federal court to start the qui tam legal process) the relator must also submit a disclosure statement to the Department of Justice. Specifically, this statement must include the following clause in order to be deemed legitimate in a court of law: “substantially all material evidence and information the [relator] possesses.” While the disclosure statement is not initially provided for review to the defending party, issues later made discoverable, regarding the pertinent details the relator might have overlooked when drafting the disclosure statement, may lead to grounds for seeking dismissal of the case in its entirety.
- Insufficient Evidentiary Backing to Prove Liability: In order to establish liability pursuant to the False Claims Act, the relator’s allegations and supporting evidentiary record and documentation must substantiate a judiciary’s finding of a requisite specified level of intent. In general terms, offering an inaccurate invoice or billing for payment to the government does not, on its own volition, subject an entity to liability for federal fraud under the False Claims Act. To be successful in qui tam litigation, the government and cooperating relator must typically be able to prove, at a minimum, that the defending party should have known about the purported fraudulent activity being attempted. Thus, even in instances involving legitimate allegations of false claims, defendants will oftentimes be able to offer mitigating counter evidence to avoid False Claims Act prosecution.
Frequently-Asked Questions (FAQs): False Claims Act Whistleblower Defense
Q: What constitutes a “false claim” under the False Claims Act?
When discussing whistleblower litigation and corporate defense strategies in qui tam actions under the False Claims Act, it is worth stepping back to examine what constitutes a “false claim.” Broadly speaking, a false claim is any request for payment from a government agency or benefit program that either (i) violates the terms of a government contract, or (ii) is non-compliant with the applicable billing rules and regulations. Under the False Claims Act, each individual billing constitutes a separate false claim, so it is not uncommon for whistleblower cases to involve hundreds or thousands of alleged False Claims Act violations.
Q: What are the penalties for submitting a “false claim” under the False Claims Act?
In civil litigation under the False Claims Act, potential penalties include treble damages and fines as mentioned above, and certain companies can face other penalties as well. For example, government contractors can face contract termination, and healthcare providers can face loss of federal benefit program eligibility.
Q: What are the chances that the government will intervene?
The likelihood of government intervention in a qui tam action under the False Claims Act depends on various factors ranging from the severity and evidentiary support for the relator’s allegations to the defendant’s choice of legal counsel. At Oberheiden, P.C., we have had significant success preventing government intervention in False Claims Act cases. Relying on our attorneys’ and former federal agents’ centuries of combined experience in high-stakes federal matters, we are able to utilize various defense tactics to convince prosecutors that intervention is unwarranted.
Q: What are the chances that intervention will lead to civil or criminal prosecution?
Of course, there is no guarantee that intervention can be avoided, and in some cases defendants will need to focus their efforts on avoiding civil or criminal prosecution. Critically, the government’s processes for deciding to intervene and deciding to press charges are very different; and, even after intervention, there are various defense strategies that can be used to fend off federal charges.
Q: What are the whistleblower’s chances of succeeding in private litigation if the government declines to intervene?
When the government declines to intervene in a qui tam action under the False Claims Act, this is usually the end of the matter. But, in rare circumstances, the relator will decide to pursue his or her allegations independently. While the relator’s chances of success in these circumstances are typically fairly low, companies cannot afford to let down their guard, and experienced defense counsel must be engaged to fight the relator’s federal lawsuit.
Q: Can the government decide to only pursue select allegations outlined in the whistleblower’s lawsuit?
Yes. In whistleblower litigation under the False Claims Act, intervention is not an “all or nothing” proposition. If federal prosecutors believe that some (but not all) of the relator’s allegations are adequately substantiated, then they can elect to intervene only with respect to those specific allegations.
Q: Can a qui tam action under the False Claim Act lead to other statutory charges as well?
Yes. If the government decides to intervene, it is not limited to pursuing charges for the False Claims Act violations alleged in the relator’s complaint. In fact, it is fairly common for prosecutors to pursue additional charges as well, including charges under the Anti-Kickback Statute (AKS), the Stark Law, and the Truth in Negotiations Act (TINA).
Q: How long do I have to respond if the government intervenes and files a complaint?
If the government intervenes, it will typically file its own complaint in federal district court. Once the government serves its complaint, you have 20 days to file an answer or a motion to dismiss.
Q: What are the potential outcomes if the government intervenes and files a complaint?
If the federal government intervenes and files a complaint, there are a few potential outcomes. First and most importantly, it is still possible at this stage to resolve the matter favorably prior to trial. At Oberheiden, P.C., we have had significant success resolving clients’ cases at this stage as well. If the government won’t negotiate a favorable plea deal and it is not possible to have the charges dismissed, then litigating in court may be necessary, and there are several defenses that can be asserted to avoid or mitigate any potential liability.
Q: When is it time to engage federal defense counsel?
If your company is facing a qui tam lawsuit under the False Claims Act, you need to engage federal defense counsel promptly. Our lawyers and investigators are available 24/7, and we can start working to prevent intervention immediately.
Why Do Clients Trust Oberheiden, P.C.?
A law firm’s reputation is its most prized possession and its most hard-won asset – and it must be earned, not given. We are more than pleased with the immense trust that our clients place in us on a daily basis. Following are some of the reasons why this is true.
Our lawyers have been battle-hardened by decades of experience navigating the byzantine corridors of the federal legal system. If you simply wish to minimize your risk of being investigated in the future, we can provide you with sound guidance on regulatory compliance issues. If an investigation has already begun, we can intervene decisively, since there simply isn’t much that can happen that we haven’t seen before.
When you are facing a federal investigation, the Oberheiden, P.C. difference is perspective. Several of us joined the firm after years of serving with distinction as federal prosecutors with the Department of Justice. Our experience on the other side of the table provides us with the broad perspective on our clients’ cases that simply cannot be matched by any other experience.
The first concern of most clients facing a federal investigation is how to minimize or completely eliminate the chance of penalties such as fines or incarceration. We are fully confident in our ability to secure the best possible outcome for you because we have done it for many clients before. In fact, many of our clients walk out of our office for the last time with no civil or criminal liability. We also strive to achieve your legal objective in a prompt and cost-effective manner.
4. Team Spirit
The federal government is the nation’s largest employer and its richest organization. Its vast resources will be deployed against you in the form of a team of investigators, federal agents, and prosecutors gathered together to handle your case. Should you choose to retain us, we will form a team to handle your case. We work in a cohesive and synergistic manner that maximizes the effect of the efforts of the individual attorneys that make up our team.
At Oberheiden, P.C., client loyalty is the indispensable virtue, because it is the one virtue without which all others would be useless. Our policy is to treat each of our clients’ cases with the same urgency and emphasis that we would exercise if we were the subjects of the investigation. Contact Oberheiden, P.C. online today.
Proven Defense Strategies
The difference between human error and liability is often a fine line that requires convincing negotiation skills, industry experience, and attention to details. The false claims act attorneys and former government officials of Oberheiden, P.C. have handled cases throughout the United States. The following are our maxims and guiding principles.
- No Criminal Charges. Our top priority in every False Claims Act case is to avoid criminal charges. Years of experience as former federal healthcare prosecutors in charge of investigations and a focused practice on healthcare fraud defense work allow us to quickly determine whether the investigation is civil or criminal, what the government’s objectives are, and how to efficiently resolve the matter.
- No Government Intervention. Because these cases are often initiated by whistle-blowing ex-employees or competitors with disingenuous agendas, we will aggressively confront the plaintiffs and destroy their credibility. Doing so is critical in order to convince the government that the accusations lack merit and do not deserve government intervention and support.
- Favorable Resolution. In instances, in which civil liability was indicated, we have negotiated the damages to fractions of the government’s demand. To date, not a single settlement forced any of our clients to cease operations or to close their business.
Connect With Experienced False Claims Act & Qui Tam Defense Lawyers Today
Call us today to discuss your situation with our false claims act lawyers. All initial consultations are free and confidential. We are available every day of the year, 24 hours a day. You can call us directly or complete our contact form or by sending us an email.