The False Claims Act

The U.S. False Claims Act authorizes whistleblowers of any citizenship to sue to recover funding for a defrauded U.S. government agency or department. These complaints are originally filed confidentially but may later become public. A whistleblower can qualify for a share in the eventual recovery of up to 30% of the returned funds. The promise of such recoveries enables law firms like this one to advance the cost of our whistleblower representation and advice so that whistleblowers pay nothing unless and until their case progresses to a financial recovery.

There are many kinds of False Claims Act lawsuits. When the law was passed, the U.S. Congress sought to address the problem of unsavory military contractors selling the army defective products, such as guns that did not shoot or boots made of cardboard. Today, many U.S. government agencies are doing equally important work based on the integrity of the products, services and research they pay for. While some contractors cheat the government by billing for no work at all, it is more common to appear to be fulfilling obligations while taking unlawful shortcuts. Examples include mental health services provided by unlicensed therapists, drugs prescribed by bribed doctors, medical procedures that are unnecessary or unsafe, and technological services or products that do not work as advertised. In science, funding agencies sometimes award or continue to pay out on grants, based on scientists making misrepresentations of the science or of other circumstances to the research: in that case, payments after the date of the misrepresentation count as having been obtained fraudulently. One important focus at my firm is to use the False Claims Act to address fraud in the scientific or medical literature that misleads federal agencies into awarding grants or other benefits for work that they might not otherwise choose to fund.

It is important to understand what is needed to prove a false or fraudulent claim. Unlike in criminal fraud cases, it is not necessary for a whistleblower or the government in a False Claims Act case to be able to show that the defendant’s misrepresentation was intentional. A false or fraudulent claim can be reckless, deliberately ignorant, or knowing (meaning that the defendant should have known or in fact knew, that they were saying something untrue). In addition, omitting or hiding relevant information can make a statement fraudulent. In June 2016, the U.S. Supreme Court unanimously concluded that misleading half-truths can count as actionable false claims in United States ex rel. Escobar v. Universal Health Services, Inc.. This case defines the contours of civil fraud in the United States today.

The whistleblower was Julio Escobar, who sued a mental healthcare provider for billing the government for the services of unsupervised and unlicensed therapists; one of whom had caused the death of his daughter. Shortly after the Supreme Court ruled, I wrote an analysis for the American Journal of Law and Medicine. I went on to join the firm that had represented Escobar, working first on two product liability cases resulting from a German manufacturer’s marketing of a dangerous surgical device. I then took on a pharmaceutical kickback case brought by whistleblower Michael Bawudniak, alleging that Biogen, his former employer, had paid doctors as supposed consultants to induce them to prescribe its medications. All three cases settled well; the Bawduniak case achieved a record $900 million, with $266 million for my former client and former firm.

Other scientific, medical or technological frauds fit the Escobar or Bawduniak templates. The government pays for something, but its decision to pay is tainted by incomplete and misleading information, kickbacks, or other fraudulent conduct. If you are dealing with a fraud of this type and want advice about whether you have a case, or what your other options may be, please feel free to book a free, confidential consultation at the link below.