What is the False Claims Act and how does it relate to Qui Tam?

The False Claims Act (FCA) is a federal law that imposes penalties for submitting false claims to the government. Qui Tam provisions allow private individuals, known as relators, to sue on behalf of the government those who defraud it, potentially earning a portion of any recovery.

Can I be held liable if someone else files a qui tam lawsuit against my company?

If you are an individual accused in a qui tam action, liability depends on your role and involvement in the alleged fraudulent activities. Defendants can face severe penalties including fines and imprisonment if found guilty under the FCA.

What defenses are available to someone facing Qui Tam charges?

Defenses include proving that no false claim was made, demonstrating lack of intent or knowledge regarding the alleged fraud, or showing compliance with applicable laws and regulations at all times relevant.

Qui Tam & False Claims Act Defense

Navigating Government Contract Fraud Defense: A Strategic Approach

The defense of government contract fraud cases, often referred to as Qui Tam and False Claims Act (FCA) litigation, is a complex area of law that requires an in-depth understanding of both civil and criminal statutes. As a former federal prosecutor with extensive experience in these matters, I have seen firsthand the significant financial and reputational risks that can accompany such allegations. Government contractors and subcontractors face stringent compliance requirements under statutes like 31 USC § 3729-3733 (False Claims Act) and 18 USC § 287 (false claims to government). These laws are designed to protect the federal treasury from fraudulent schemes, which can range from overcharging for goods or services to inflating contract costs. A robust defense strategy must be carefully crafted to address specific allegations while also considering broader compliance issues within the client's organization. In recent years, Qui Tam provisions under 31 USC § 3730 have been a primary avenue for whistleblowers and insiders to initiate litigation against companies suspected of defrauding the government. This has resulted in an increased number of qui tam cases brought by relators, often with significant financial incentives at stake for those bringing forth information on fraudulent activities. As defense counsel, it is crucial to not only counter the allegations but also work proactively with clients to develop internal compliance programs that reduce the likelihood of future violations. The penalties for violating the False Claims Act can be severe, including treble damages and substantial fines, making early intervention and strategic litigation critical. Defense strategies may involve challenging jurisdictional issues, asserting substantive defenses such as good faith reliance on government guidance, or negotiating settlements with enforcement agencies like the DOJ Civil Fraud Section and HHS-OIG to mitigate potential liabilities.

Compliance Programs

Developing a robust compliance program is key to preventing and detecting fraud before it occurs.

Jurisdictional Challenges

Leveraging jurisdictional defenses can be an effective strategy in Qui Tam litigation to challenge the legal basis of a case.

Negotiated Settlements

Early engagement with enforcement agencies can lead to favorable settlement terms and reduced penalties.

Former Federal Prosecutor Insight

In my experience, prosecutors often leverage qui tam provisions to gather information and build cases against contractors suspected of defrauding the government. As defense counsel, it is essential to stay ahead by understanding both the legal framework and the practical investigative processes used by agencies like the DOD Inspector General.