False Claims Act of 1863: Difference between revisions - Wikipedia

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| SCOTUS cases = {{ubl|''[[United States =v. Cohn]]'', {{~~ubl~~ussc|270|339|1926}}|''[[United States v. Gilliland]]'', {{ussc|312|86|1941}}|''[[United States ex rel. Marcus v. Hess]]'', {{ussc|317|537|1943}}|''[[United States v. Grainger]]'', {{ussc|346|235|1953}}|''[[Rainwater v. United States]]'', {{ussc|356|590|1958}}|''[[United States v. McNinch]]'', {{ussc|356|595|1958}}|''[[United States v. Neifert-White Co.]]'', {{ussc|390|228|1968}}|''[[United States v. Bornstein]]'', {{ussc|423|303|1976}}|''[[United States v. Halper]]'', {{ussc|490|435|1989}}|''[[Hughes Aircraft Co. v. United States ex rel. Schumer]]'', {{ussc|520|939|1997}}|''[[Vermont Agency of Natural Resources v. United States ex rel. Stevens]]'', {{ussc|529|765|2000}}|''[[Cook County v. United States Exex ~~Rel~~rel. Chandler]]'', {{ussc|538|119|2003}}|''[[Graham County Soil and Water Conservation Dist. v. United States ex rel. Wilson]]'', {{ussc|545|409|2005}}|''[[Rockwell International Corp. v. United States]]'', {{ussc|549|457|2007}}|''[[Allison Engine Co. v. United States ex rel. Sanders]]'', {{ussc|553|662|2008}}|''[[United States ex rel. Eisenstein v. City of New York]]'', {{ussc|556|928|2009}}|''[[Graham County Soil and Water Conservation Dist. v. United States ex rel. Wilson]]'', {{ussc|559|280|2010}}|''[[Schindler Elevator Corp. v. United States ex rel. Kirk]]'', {{ussc|563|401|2011}}|''[[Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter]]'', {{ussc|docket=12-1497|volume=575|year=2015}}|''[[Universal Health Services, Inc. v. United States ex rel. Escobar]]'', {{ussc|docket=15-7|volume=579|year=2016}}|''[[State Farm Fire & Casualty Co. v. United States ex rel. Rigsby]]'', {{ussc|docket=15-513|volume=580|year=2016}}|''[[Cochise Consultancy, Inc. v. United States ex rel. Hunt]]'', {{ussc|docket=18-315|volume=587|year=2019}}|''[[United States ex rel. Schutte v. SuperValu Inc.]]'', {{ussc|docket=21-1326|volume=598|year=2023}}|''[[United States ex rel. Polansky v. Executive Health Resources, Inc.]]'', {{ussc|docket=21-1052|volume=599|year=2023}}|''[[Wisconsin Bell, Inc. v. United States ex rel. Todd Heath]]'', {{ussc|docket=23-1127|volume=|year=2025}}}}

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The '''False Claims Act of 1863''' ('''FCA'''),<ref>{{Cite web|url=https://www.govinfo.gov/app/details/USCODE-2011-title31/USCODE-2011-title31-subtitleIII-chap37-subchapIII-sec3729|title=govinfo|website=www.govinfo.gov|access-date=Jul 23, 2020}}</ref> ~~also called the "'''Lincoln Law'''",~~ is an American [[federal law]] that imposes liability on persons and companies (typically [[federal contractor]]s) who [[defraud]] governmental programs. It is the federal government's primary [[litigation]] tool in combating fraud against the government.<ref>{{cite court |litigants=United States ex rel. Steury v. Cardinal Health, Inc. |vol=625 |reporter=F.3d |opinion=262 |pinpoint=267 |court=[[5th Cir.]] |date=2010 |url=https://www.leagle.com/decision/infco20101101082 |access-date=2018-11-08 |quote=The FCA is the Government's primary litigation tool for recovering losses resulting from fraud.}}</ref> The law includes a ''[[qui tam]]'' provision that allows people who are not affiliated with the government, called "relators" under the law, to file [[Lawsuit|actions]] on behalf of the government. This is informally called "[[whistleblower|whistleblowing]]", especially when the relator is employed by the organization accused in the suit. Persons filing actions under the Act stand to receive a portion (15–30%, depending on certain factors) of any recovered [[damages]].<ref>{{Cite web|url=https://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf |archive-url=https://web.archive.org/web/20141113141951/http://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf |archive-date=2014-11-13 |url-status=live|title=The False Claims Act: A Primer|date=February 22, 2011|website=Department of Justice}}</ref>

As of 2019, over 71% of all FCA actions were initiated by whistleblowers.<ref name=":1">{{Cite web|url=https://www.justice.gov/opa/press-release/file/1233201/download|title=FRAUD STATISTICS - OVERVIEW|date=September 30, 2019|website=Department of Justice (Civil Division)}}</ref> Claims under the law have typically involved government health care programs (Medicare, Medicaid and TriCare), military, or other government spending programs,. ~~and~~FCA actions dominate the [[list of largest pharmaceutical settlements]]. Between 1987 and 2019, the government recovered more than $62 billion under the False Claims Act.<ref>{{Cite web|url=https://www.justice.gov/opa/pr/justice-department-recovers-over-3-billion-false-claims-act-cases-fiscal-year-2019|title=Justice Department Recovers over $3 Billion from False Claims Act Cases in Fiscal Year 2019|date=January 9, 2020|website=Department of Justice}}</ref>

==History==

''[[Qui tam]]'' laws have history dating back to the [[Middle Ages]] in [[England]]. In 1318, King [[Edward II of England|Edward II]] offered one third of the penalty to the relator when the relator successfully sued government officials who moonlighted as wine merchants.<ref name=cdoyle>{{Cite web|url=http://www.fas.org/sgp/crs/misc/R40785.pdf |archive-url=https://web.archive.org/web/20091104004043/http://www.fas.org/sgp/crs/misc/R40785.pdf |archive-date=2009-11-04 |url-status=live|title=C. Doyle, writing for the Congressional Research Service (2009): "Qui Tam: The False Claims Act and Related Federal Statutes"|access-date=Jul 23, 2020}}</ref> The [[Maintenance and Embracery Act 1540]] of [[Henry VIII]] provided that [[common informer]]s could sue for certain forms of interference with the course of justice in legal proceedings that were concerned with the title to land.<ref>The Law Commission. Proposals to Abolish Certain Ancient Criminal Offences. HMSO. 1966. Paragraph 6(a) at page 4.</ref> This act is still in force today in the [[Republic of Ireland]], although in 1967 it was extinguished in England. The idea of a common informer bringing suit for damages to the Commonwealth was later brought to [[Massachusetts]], where "penalties for fraud in the sale of bread [are] to be distributed one third to inspector who discovered the fraud and the remainder for the benefit of the town where the offense occurred."<ref name=cdoyle/> Other statutes can be found on the colonial law books of [[Connecticut]], [[New York (state)|New York]], [[Virginia]] and [[South Carolina]].<ref name=cdoyle/>

The [[American Civil War]] (1861–1865) was marked by fraud on all levels, both in the [[Union (American Civil War)|Union]] north and the [[Confederate States of America|Confederate]] south. During the war, unscrupulous contractors sold the [[Union (American Civil War)|Union Army]] decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions, among other unscrupulous actions.<ref>{{cite web|first=Larry D. |last=Lahman|title= "Bad Mules: A Primer on the Federal False Claims Act", 76 Okla. B. J. 901, 901 (2005) |url=https://www.michbar.org/journal/pdf/pdf4article1590.pdf |archive-url=https://web.archive.org/web/20100202202046/http://www.michbar.org/journal/pdf/pdf4article1590.pdf |archive-date=2010-02-02 |url-status=live|work=michbar.org}}</ref> In response, Congress passed the False Claims Act on March 2, 1863, {{USStat|12|696}}.<ref>{{ussc|name=Hubbard v. United States|volume=514|page=695|pin=704|year=1995}}.</ref> Because it was passed under the administration of President [[Abraham Lincoln]], the False Claims Act is ~~often~~sometimes referred to as the "Lincoln Law".<ref name=whistleblowingprotection>{{cite web | url=http://www.whistleblowingprotection.org/?q=node/69 | title=Qui Tam A History | publisher=Whistleblower Info | access-date=2012-01-23 }}</ref>

Importantly, a reward was offered in what is called the ''[[qui tam]]'' provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery. ''Qui tam'' is an abbreviated form of the Latin legal phrase ''qui tam pro domino rege quam pro se ipso in hac parte sequitur'' ("he who brings a case on behalf of our lord the King, as well as for himself")<ref name=Vermont>{{ussc|name=Vt. Agency of Natural Res. v. United States ex rel. Stevens|volume=529|page=765}}, 769 n.1 (2000).</ref> In a ''qui tam'' action, the citizen filing suit is called a "relator".<ref>("A ‘relator’ is ‘[a] party in interest who is permitted to institute a proceeding in the name of the People or the Attorney General when the right to sue resides solely in that official.’ Black's Law Dictionary 1289 (6th ed. 1990).")</ref><ref>A relator is one who relates the fraud action on behalf of the Government. See {{cite court |litigants=United States ex rel. Karvelas v. Melrose-Wakefield Hosp. |vol=360 |reporter=F.3d |opinion=220 |pinpoint=226 n.7 |court=[[1st Cir.]] |date=2004 |url=https://law.justia.com/cases/federal/appellate-courts/F3/360/220/484199/ |access-date=2018-11-08 }}</ref> As an exception to the general legal rule of [[standing (law)|standing]], courts have held that ''qui tam'' relators are "partially assigned" a portion of the government's legal injury, thereby allowing relators to proceed with their suits.<ref name="auto">{{Cite journal|url=https://papers.ssrn.com/abstract=1537749|title=The King and I?: An Examination of the Interest Qui Tam Relators Represent and the Implications for Future False Claims Act Litigation|first=Nathan|last=Sturycz|ssrn=1537749|access-date=Jul 23, 2020|journal=St. Louis University Public Law Review|volume=28|issue=459|year=2009|via=papers.ssrn.com}}</ref>

[[United States Senate|U.S. Senator]] [[Jacob M. Howard]], who sponsored the legislation, justified giving rewards to whistle blowers, many of whom had engaged in unethical activities themselves. He said, "I have based the [''qui tam'' provision] upon the old-fashioned idea of holding out a temptation, and ‘setting a rogue to catch a rogue,’ which is the safest and most expeditious way I have ever discovered of bringing rogues to justice."<ref>''Vt. Agency of Natural Res. v. United States ex rel. Stevens'', 529 U.S. at 769 n.1; see also {{cite ~~web~~news|title=When Bad Things Happen to Good Rogues|url=https://psmag.com/news/when-bad-things-happen-to-good-rogues-11512|~~publisher~~newspaper=Pacific Standard|access-date=29 August 2013}}</ref>

In the massive military spending leading up to and during [[World War II]], the [[United States Attorney General|US Attorney General]] relied on criminal provisions of the law to deal with fraud, rather than using the FCA. As a result, attorneys would wait for the [[United States Department of Justice|Department of Justice]] to file criminal cases and then immediately file civil suits under the FCA, a practice decried as "parasitic" at the time. Congress moved to abolish the FCA but at the last minute decided instead to reduce the relator's share of the recovered proceeds.<ref name=Helmer/>{{rp|1267–1271}}<ref name=CongResServ>Charles Doyle, Senior Specialist in American Public Law, for the Congressional Research Service. August 6, 2009 [http://fas.org/sgp/crs/misc/R40785.pdf Qui Tam: The False Claims Act and Related Federal Statutes]</ref>{{rp|6}}

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The Act establishes liability when any person or entity improperly receives from or avoids payment to the Federal government. The Act prohibits:

# Knowingly presenting, or causing to be presented, a false claim for payment or approval;

# Knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim;

# [[Conspiracy (civil)|Conspiring]] to commit any violation of the False Claims Act;

# Falsely certifying the type or amount of property to be used by the ~~Government~~government;

# Certifying receipt of property on a document without completely knowing that the information is true;

# Knowingly buying ~~Government~~government property from an unauthorized officer of the ~~Government~~government, and;

# Knowingly making, using, or causing to be made or used a false record to avoid, or decrease an obligation to pay or transmit property to the ~~Government~~government.

# The False Claims act does not apply to IRS Tax matters. <ref>{{Cite web|url=https://www.falseclaimsact.com/irs-whistleblower-law/|title=Report Tax Fraud - Call our IRS Whistleblower Attorneys Today|access-date=Jul 23, 2020}}</ref>

The statute provides that anyone who violates the law "is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990,<ref name=":4">{{Cite web|title=28 U.S. Code § 2461 - Mode of recovery|url=https://www.law.cornell.edu/uscode/text/28/2461|access-date=2020-06-28|website=LII / Legal Information Institute|language=en}}</ref> plus 3 times the amount of damages which the Government sustains because of the act of that person."<ref>{{Cite web|title=31 U.S. Code § 3729 - False claims|url=https://www.law.cornell.edu/uscode/text/31/3729|access-date=2020-06-28|website=LII / Legal Information Institute|language=en}}</ref> The False Claims Act requires a separate penalty for each violation of the statute.<ref name=":5">{{Cite web|date=2020-06-01|title=False Claims Act Penalties Explained - Whistleblower Law|url=https://www.whistleblowerllc.com/false-claims-act-penalties/|access-date=2020-06-28|website=Whistleblower Law Collaborative}}</ref> Under the Civil Penalties Inflation Adjustment Act,<ref name=":4" /> False Claims Act penalties are periodically adjusted for inflation.<ref name=":5" /> In 2020, the penalties range from $11,665 to $23,331 per violation.<ref>{{Cite web|date=2020-06-23|title=2020 False Claims Act Penalties|url=https://www.whistleblowerllc.com/2020-false-claims-act-penalties/|access-date=2020-06-28|website=Whistleblower Law Collaborative}}</ref>

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There are unique procedural requirements in False Claims Act cases. For example:

# a complaint under the False Claims Act must be filed under seal;<ref name="31 U.S.C. § 3730b2">31 U.S.C. § 3730(b)(2).</ref><ref>{{Cite web|url=http://www.jameshoyer.com/what-does-under-seal-really-mean/|title=What Does "Under Seal" Really Mean?|date=Jun 24, 2013|access-date=Jul 23, 2020|archive-date=September 26, 2020|archive-url=https://web.archive.org/web/20200926050148/http://www.jameshoyer.com/what-does-under-seal-really-mean/|url-status=dead}}</ref>

# the complaint must be served on the government but must not be served on the defendant;<ref name="31 U.S.C. § 3730b2"/>

# the complaint must be buttressed by a comprehensive memorandum, not filed in court, but served on the government detailing the factual underpinnings of the complaint.<ref>The FCA requires each relator to supply the Government with a statement of material evidence ("SME") containing all information and documents they possess that support the FCA allegations. 31 U.S.C. § 3730(b)(2).</ref>

In addition, the FCA contains an anti-retaliation provision, which allows a relator to recover, in addition to his award for reporting fraud, double damages plus attorney fees for any acts of retaliation for reporting fraud against the ~~Government~~government.<ref>31 U.S.C. § 3730(h). To prevail on a § 3730(h) retaliation claim, the relator must establish these three elements: (1) the employee was engaging in conduct protected by the FCA, (2) the employer knew the employee was engaging in protected conduct, and (3) the employer discriminated against the employee because of his or her protected conduct. Id.</ref> This provision specifically provides relators with a personal claim of double damages for harm suffered and reinstatement.<ref>31 U.S.C. § 3730(h).</ref>

Under the False Claims Act, the [[United States Department of Justice|Department of Justice]] is authorized to pay rewards to those who report fraud against the federal government and are not convicted of a crime related to the fraud, in an amount of between 15 and 25 (but up to 30% in some cases) of what it recovers based upon the whistleblower's report.<ref name=Hesch/>{{rp|219}} The relator's share is determined based on the FCA itself, legislative history, Department of Justice guidelines released in 1997, and court decisions.<ref>John C. Moylan. January 2012 [http://www.wyche.com/article/recoveries-and-protections-for-whistleblowers-under-the-false-claims-act Recoveries and Protections for Whistleblowers Under the False Claims Act]</ref>

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# Restoration of the "[[Legal burden of proof|preponderance of the evidence]]" standard for all elements of the claim including damages;

# Imposition of treble damages and civil fines of $5,000 to $10,000 per false claim;

# Increased rewards for ''qui tam'' plaintiffs of between ~~15–30~~15 and 30% of the funds recovered from the defendant;

# Defendant payment of the successful plaintiff's expenses and attorney's fees, and;

# Employment protection for whistleblowers including reinstatement with seniority status, special damages, and double back pay.

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==Practical application of the law==

The False Claims Act has a detailed process for making a claim ~~under the Act~~. Mere complaints to the government agency are insufficient to bring claims under the Act. A complaint (lawsuit)

must be filed in a [[U.S. District Court]] (Federal court) ''in camera'' (under seal). The [[United States Department of Justice|Department of Justice]] (DOJ) must thence investigate within 60 days, but it often enjoys several months' worth of extensions by the Court. In this time, the ~~Department~~department decides whether it will pursue the case.

If the case is pursued by DOJ, the amount of the reward is less than if the Department of Justice had decided not to pursue the case and the plaintiff/relator continues the lawsuit himself. However, the success rate is higher in cases that the Department of Justice decides to pursue.

Technically, the government has several options in handing cases. These include:

# intervene in one or more counts of the pending ''qui tam'' action. This intervention expresses the Government's intention to participate as a plaintiff in prosecuting that count of the complaint. The ~~Department~~department intervenes in fewer than 25% of filed ''qui tam'' actions.

# decline to intervene in one or all counts of the pending ''qui tam'' action. If the United States declines to intervene, the relator (i.e., plaintiff) may prosecute the action alone and thus on behalf of the United States, but the United States is not a party to the proceedings apart from its right to any recovery. This option is frequently used by relators and their attorneys.

# move to dismiss the relator's complaint, either because there is no case, or the case conflicts with significant statutory or policy interests of the United States.

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In practice, there are two other options for the Department of Justice:

# settle the pending ''qui tam'' action with the defendant prior to the intervention decision. This usually, but not always, results in a simultaneous intervention and settlement with the Department of Justice (and is included in the 25% intervention rate).

# advise the relator that the Department of Justice intends to decline intervention. This usually, but not always, results in dismissal of the ''qui tam'' action, according to the U.S. Attorney's Office of the Eastern District of Pennsylvania.<ref>{{Cite web|url=http://www.usdoj.gov/usao/pae/Documents/fcaprocess2.pdf |archive-url=https://web.archive.org/web/20040416071506/http://www.usdoj.gov/usao/pae/Documents/fcaprocess2.pdf |archive-date=2004-04-16 |url-status=live|title=False Claims Act Cases: Government intervention in Qui Tam (whistleblower) suits – Memo of the U.S. Attorneys' Office of the Eastern District of Pennsylvania |access-date=Jul 23, 2020}}</ref>

There is case law where claims may be prejudiced if disclosure of the alleged unlawful act has been reported in the press, if complaints were filed to an agency instead of filing a lawsuit, or if the person filing a claim under the act is not the first person to do so. Individual states in the U.S. have different laws regarding whistleblowing involving state governments.

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In a 2007 case, ''[[Rockwell International Corp. v. United States]]'', the [[Supreme Court of the United States|United States Supreme Court]] considered several issues relating to the "original source" exception to the FCA's public-disclosure bar. The Court held that (1) the original source requirement of the FCA provision setting for the original-source exception to the public-disclosure bar on federal-court jurisdiction is jurisdictional; (2) the statutory phrase "information on which the allegations are based" refers to the relator's allegations and not the publicly disclosed allegations; the terms "allegations" is not limited to the allegations in the original complaint, but includes, at a minimum, the allegations in the original complaint as amended; (3) relator's knowledge with respect to the pondcrete fell short of the direct and independent knowledge of the information on which the allegations are based required for him to qualify as an original source; and (4) the government's intervention did not provide an independent basis of jurisdiction with respect to the relator.

In a 2008 case, ''[[Allison Engine Co. v. United States ex rel. Sanders]]'', the [[Supreme Court of the United States|United States Supreme Court]] considered whether a false claim had to be presented directly to the Federal government, or if it merely needed to be paid with government money, such as a false claim by a [[subcontractor]] to a prime contractor. The Court found that the claim need not be presented directly to the government, but that the false statement must be made with the intention that it will be relied upon by the government in paying, or approving payment of, a claim.<ref>Opinion of the Court, [https://www.supremecourt.gov/opinions/07pdf/07-214.pdf Allison Engine Co. v. United States ex rel. Sanders] {{Webarchive|url=https://web.archive.org/web/20210411042710/https://www.supremecourt.gov/opinions/07pdf/07-214.pdf |date=2021-04-11 }}, 553 U. S. __ (2008), part II(C).</ref> The [[Fraud Enforcement and Recovery Act of 2009]] reversed the Court's decision and made the types of fraud to which the False Claims Act applies more explicit.<ref>{{cite web | title = Senate Report 111-10, part III | quote = This section amends the FCA to clarify and correct erroneous interpretations of the law that were decided in ''Allison Engine Co. v. United States ex rel. Sanders'', 128 S. Ct. 2123 (2008), and ''United States ex. rel. Totten v. Bombardier Corp'', 380 F.3d 488 (D.C. Cir. 2004). | author = Senate Judiciary Committee | date = March 23, 2009 | access-date = 2009-05-26 | url = http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp111&sid=cp11123vD4&refer=&r_n=sr010.111&item=&sel=TOC_17601& }}{{Dead link|date=August 2021 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

In a 2009 case, ''[[United States ex rel. Eisenstein v. City of New York]]'',<ref>[{{Cite web |url=https://www.supremecourt.gov/opinions/08pdf/08-660.pdf |title=Supreme Court Of The United States. United States Exex ~~Rel~~rel. Eisenstein v. City of New York, New York, et al. Certiorari To The United States Court Of Appeals for the Second Circuit No. 08–660. Argued April 21, 2009. Decided June 8, 2009. ]|access-date=June 27, 2017 |archive-date=February 2, 2017 |archive-url=https://web.archive.org/web/20170202151403/https://www.supremecourt.gov/opinions/08pdf/08-660.pdf |url-status=dead }}</ref> the [[Supreme Court of the United States|United States Supreme Court]] considered whether, when the government declines to intervene or otherwise actively participate in a ''qui tam'' action under the False Claims Act, the United States is a "party" to the suit for purposes of Federal Rule of Appellate Procedure 4(a)(1)(A) (which requires that a notice of appeal in a federal civil action generally be filed within 30 days after entry of a judgment or order from which the appeal is taken). The Court held that when the United States has declined to intervene in a privately initiated FCA action, it is not a "party" for FRAP 4 purposes, and therefore, petitioner's appeal filed after 30 days was untimely.

In a 2016 case, ''[[Universal Health Services, Inc. v. United States ex rel. Escobar]]'',<ref>[{{Cite web |url=https://www.supremecourt.gov/opinions/15pdf/15-7_a074.pdf |title=Supreme Court Of The United States. Universal Health Services, Inc. v. United States ex rel. Escobar. Certiorari To The United States Court Of Appeals for the First Circuit No. 15–7. Argued April 19, 2016. Decided June 16, 2016 ]|access-date=October 12, 2017 |archive-date=May 2, 2021 |archive-url=https://web.archive.org/web/20210502142246/https://www.supremecourt.gov/opinions/15pdf/15-7_a074.pdf |url-status=dead }}</ref> the [[Supreme Court of the United States|United States Supreme Court]] sought to clarify the standard for materiality under the FCA. The court unanimously upheld the implied certification theory of FCA liability and strengthened the FCA's materiality requirement.

In a 2023 combined case, ''[[wikisource:U.S._ex_rel._Schutte_v._SuperValu|United States ex rel. Schutte v. SuperValu Inc.]]'' and ''United States ex rel. Proctor v. Safeway'', a unanimous U.S. Supreme Court opinion rejected an attempt to dilute the FCA's "knowledge standard."<ref>{{Cite news |last=Elberg |first=Jacob |date=June 1, 2023 |title=Supreme Court maintains focus on defendant's subjective beliefs in False Claims Act cases |url=https://www.scotusblog.com/2023/06/supreme-court-maintains-focus-on-defendants-subjective-beliefs-in-false-claims-act-cases/ |work=SCOTUS Blog}}</ref> Under the knowledge standard, a defendant is liable under the FCA if a false claim is "knowingly" submitted to the government for payment. The statute defines "knowingly" as acting with actual knowledge, deliberate ignorance, or reckless disregard.<ref>{{Cite news |last=Palvia |first=Tanisha |date=July 6, 2023 |title=SCOTUS clarifies intent requirement for False Claims Act cases |url=https://www.reuters.com/legal/litigation/scotus-clarifies-intent-requirement-false-claims-act-cases-2023-07-06/ |work=Reuters}}</ref> The unanimous opinion found that a defendant is liable if it submits a false claim to the government based on its own knowledge and subjective beliefs — not what an objectively reasonable person may have thought.

In a 2024 case, ''[[Murray v. UBS Securities, LLC]], et al.'' 601 U. S. ____ (2024), a unanimous U.S. Supreme Court endorsed a lower burden of proof for whistleblowers, holding that whistleblowers do not need to prove that an employer acted with "retaliatory intent" in order to be protected under the Sarbanes-Oxley Act. The Supreme Court found that a whistleblower needs only to prove that their actions in making a whistleblower complaint were a "contributing factor" in the employer's unfavorable action.<ref>{{Cite news |last=Hughes |first=Melissa |date=February 15, 2024 |title=U.S. Supreme Court Endorses Low Burden of Proof for Whistleblowers |url=https://www.natlawreview.com/article/us-supreme-court-endorses-low-burden-proof-whistleblowers |work=National Law Review}}</ref> The unanimous opinion found that liability hinges on a defendant’s “knowledge and subjective beliefs” — not what an objective, reasonable person would have thought — at the time they submitted their claims to the government.<ref>{{Cite news |last=Palvia |first=Tanisha |date=June 6, 2023 |title=SCOTUS clarifies intent requirement for False Claims Act cases |url=https://reuters.com/legal/litigation/scotus-clarifies-intent-requirement-false-claims-act-cases-2023-07-06/ |work=Reuters}}</ref>

==State False Claims Acts==

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==Influence on other countries==

===Australia===

In Australia, [[Whistleblower protection in Australia|The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act]],<ref>{{Cite web|url=https://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/s1120_third-senate/toc_pdf/1729120.pdf;fileType=application%2Fpdf |archive-url=https://web.archive.org/web/20190519004924/http://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/s1120_third-senate/toc_pdf/1729120.pdf;fileType=application%2Fpdf |archive-date=2019-05-19 |url-status=live|title=Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018|publisher=The Parliament of the Commonwealth of Australia}}</ref> was passed in December 2018 and went into effect in 2019. The law expanded protections for whistleblowers, allowing them to report misconduct anonymously, as well as applying anti-retaliation protections to additional kinds of whistleblowers. Importantly, the law does not provide for rewards for whistleblowers. There have been calls since 2011 for legislation modeled on the False Claims Act and for their application to the tobacco industry and [[carbon price|carbon pricing]] schemes.<ref>{{cite journal|author=Thomas A Faunce|author2=Gregor Urbas|author3=Lesley Skillen|title= Implementing US-style anti-fraud laws in the Australian pharmaceutical and health care industries|journal=Med J Aust|date=2011|volume=194|issue=9|pages=474–478|doi=10.5694/j.1326-5377.2011.tb03066.x|pmid=21534908|doi-access=free|hdl=1885/54965|hdl-access=free}}</ref><ref>{{cite news|author=Ben Allen|work=The Sydney Morning Herald|date=7 May 2013|url= http://www.smh.com.au/national/public-service/pay-the-piper-and-we-may-end-public-fraud-20130503-2iz0o.html|title=Pay the piper, and we may end public fraud}}</ref>

===United Kingdom===

In October 2013, the UK Government announced that it iswas considering the case for financially incentivising individuals reporting fraud in economic crime cases by private sector organisations, in an approach much like the US False Claims Act.<ref name=SeriousPlan>{{cite report|url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/248645/Serious_and_Organised_Crime_Strategy.pdf |archive-url=https://web.archive.org/web/20131030094345/https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/248645/Serious_and_Organised_Crime_Strategy.pdf |archive-date=2013-10-30 |url-status=live|title=Serious and Organised Crime Strategy|date=October 2013}}</ref> The 'Serious and Organised Crime Strategy' paper released by the UK's Secretary of State for the Home Department sets out how that government plans to take action to prevent serious and organised crime and strengthen protections against and responses to it. The paper ~~asserts~~asserted that serious and organised crime costs the UK more than £24 billion a year. In the context of anti-corruption, the paper ~~acknowledges~~acknowledged that there iswas a need to not only target serious and organised criminals but also support those who seek to help identify and disrupt serious and organised criminality. Three UK agencies, the Department for Business, Innovation & Skills, the Ministry of Justice and the Home Office were tasked with considering the case for a US-style False Claims Act in the UK.<ref name=SeriousPlan/> In July 2014, the Financial Conduct Authority and the Bank of England Prudential Regulation Authority recommended Parliament enact strong measure to encourage and protect whistleblowers, but without offering whistleblower rewards – rejecting the US model.<ref>{{Cite web|url=https://www.fca.org.uk/publication/financial-incentives-for-whistleblowers.pdf|title=Financial Incentives for Whistleblowers|date=July 2014|website=Financial Conduct Authority UK}}</ref>

Three UK agencies, the [[Department for Business, Innovation and Skills]], the [[Ministry of Justice (United Kingdom)|Ministry of Justice]] and the [[Home Office]], were tasked with considering the case for a US-style False Claims Act in the UK.<ref name=SeriousPlan/> In July 2014, the [[Financial Conduct Authority]] and the Bank of England [[Prudential Regulation Authority (United Kingdom)|Prudential Regulation Authority]] recommended Parliament enact strong measures to encourage and protect whistleblowers, but without offering whistleblower rewards, rejecting the US model.<ref>{{Cite web|url=https://www.fca.org.uk/publication/financial-incentives-for-whistleblowers.pdf|title=Financial Incentives for Whistleblowers|date=July 2014|website=Financial Conduct Authority UK}}</ref>

==Rule 9(b) circuit split==

Under Rule 9(b) of the [[Federal Rules of Civil Procedure]], allegations of fraud or mistake must be pleaded with particularity.<ref>Federal Rules of Procedure. [https://www.law.cornell.edu/rules/frcp/rule_9 Fed.R.Civ.P. 9(b)]</ref> All appeals courts to have addressed the issue of whether Rule 9(b) pleading standards apply to qui tam actions have held that the heightened standard applies.<ref>[http://cdn.harvardlawreview.org/wp-content/uploads/pdfs/duxbury_v_ortho_biotech_products.pdf Recent Cases : False Claims Act — Jurisdiction — First Circuit Adopts Plain Meaning of Requirement that Plaintiffs Give Government their Information Before Filing Suit.] {{Webarchive|url=https://web.archive.org/web/20140811112543/http://cdn.harvardlawreview.org/wp-content/uploads/pdfs/duxbury_v_ortho_biotech_products.pdf |date=2014-08-11 }} United States ex rel. Duxbury v. Ortho Biotech Products, L.P., 579 F.3d 13 (1st Cir. 2009).</ref> The [[United States Court of Appeals for the Fifth Circuit|Fifth Circuit]],<ref>United States Court Of Appeals for The Fifth Circuit Decision. May 5, 2014. United States Of America Exex ~~Rel~~rel. John Dee Spicer, Chapter 7 Trustee, Substituted As Qui Tam Plaintiff And Relator Per #122 Order, Trustee, for the Bankruptcy Estate of Westbrook Navigator, Plaintiff–Appellant–Appellee, v. Clifford Westbrook, Qui Tam Plaintiff And Relator, Plaintiff–Appellant, v. Navistar Defense, L.L.C., Formerly Known As International Military & Government, L.L.C.; Navistar, Incorporated; Defiance Metal Products Company; Jerry Bell, Individually, Doing Business as Bell's Conversions, Incorporated, Doing Business As Bell's Custom Conversions; and Bell's Conversions, Incorporated, Doing Business As Bell's Custom Conversions, Defendants–Appellees. No. 12-10858 [http://www.ca5.uscourts.gov/opinions/pub/12/12-10858-CV0.pdf Fifth Circuit Decision]</ref> the [[United States Court of Appeals for the Sixth Circuit|Sixth Circuit]],<ref>United States Court Of Appeals for The Sixth Circuit Decision. May 12, 2006. Philip H. Sanderson, Plaintiff-Appellant, v. HCA-The Healthcare Company; Columbia Health Care Corporation; Hospital Corporation of America; and Healthtrust Inc., Defendants-Appellees. No. 04-6342 [http://www.ca6.uscourts.gov/opinions.pdf/06a0161p-06.pdf Sixth Circuit Decision]</ref> the [[United States Court of Appeals for the Seventh Circuit|Seventh Circuit]],<ref>United States Court of Appeals, Seventh Circuit Decision. June 30, 2009 United States of America on the relation of Curtis J. Lusby, Plaintiff-Appellant, v. Rolls-Royce Corporation, Defendant-Appellee. No. 08-3593. [https://caselaw.findlaw.com/us-7th-circuit/1149995.html Seventh Circuit Decision]</ref> the [[United States Court of Appeals for the Eighth Circuit|Eighth Circuit]],<ref>United States Court of Appeals, Eight Circuit Decision. May 5, 2011. United States of America ex rel. Rudy Vigil, Plaintiff Relator - Appellant, v. Nelnet, Inc.; JP Morgan Chase & Co.; Citigroup, Inc., Defendants - Appellees. No. 10-1784 [http://www.ca8.uscourts.gov/opndir/11/05/101784P.pdf Eight Circuit Decision] {{Webarchive|url=https://web.archive.org/web/20110523204934/http://www.ca8.uscourts.gov/opndir/11/05/101784P.pdf |date=2011-05-23 }}</ref> the [[United States Court of Appeals for the Tenth Circuit|Tenth Circuit]],<ref>United States Court of Appeals, Tenth Circuit Decision. December 5, 2006. UNITED STATES of America, ex rel. Edyth L. Sikkenga, and Edyth L. Sikkenga, on her own behalf, Plaintiffs-Appellants, v. Regence Bluecross Blueshield of Utah, formerly known as Blue Cross and Blue Shield of Utah; Associated Regional and University Pathologists, Inc.; John P. Mitchell; Jed H. Pitcher; and Frank Brown, Defendants-Appellees. No. 05-4088. [https://caselaw.findlaw.com/us-10th-circuit/1080281.html Tenth Circuit Decision]</ref> and the [[United States Court of Appeals for the Eleventh Circuit|Eleventh Circuit]]<ref>United States Court Of Appeals for The Eleventh Circuit Decision. December 4, 2009. James Hopper, Colin Hutto, Plaintiffs-Appellants, v. Solvay Pharmaceuticals, Inc., Unimed Pharmaceuticals, Inc. United States Of America, Defendants-Appellees. No. 08-15810 [http://media.ca11.uscourts.gov/opinions/pub/files/200815810.pdf Eleventh Circuit Decision]</ref> have all found that plaintiffs must allege specific false claims.

In 2010, the First Circuit decision in ''U.S. ex rel. Duxbury v. Ortho Biotech Prods., L.P.''(2009) and the Eleventh Circuit ruling in ''U.S. ex rel. Hopper v. Solvay Pharms., Inc.''(2009) were both appealed to the [[Supreme Court of the United States|U.S. Supreme Court]]. The Court denied ''[[certiorari]]'' for both cases, however, declining to resolve the divergent appeals court decisions.<ref>''Ortho Biotech Prods., L.P. v. United States ex rel. Duxbury'', 78 U.S.L.W. 3361 (U.S. June 21, 2010) and ''United States ex rel. Hopper v. Solvay Pharms., Inc.'', 78 U.S.L.W. 3531 (U.S. June 21, 2010) [https://www.law.cornell.edu/supct/html/062110.ZOR.html Denial of ''certiorari'']</ref>

==''ACLU et al. v. Holder''==

In 2009, the [[American Civil Liberties Union]] (ACLU), [[Government Accountability Project]] (GAP) and [[OMB Watch]] filed suit against the Department of Justice challenging the constitutionality of the "seal provisions" of the FCA that require the whistleblower and the court to keep lawsuits confidential for at least 60 days. The plaintiffs argued that the requirements infringe the [[First Amendment]] rights of the public and the whistleblower, and that they violate the [[~~division~~separation of powers]], since courts are not free to release the documents until the executive branch acts.<ref>Melissa Maleske for Inside Counsel. July 1, 2009. [http://www.insidecounsel.com/2009/07/01/false-claims-act-procedures-go-to-court False Claims Act Procedures Go to Court] {{Webarchive|url=https://web.archive.org/web/20150924035152/http://www.insidecounsel.com/2009/07/01/false-claims-act-procedures-go-to-court |date=2015-09-24 }}</ref> The government moved for dismissal, and the district court granted that motion in 2009.<ref>District Judge Liam O'Grady August 21, 2009. [http://law.justia.com/cases/federal/district-courts/virginia/vaedce/1:2009cv00042/238410/39 American Civil Liberties Union et al v. Mukasey et al - Document 39. Decision]</ref> The plaintiffs appealed, and in 2011 their appeal was denied.<ref>The Jurist. March 29, 2011 [http://jurist.org/paperchase/2011/03/us-court-of-appeals-upholds-secrecy-provision-of-federal-whistleblower-law.php Federal appeals court upholds secrecy provision of whistleblower law]</ref>

==Examples==

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The largest healthcare fraud settlement in history was made by GlaxoSmithKline in 2012 when it paid a total of $3 billion to resolve four qui tam lawsuits brought under the False Claims Act and related criminal charges.<ref name=":3">{{Cite web|url=https://www.justice.gov/opa/pr/glaxosmithkline-plead-guilty-and-pay-3-billion-resolve-fraud-allegations-and-failure-report|title=GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data|date=2012-07-02|website=www.justice.gov|language=en|access-date=2020-01-23}}</ref> The claims include allegations Glaxo engaged in off-label marketing and paid kickbacks to doctors to prescribe certain drugs, including Paxil, Wellbutrin and Advair.<ref name=":3" />

In 2013, [[Wyeth|Wyeth Pharmaceuticals Inc]]., a pharmaceutical company acquired by [[Pfizer|Pfizer, Inc]]. in 2009, paid $490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of its drug [[Sirolimus|Rapamune]] for uses that were not FDA-approved and potentially harmful.<ref>{{Cite web|url=https://www.justice.gov/opa/pr/wyeth-pharmaceuticals-agrees-pay-4909-million-marketing-prescription-drug-rapamune-unapproved|title=Wyeth Pharmaceuticals Agrees to Pay $490.9 Million for Marketing the Prescription Drug Rapamune for Unapproved Uses|date=2013-07-30|website=www.justice.gov|language=en|access-date=2019-08-05}}</ref> The case, ''U.S. ex rel. Sandler and Paris v. Wyeth Pharmaceuticals and Pfizer, Inc.'' was brought by multiple [[whistleblower]]s and culminated in one of the largest False Claims Act recoveries for a single drug.<ref name=":0"/>

In 2014, CareFusion paid $40.1 million to settle allegations of violating the False Claims Act by promoting off label use of its products in the case United States ex rel. Kirk v. CareFusion et al., No. 10-2492. The government alleged that [[CareFusion]] promoted the sale of its drug ChloraPrep for uses that were not approved by the [[FDA]].<ref>{{Cite web|url=https://www.justice.gov/opa/pr/carefusion-pay-government-401-million-resolve-allegations-include-more-11-million-kickbacks|title=CareFusion to Pay the Government $40.1 Million to Resolve Allegations That Include More Than $11 Million in Kickbacks to One Doctor|website=www.justice.gov|date=9 January 2014|language=en|access-date=2017-09-06}}</ref> ChloraPrep is the commercial name under which CareFusion produced the drug [[chlorhexidine]], used to clean the skin before surgery. In 2017, this case was called into question and was under review by the [[United States Department of Justice|DOJ]] because the lead attorney for the DOJ serving as Assistant Attorney General in the case, Jeffery Wertkin, was arrested by the FBI on January 31, 2017, for allegedly attempting to sell a copy of a complaint in a secret whistleblower suit that was under seal.<ref>{{Cite web|url=http://www.nationallawjournal.com/id=1202778867156/Whistleblower-Lawyers-Fret-Over-Leaks-After-Akin-Gump-Partners-Arrest|title=Whistleblower Lawyers Fret Over Leaks After Akin Gump Partner's Arrest|website=National Law Journal|access-date=2017-09-06}}</ref><ref>{{Cite web|url=http://fortune.com/2017/02/08/fbi-lawyer-whistleblower/|title=Lawyer Charged for Trying to Sell Secret Tech Whistleblower Case|last=Roberts|first=Jeff John|website=Fortune|access-date=2017-09-06}}</ref>

In 2017, bio-pharmaceutical giant [[Celgene|Celgene Corporation]] paid $240 million to settle allegations it sold and marketed its drugs [[Thalidomide|Thalomid]] and [[Lenalidomide|Revlimid]] off-label in ''U.S. ex rel. Brown v. Celgene'', CV 10-03165 (RK) (C.D. Cal.).<ref>{{Cite web|url=https://www.justice.gov/usao-cdca/pr/celgene-agrees-pay-280-million-resolve-fraud-allegations-related-promotion-cancer-drugs|title=Celgene Agrees to Pay $280 Million to Resolve Fraud Allegations Related to Promotion of Cancer Drugs For Uses Not Approved by FDA|date=2017-07-25|website=www.justice.gov|language=en|access-date=2019-08-05}}</ref> The case, brought by former Celgene sales representative, Beverly Brown,<ref name=":0"/> alleged violations under the False Claims Act including promoting Thalomid and Revlimid off-label for uses that were not [[FDA approval|FDA-approved]] and, in many cases, unsafe and not [[Medical necessity|medically necessary]], offered illegal [[Kickback (bribery)|kickbacks]] to influence healthcare providers to select its products, and concealed potential [[adverse event]]s related to use of its drugs.<ref name=":0">{{Cite press release|url=https://www.prnewswire.com/news-releases/bio-pharma-giant----celgene----settles-case-alleging-marketing-violations-for-280-million-300494044.html|title=Bio Pharma Giant -- Celgene -- Settles Case Alleging Marketing Violations For $280 Million|date=July 25, 2017|publisher=Guttman, Buschner & Brooks PLLC|via=PR Newswire|access-date=2019-08-05}}</ref>

In 2021, A South Carolina pain management company was ordered to pay $140 million under the False Claims Act after a judge in U.S. district court found it in default after fraud schemes.<ref>{{Cite web |date=2021-11-22 |title=South Carolina Chiropractor Pleads Guilty and Agrees to $9 Million False Claims Act Consent Judgment |url=https://www.justice.gov/opa/pr/south-carolina-chiropractor-pleads-guilty-and-agrees-9-million-false-claims-act-consent |access-date=2022-07-27 |website=www.justice.gov |language=en}}</ref><ref>{{Cite web |last=Herrington |first=Caitlin |title=Upstate SC pain clinic owes $140M after judge finds it in default after 'fraud schemes' |url=https://www.greenvilleonline.com/story/news/2021/09/09/sc-pain-clinic-ordered-pay-140-million-oaktree-firstchoice-pma-labsource-daniel-mccollum/5683477001/ |access-date=2022-07-27 |website=The Greenville News |language=en-US}}</ref>

==See also==

*[https://www.justice.gov/opa/pr/deputy-attorney-general-lisa-o-monaco-announces-new-civil-cyber-fraud-initiative Civil Cyber-Fraud Initiative]<ref>{{Cite web|last=U.S. Department of Justice|date=October 6, 2021|title=New Civil Cyber-Fraud Initiative|url=https://www.justice.gov/opa/pr/deputy-attorney-general-lisa-o-monaco-announces-new-civil-cyber-fraud-initiative~~|url-status=live~~}}</ref>

*[[Making false statements]]

* [[Medicare Fraud]]

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* [https://web.archive.org/web/20140125022448/http://depts.washington.edu/uwmbrc/supplements/DOJ_Presentation_12_6_03.pdf Department of Justice Presentation on University of Washington Overbilling Case from UW public website (pdf)]

* [http://www.taf.org Taxpayers Against Fraud Education Fund]

* [http://www.bergermontague.com/practice-areas/whistleblowers,-qui-tam-false-claims-act/whistleblowers,-qui-tam-false-claims-act-legal-blog/federal-false-claims-act-lawyers-and-qui-tam-attorneys What is the False Claims Act?] {{Webarchive|url=https://web.archive.org/web/20170815061404/http://www.bergermontague.com/practice-areas/whistleblowers,-qui-tam-false-claims-act/whistleblowers,-qui-tam-false-claims-act-legal-blog/federal-false-claims-act-lawyers-and-qui-tam-attorneys |date=2017-08-15 }}

* [http://masslawyersweekly.com/2012/11/21/2013-another-year-of-the-whistleblower/ masslawyersweekly.com]

*[https://kkc.com/frequently-asked-questions/what-is-the-false-claims-act/ Federal False Claims and State False Claims Act Laws]

[[Category:37th United States Congress]]

[[Category:1863 in American law]]

~~[[Category:1863 in the United States]]~~

[[Category:United States federal government administration legislation]]

[[Category:Fraud legislation]]