Understanding The False Claims Act

My name is Michael Porter. I have been practicing law for over 40 years. In that time, I have become passionate about helping clients pursue claims under the False Claims Act (FCA). My firm, The Law Firm of Michael S. Porter, LLC, in Wheat Ridge, has represented clients in Colorado and throughout the country to pursue some of the most notable FCA cases in the country.

What Is The False Claims Act?

The False Claims Act  (FCA) is a federal statute, 31 U.S.C. § 3729, et. seq., that empowers private citizens to pursue claims on behalf of the federal government against individuals and entities who are knowingly defrauding or making false claims to the government or through government programs.

Many states have enacted similar false claims statutes to empower citizens to redress fraud against a given state. In addition, relators who pursue claims under the FCA have whistleblower protection.

What Type Of Fraud Is Actionable Under The False Claims Act?

The most common type of FCA claim involves health care fraud stemming from knowingly false claims for payment sent to either Medicare, Tricare or Medicaid. However, the FCA is regularly used to address a host of other false claims or statements presented to the government that cost the government money. FCA claims have been successfully pursued for:

• Health care fraud
• Customs fraud
• Defense contract fraud
• Procurement fraud
• Underpayment of federal oil and gas royalties

When trying to determine whether a scenario amounts to an FCA case, the underlying question is whether the wrongdoer’s actions have cost the government money.

Not every situation, though, qualifies as an FCA case. For example, the FCA excludes claims, records or statements made under the Internal Revenue Code. An FCA case may also not be brought against a member of Congress, a member of the judiciary or a senior executive branch official if the action is based on evidence or information known to the government when the action is brought. In addition, an FCA case may not be based on allegations or transactions that are the subject of a civil suit or an administrative civil money penalty proceeding in which the government is already a party.

A Claim Under The FCA Must Be Material

In order to be actionable under the FCA, a given false claim must be “material.” In other words, this means that the falsity cannot be trivial. In general, the falsity must be something that is important to the government’s decision to make payment or to the government’s decision to pursue someone for failure to pay (i.e., oil and gas royalties).

Answering Your Frequently Asked Questions About Claims Under The FCA

In my time helping clients pursue claims under the FCA, I often get asked the same questions. As an FCA attorney, I understand that it is a complicated proceeding. Here, I provide some answers to the questions I get asked most often. For answers to your specific questions, I offer clients a free case evaluation, and I invite you to book an initial consultation so that we can discuss your case specifically.

What makes a claim material under the FCA?

Significant factors in evaluating whether your particular fact pattern can satisfy the materiality element include:

• Whether the federal agency that makes payment had actual knowledge of the falsity and then continued to pay the claim
• How the agency typically responds to similar transgressions
• Whether contract or regulatory language states that payment may be withheld for the violation at issue
• Whether the violation goes to the essence of the bargain between the party and the government
• Whether the violated requirement is a condition of payment.

The significance of this materiality element has grown in recent years, culminating in the 2016 United States Supreme Court decision of Universal Health Services v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016). Since Escobar, numerous FCA cases have been dismissed on determinations that the claim at issue did not satisfy the materiality element.

Who is eligible to pursue an FCA claim?

Any “person” may pursue an FCA claim, with the exception of a former or present member of the armed forces who wants to bring a claim against a member of the armed forces that is based on that person’s service in the armed forces.

I have personally devoted considerable effort to ensure that federal employees, who work in a corrupt agency, may utilize the FCA to pursue claims their agency would prefer to ignore. See, United States ex rel. Maxwell v. Kerr-McGee Oil & Gas Company, 540 F.3d 1180, 1184 (10th Cir. 2008) (Click here to view); and United States ex rel. Little v. Shell Exploration & Production Company, 690 F.3d 282, 286 (5th Cir. 2012) (Click here to view). In both decisions, the 10th Circuit and the 5th Circuit agreed that federal employees were “persons” who could pursue FCA claims arising from information they learned in the course and scope of their employment.

What is the statute of limitations for an FCA lawsuit?

The statute of limitations for an FCA suit is set forth in 31 U.S.C. § 3731(b)(1), which provides that FCA claims have to be brought within six years after the violation is committed or within three years after the date material facts regarding the action become known, or should have been known by the government official, but surely within 10 years after the date the violation is committed, whichever occurs last.

The 2019 Supreme Court decision of Cochise Consultancy, Inc. v. United States ex rel. Hunt, 587 U.S. 262 (2019) cleared up some of the confusion regarding how to interpret this language. The court held that in the circumstance where three years had not transpired since the United States official charged with the responsibility to act knew or should have known the relevant facts, the statute of limitations was 10 years.

Notwithstanding this favorable interpretation, it is not wise to delay having your case evaluated by a competent attorney. You likely will not have complete knowledge about what the government may know about the relevant facts and could be limited to the six-year statute of limitations.

How much can you personally recover from a claim under the FCA?

The FCA provides that a successful plaintiff or relator may recover between 15% and 30% of the proceeds of the action or settlement of the claim. The amount depends on whether the government has intervened in the suit and the extent to which the relator substantially contributed to the prosecution of the action. In the situation where the government has intervened in the suit, the amount of the relator’s share is between 15% and 25%. 31 U.S.C. § 3730(d)(1). When the government does not intervene or proceed with the action, the range of the relator’s recovery is between 25% and 30%. § 3730(d)(2).

I have a reputation for fighting for my client’s share of the recovery. In the Maxwell case, I was successful in obtaining a 30% share for Mr. Maxwell. Click here to view the Maxwell settlement agreement. In the Fowler case, the government was only willing to agree to an 18% relator share. We fought that decision and convinced the court to increase the relator share to 20%, which was worth an additional $360,000.00. (Click here to view the Fowler decision)

What makes a good FCA case?

The best FCA cases are brought by an individual who has substantial, direct and independent knowledge of the defendant’s wrongful actions. It is important that you not only understand what the defendant has done, or is doing, but that you also have concrete evidence to back up your allegations. A proper complaint can only be pled with concrete facts and evidence. The initial stage of the case involves working with the government and convincing it that your case is worth investigating. You need strong evidence to convince the government to pursue your case.

In addition, the case must present with strong liability, substantial damages and the defendant must have the capacity to pay. Several years ago, I passed on pursuing a case that involved allegations of upcoding by an orthopedic department of a major hospital chain. Upcoding means that rather than use the appropriate CPT billing code for a given procedure, the defendant upcodes or chooses a higher billing code in order to inappropriately bill for a higher dollar amount. The government investigated the claim and reported back that although there was some upcoding, the pattern did not seem to be that egregious, and on its best day, the total damages were only $150,000.

I recommended to the client that the case should be dropped, and we dismissed the case without ever serving the defendant. That does not mean every time the government chooses not to intervene, a given case should be dropped. I have aggressively pursued several cases the government chose not to pursue and recovered millions of dollars.

The Procedural Complexity Of FCA Cases

FCA cases are procedurally complex. A large number of filed FCA cases are dismissed by the courts each year because:

• The case does not state a proper FCA claim.
• The complaint has failed to plead fraud with sufficient specificity.
• The case violates one of the FCA’s many jurisdictional provisions, and the court has determined that it has no jurisdiction over the case.

The attorney you choose to hire should not only be an experienced litigator but should also have significant experience pursuing FCA cases. For example, the courts have established that an FCA claim must be pled with specificity to satisfy the pleading requirements of Fed.R.Civ.P. 9(b). Generally, this requires identifying specific facts and events that take the allegations of the complaint from something that sounds like mere suspicion to something that gives the court a reasonable basis to conclude a knowingly false claim has been made. In a health care fraud case, it is best to be able to reference specific patient examples without jeopardizing the patient’s identity. (Click here to view the Fowler Amended Complaint, see ¶ ¶ 175-198)

Unfortunately, a great number of attorneys who advertise themselves as False Claims Act experts are not litigators, have never tried a case and are not competent to write a complaint that can withstand a motion to dismiss. Make sure the attorney you hire has substantial FCA litigation and trial experience.

Schedule A Free Consultation With An FCA Lawyer

Do you suspect that you may have a claim under the False Claims Act? Contact my office to learn more about your rights and ability to file a claim under the FCA. I offer clients a free case evaluation and consultation. To schedule your free appointment, you can call CALL or send me an email through my website.