False Claims Act Penalties
By FindLaw Staff | Legally reviewed by Omri Ben-Ari, Esq. | Last reviewed December 29, 2021
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The False Claims Act (FCA) is a federal law that allows the federal government, and even private individuals, to sue those making fraudulent financial claims against the government. For example, an accountant could "blow the whistle" on fraud if they had information that a medical provider overbilled Medicare, or a defense contractor overbilled the defense department.
These are also called Qui Tam actions.
In order for a claim to be fraudulent, the offender must knowingly submit a false invoice or bill, or cause someone else to submit it. An inadvertent clerical mistake isn't fraud unless someone knew there was an error and failed to correct it.
The penalties for knowingly submitting a fraudulent claim are severe. Below you'll find a general overview of FCA penalties and how the False Claims Act works to deter fraud.
Civil Penalties Under the FCA
Under the FCA, those who submit fraudulent claims to the government can be fined between $11,803 and $23,607 for each claim. The Act allows for inflationary adjustments, however, so these penalties have increased over the years. In 2021, penalties could go as high as $23,607 per violation.
In addition to these civil penalties, the government can recover "treble damages" or triple the amount of any money it lost due to a false claim.
FCA Penalties in Action
To see how FCA penalties can add up, you can look at a hypothetical Medicare fraud claim.
Corey, a retired construction worker now receiving Medicare coverage, has had ongoing but relatively minor low back pain due to his many years of swinging hammers on job sites. Corey goes to his primary care physician who refers him to an orthopedic doctor for back treatment.
When he arrives at the orthopedic clinic, the doctor performs a full examination of his back, as well as his knees and neck. He recommends surgery for his back and pain medication for his knees and neck. Corey never complained of any neck or knee pain. After his back surgery, he sees the Medicare bill. The charges were as follows:
| Orthopedic Examination of Neck | $350 |
| Orthopedic Examination of Knees | $700 |
| Back Surgery | $100,000 |
| Pain Medication (Neck) | $36 |
| Pain Medication (Knees) | $36 |
Total: |
$101,122 |
If the government pays these claims and later determines that part of the bill was fraudulent because the pain medication and neck/knee evaluations weren't necessary, then an FCA case could potentially recover triple the government's damages, or $3,366 (since the clinic overcharged by $1,122).
In addition, since there are five different fraudulent claims, the government could recover separate civil penalties of up to $23,331 per claim). So, based on one referral for minor back pain, the orthopedic clinic could face over $120,000 in fines and penalties.
False Claims Act: Related Crimes
Qui tam claims also typically violate criminal laws. So, in addition to civil penalties and damages, those submitting fraudulent claims could also face prison time. Crimes often associated with FCA cases include:
Questions About the False Claims Act? Talk to a Whistleblower Lawyer
Fraudulent government claims siphon away taxpayer dollars. The False Claims Act is one deterrent. Blowing the whistle on fraud can get a little complicated, especially if you work for the company engaging in the fraud. Talk with a whistleblower-qui tam attorney near you who can help ensure your rights are protected.
Next Steps
Contact a qualified whistleblower law attorney to make sure your rights are protected.