BY Shulamit Shvartsman for Lawyers.comsm
On March 30, 2010, the US Supreme Court limited the way the federal False Claims Act (FCA) may be used by whistle-blowers. In Graham County Soil and Water Conservation District v. United States, ex rel. Wilson, Wilson, a former official of the District, uncovered fraud in connection with the District's use of money received from a federal disaster relief program. She found the fraud by examining state reports and audits.
The issue in the case was whether Wilson was barred from filing the lawsuit in the first place. Under the FCA, suits like Wilson's, called "qui tam" suits, can't be based on "administrative" reports or audits. The question: Does that ban cover only federal reports or audits, or state ones as well, such as those relied on by Wilson?
The Court ruled "administrative" reports covered state and local audits, too.
That's not the end, though. Days before the Court's decision, the Health Care Reform Law was passed. As part of that law, the FCA was changed so that the ban applies only to federal "administrative" reports.
The question now, to be answered some time in the future, is whether the change in the FCA applies to cases - like Wilson's - that were filed before the law was changed. If so, Wilson may be able to get a portion of any money the US gets because of the District's fraud.
It sounds like a story from a horror film. A company having 68 dental clinics across 21 states performed teeth extractions and root canals on hundreds of children. These expensive procedures were either unnecessary or failed to meet professional standards. The good news is that the company was caught with the help of a federal law called the False Claims Act.
Operation Bite Back
"Operation Bite Back," a federal investigation against these companies, began with suits in Maryland, Virginia and South Carolina under the federal False Claims Act. Twenty-three state attorneys general and the US government sued the company managing Small Smiles dental clinics nationwide. The company agreed to pay $24 million to settle this multistate lawsuit.
What Is the False Claims Act?
Congress recognized that the government alone is unable to fight fraudulent activities that exist everywhere. So, in 1986 Congress revised the Act and created incentives for private citizens with evidence of fraud to help the government.
The False Claims Act is one of the most important protections American citizens have to recover the billions of dollars stolen through fraud from US government programs every year.
Under the Act, anyone who submits or causes another to submit false claims for government funds will have to pay high penalties. The penalties are up to three times the government's damages plus $5,500 to $11,000 per false claim.