What Is The False Claims Act in Healthcare

The False Claims Act (FCA) is the most successful anti-fraud law in the United States. This federal statute was enacted to protect the public fisc by encouraging private citizens to expose fraud involving federally funded contracts or programs, such as Medicare and Medicaid. 

What Is the False Claims Act? Definition & Purpose - The Whistleblower Firm

The FCA also supplements the limited prosecutorial and investigative resources of the federal government. Congress specifically crafted and later amended the FCA so that private citizens and the Government have an effective weapon for fighting dishonest corporations that pilfer government funds. The healthcare and defense industries have traditionally been the top two areas under the FCA. 

The  FCA has historically also been referred to as the  “Lincoln Law,” “Informer’s Act,” or the “Qui Tam Statute.” Each of the terms describes an aspect of the False Claims Act definition. False Claims Act cases have returned over $70 billion to the federal government since Congress strengthened the FCA in 1986. 

READ THE FULL FCA STATUTE: The False Claims Act Text

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Origins of The False Claims Act – The Lincoln Law

The Federal False Claims Act was originally enacted by the United States Congress in 1863 under the administration of President Abraham Lincoln, as a response to widespread abuses by government contractors against the Union Army during the Civil War. The Act was modified in 1943 by setting up certain restrictions on relators. Such restrictions in the 1943 amendments, and subsequent unfavorable case law, led to the decreased use of the qui tam whistleblower provisions because the incentives for honest citizens and their attorneys to step forward and provide resources were lacking.

However, as more and more fraud went undetected and unaddressed (especially in the defense industry), the public and Congress became outraged. Stories of outrageous fleecing of our Government, like hammers that cost the military $5,000 each, were becoming more common. In 1986, the law was amended to strengthen the incentives for citizens to expose fraud as qui tam relators. The amendment worked – since the revitalization in 1986, the number of qui tam lawsuits filed has greatly increased each year, and more and more attorneys and their law firms have become familiar with the law. 

The False Claims Act intent and its qui tam whistleblower provisions for whistleblower protection have been so successful that the defense, healthcare, and other industries have periodically been behind substantial efforts to legislatively weaken the False Claims Act and its qui tam provisions. 

Qui Tam Provisions of the False Claims Act

Over the years, the legal requirements involving knowledge and intent sufficient to attach FCA liability have evolved, but the basic trigger has remained the same – namely, companies knowingly defrauding the Government to obtain government funds. Most False Claims Act lawsuits call upon the Qui Tam Whistleblower Provisions of the FCA and involve Government Healthcare Programs and include False Claims Act Medicare and Medicaid lawsuits.

The Qui Tam provisions encourage private citizens and their counsel to file sealed lawsuits in federal court that seek recovery of government money obtained by fraud, or more specifically, false claims. This very powerful law not only affords rights to whistleblower litigants but provides essential checks and balances against government inaction. 

Employees of healthcare providers who have the moral fortitude and courage to file qui tam False Claims Act Healthcare lawsuits are generally eligible to receive a share of the recovery, known as a whistleblower reward.

LEARN MORE: Qui Tam Meaning

Amended False Claims Act Offers Anti-Retaliation Protection to Healthcare Compliance Employees

The False Claims Act was amended again in 2009. Prior to the Amendments, the FCA’s anti-retaliation provisions  were overly restrictive in its protection of healthcare company employees. Under the prior statutory language and case law, employees (and others) could only pursue anti-retaliation actions in the rare instances when their employer was on notice that they were intending to file a qui tam action. The 2009 amendments broadened the statutory language, allowing the right to relief not only on pursuit of a qui tam case, but on any conduct by or on behalf of the employee which would tend to stop FCA misconduct.

Ohio Case Illustrates Distinction Between Pre- and Post-2009 Amendments to Anti-Retaliation Protection

This broader protection was the focus of an Ohio district court case, which dissected the differences between the pre- and post-2009 FCA anti-retaliation provisions. In that case, the plaintiff was a former corporate compliance vice president who brought an FCA anti-retaliation action against her former employer, Holzer Health Systems.

According to the plaintiff, she was fired soon after commencing an investigation into allegations that employees were disproportionately using the services of an ambulance company, Life Ambulance, in exchange for gifts and luncheons paid for by Life Ambulance.

The defendant cited a Sixth Circuit decision, Yuhasz v. Brush Wellman, Inc., which concluded that performing ordinary and expected employment duties of informing an employer that certifications were illegal and might incur liability under the FCA, failed to provide the employer with notice of protected activity. The court rejected the defendant’s argument, noting that Yuhasz pre-dated the 2009 FCA amendments.

Under the amended FCA, the anti-retaliation protection now properly extends to healthcare employees who are fired for trying to stop FCA violations, regardless of employer knowledge.

How False Claims Act Lawyers Evaluate a Healthcare Fraud Case Under the FCA

The False Claims Act works, among other reasons, because whistleblowers bring important inside information to the government’s attention.  The FCA incentivizes whistleblowers to expose this valuable information. 

False Claims Act Law Firms work with the whistleblower client to present evidence of fraud to the government in a way that facilitates easy understandability and a successful prosecution. False Claims Act attorneys are particularly interested in False Claims Act Healthcare Cases dealing with violations of the FCA and involving additional factors, such as patient harm or lack of efficacy.

“Industry insiders are uniquely positioned to expose fraud and false claims and often risk their careers to bring these schemes to light. Our efforts to protect taxpayer funds benefit from the courageous actions of these whistleblowers, and they are justly rewarded under the False Claims Act.”

– Acting Assistant Attorney General Boynton 

Typical cases brought under the qui tam provisions of the  False Claims Act include at least one company with relatively deep pockets. Smaller companies that may be defrauding the government often dissolve with little to no assets or declare bankruptcy. The estimated amount of damages from the false claims, whether there was patient harm, and whether there were kickbacks involved are just some considerations when whistleblower firms evaluate potential representation of a healthcare whistleblower.

Types Of Acts Covered By The False Claims Act

The most common violations under the FCA, in legalese, are as follows::

  1. Knowingly submitting (or causing the submission of) false or fraudulent claims for payment.
  2. Knowingly making (or causing to be made) a false record or statement to get a false or fraudulent claim paid or approved.
  3. Knowingly making (or causing to be made) a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit property;
  4. Knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money to the Government. 

The False Claims Act is intended to reach all fraudulent activity resulting in government monetary damages. A false claim may take many forms, the most common being a claim for goods or services not provided or knowingly provided in violation of contract terms, specification, statute, or regulation. Each and every claim submitted under a contract or other agreement which was originally obtained by means of false statements, falsities, or in knowing material violation of any statute or applicable regulation, constitutes a false claim.

Typical Defendants in False Claims Act Healthcare Lawsuits

Whistleblowers and counsel bring Qui Tam cases against parties engaging in Healthcare Fraud against the Government. The defendants in Qui Tam cases are often in the  healthcare industry companies, including:

  • FDA Regulated Manufacturers – pharmaceutical and medical device companies, biotech and medical equipment companies
  • Hospitals and Other Systems – Home Health and Hospice Providers, Skilled Nursing Home Facilities, Academic Medical Centers, and more
  • Diagnostic, Clinical, and Other Laboratories –  Independent Diagnostic Testing Facilities, Drug Testing Companies, Pathology Labs and more
  • DME Providers – Oxygen Suppliers, Home Infusion Service Providers, Wheelchair suppliers, Diabetic suppliers and more
  • Skilled Therapy Providers – Outpatient Rehabilitation Facilities, Occupational Therapy Facilities, Skilled Nursing Facilities and more
  • Various Outpatient Providers – Medical Transportation Companies, Psychiatric Treatment Facilities, Outpatient Surgery Centers, Sleep Disorder Clinics, and more
  • Miscellaneous Healthcare Providers – Medicare Administrative Contractors, University Research Facilities, Group Purchasing Organizations, Prescription Benefit Managers, Hospital Revenue Cycle Consulting Companies, Medicare and Medicaid Managed Healthcare companies and more

Success of the False Claims Act In Combating Healthcare Fraud

False Claims Act healthcare cases have returned over $48 billion to the federal government since 1988. The vast majority of the recoveries were the result of courageous whistleblowers who stood up against their dishonest employers and filed healthcare fraud qui tam lawsuits.

“The continued success of the Department’s False Claims Act enforcement efforts are a testament to the tireless efforts of the civil servants who investigate, litigate, and try those important cases as well as to the fortitude of whistleblowers who report fraud.” 

 – Former Assistant Attorney General Jody Hunt

Throughout the legislation’s history, lobbyists for industries subject to False Claims Act prosecution, and in particular, the healthcare industries and defense industries, have aggressively pushed to derail aspects of the FCA qui tam mechanism. Fortunately, Congress has refused to ignore the overwhelming effectiveness of this important fraud-fighting weapon. 

Taxpayers Against Fraud reminded Congress and the public about the real-world success of the Act when it released its report, The Importance of Whistleblowers to Reducing Fraud Against the Federal Government and Recovering Funds for Taxpayers.(1) Authored by economist Jack Meyer of Health Management Associates, the report was a response to a paper published by the defense-oriented U.S. Chamber of Commerce.

“Ensuring that citizens’ tax dollars are protected from fraud and abuse is among the department’s top priorities. The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”

Acting Assistant Attorney General Brian M. Boynton

Whistleblower Actions Recover Billions Annually 

The United States Department of Justice announced that False Claims Act recoveries through settlements and judgments exceeded $5.6 billion in fiscal year 2021, marking the second-largest amount recorded since 2014.(2) Of the $5.6 billion recovered in FY2021, over $5 billion came from defendants in the healthcare industry resulting from allegations involving unnecessary or inadequate care, paying kickbacks to health care providers to induce the use of certain goods and services, or overcharging for goods and services paid for by Medicare, Medicaid, and other federal health care programs.

Of particular note, Whistleblowers filed 598 qui tam lawsuits for fiscal year 2021, with the Justice Department reporting settlements and judgments exceeding $1.6 billion in these and earlier-filed suits — a testament that whistleblowers have brought the lion’s share of the recoveries. 

“The False Claims Act has again proven to be the government’s most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs. Many of these recoveries obtained under the False Claims Act result from courageous men and women who come forward to blow the whistle on fraud they are often uniquely positioned to expose.”

– Benjamin C. Mizer, Former Principal Deputy Assistant Attorney General 

An Effective Weapon Against False Claims Act Medicare Fraud

The False Claims Act is particularly effective at recovering stolen health care dollars due to Medicare fraud. Over $5 billion, or approximately 89%, of the recoveries for FY2021 were from actions alleging healthcare fraud against federal healthcare programs. The most egregious violators were hospital systems, dialysis chains, and pharmaceutical manufacturer fraud, accounting for the bulk of the billions of all healthcare dollars returned to the federal government. 

As these numbers indicate a steady increase over previous years, it follows that qui tam recoveries in the past five years account for half the settlement dollars recovered under the modern False Claims Act since its inception in 1986.

Successful Healthcare Fraud Whistleblowers Get Higher Rewards from False Claims Act

For False Claims Act Medicare violations and other healthcare fraud, reporting directly to the Centers for Medicare & Medicaid Services (CMS) has failed thus far to result in significant rewards for whistleblowers. Although CMS has a Medicare Incentive Reward Program (3), it will only reward whistleblowers up to 10% of the amount recovered, or a maximum amount of $1000, whichever is less. 

No such cap exists in the False Claims Act, which provides that successful whistleblowers are entitled to 15-30% of the total recovery from the Defendant, whether through a favorable verdict or settlement. Tens, if not hundreds of millions, are at stake in most False Claims Act cases brought by us and by most of our colleague qui tam plaintiff law firms. 

“It is simple common sense to reward and protect whistleblowers who report waste, fraud, and abuse. The False Claims Act does that. Of course, the Act has no shortage of critics – typically the groups where you find perpetrators of fraud.” But we have learned our lesson that a weak False Claims Act is not in the taxpayer’s best interest.” 

  – Senator Chuck Grassley, Chairman, Senate Judiciary Committee July 29, 2015 (4)

Notably, from 1986 through September 2021, the total amount of whistleblower rewards paid to relators, pursuant to the False Claims Act, was approximately $8.1 billion. Most of that amount was paid specifically to healthcare fraud whistleblowers. Whistleblowers continue to make crucial contributions to the fight against fraud and, as such, should be rewarded in False Claims Act Healthcare Cases.

More Resources for The False Claims Act

Frequently Asked Questions About Medicaid Fraud Lawsuits

What if someone else has already filed a False Claims Act Lawsuit against the same company that I want to file against?

If the federal government or another private person has already filed a False Claims Act lawsuit based on the same allegations as you are aware of, your lawsuit will be subject to dismissal. This provision in the law is sometimes referred to as the “first-to-file” bar. It is therefore important to file a qui tam lawsuit, in most circumstances, as soon as possible.

Do I have any protection against my employer firing or otherwise discriminating against me for filing a Whistleblower Lawsuit under the False Claims Act?

Yes – but it is an after-the-fact remedy and provides no absolute “protection” while employed. The False Claims Act contains a section commonly known as the “whistleblower protection” provision.

Section 3730(h) of the Act provides that “Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act],” is entitled to special protection.

The protection afforded to qui tam whistleblowers includes reinstatement with the same seniority status such employee would have had, but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney’s fees. A civil action under this subsection may not be brought more than three years after the date when the retaliation occurred.

What is a “Relator”?

The person (plaintiff) who brings an action under the False Claims Act is known as a “relator.” That is, a relator is a qui tam plaintiff in a whistleblower lawsuit brought under the False Claims Act on behalf of the federal government.

Kathleen Hawkins

Dignity Health
$37 million

Kathleen Hawkins, RN MSN, had been employed by Defendant, Catholic Healthcare West (CHW) for approximately 6 years when she decided she had had enough of trying to change the hospital system from within.

CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.


Joe Strom

Johnson & Johnson
$184 Million

Joe Strom contacted us in 2005. We were very grateful that he did. We immediately formed an all-star legal team and a process to stop a very harmful pharmaceutical marketing strategy. It was this process we set into motion that ultimately returned hundreds of millions of dollars to the U.S. Treasury, and a portion of that, very well-deserved, into Joe’s bank account.

Joe told us a very troubling story about the off-label promotion of a pharmaceutical drug for patients who already suffered from chronic heart failure.


Bruce A. Moilan Sr.

$27 Million

Bruce Moilan was a seasoned hospital systems expert by the time he contacted our Firm. At the time he decided to file his qui tam lawsuit, he was employed by South Texas Health System as a System Director for Materials Management. In this position, he oversaw $24 million in annual purchases of supplies and equipment and helped determine budget, reduction and cost analysis throughout the contract bidding and negotiations process. His job was to insure proper implementation for purchasing, receiving and management of inventory, for McAllen Hospitals, L.P.


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