False Claims Act (FCA)
One of the most important laws in the fight against healthcare fraud is the False Claims Act (FCA). The FCA was originally passed in 1863 to combat fraud against the Union Army during the Civil War, when unscrupulous contractors were selling defective goods to the government.
Today, the FCA is the primary legal tool used to hold individuals and corporations accountable for defrauding federal programs. In the healthcare context, this means fraud involving Medicare, Medicaid, or other government-funded health initiatives. Common violations include submitting bills for services never performed, inflating charges (a practice known as “upcoding”), or paying illegal kickbacks to secure patient referrals.
The FCA is unique because of its qui tam provisions, which allow private citizens — whistleblowers — to file lawsuits on behalf of the government. These cases are initially filed under seal, giving the Department of Justice (DOJ) time to investigate. If successful, the whistleblower may receive a share of the recovered funds, usually ranging from 15% to 30%.
Over the years, amendments have strengthened the FCA, particularly in 1986, which made it easier for whistleblowers to pursue cases and harder for corporations to avoid liability. As a result, billions of dollars have been returned to taxpayers, much of it from healthcare-related fraud.
From our perspective at Barrett Johnston, the FCA isn’t just a law — it’s a safeguard for patients and taxpayers alike. It empowers individuals to challenge fraud that undermines trust in healthcare. If you are a healthcare worker, patient, or employee who has witnessed suspicious billing or misconduct, understanding the FCA is crucial to knowing your rights and options.
The False Claims Act (FCA) is a federal civil statute that prohibits any person or entity from knowingly submitting false claims for payment to the U.S. government or using false records to receive government funds. Liability can arise from intentional fraud, reckless disregard for billing accuracy, or deliberate ignorance of regulatory requirements.
The law applies broadly across government spending but is most frequently enforced in healthcare fraud involving Medicare and Medicaid claims. Under the False Claims Act, the Department of Justice can initiate lawsuits itself, but the statute also contains a qui tam provision allowing for individual whistleblowers to file suit on the government’s behalf.
A false claim includes any demand for government payment that is knowingly inaccurate or improperly obtained, including:
-Billing for services that were never provided.
-Charging higher reimbursement codes than services justify (upcoding).
-Violating rules tied to payment eligibility.
-Certifying compliance with regulations that are actually being violated.
-Submitting claims tainted by illegal kickbacks or conflicts of interest.
A claim does not have to be completely fabricated; even partially false or improperly supported claims can trigger FCA liability.
Any individual with non-public knowledge of fraud against the federal government may bring a lawsuit on the government’s behalf. Eligible whistleblowers include:
-Healthcare employees or contractors
-Medical billing or compliance professionals
-Office administrators or executives
-Third-party vendors and consultants
The person who files the action becomes the relator and may participate in the case alongside federal prosecutors.
The False Claims Act is a purely civil statute, which means that its focus is recovering money to the government that was lost through fraud and imposing financial penalties (not incarceration).
Criminal healthcare fraud cases are prosecuted under separate federal statutes and may result in prison sentences. In serious cases, the filing of a qui tam under the FCA may trigger a criminal investigation, which may proceed at the same time as the civil action, but they remain legally distinct processes.
FCA penalties involve substantial financial liability, including:
-Three times the value of the government’s losses.
-Mandatory fines assessed per false claim submitted.
-Potential exclusion from federal healthcare programs.
The financial exposure grows quickly because liability attaches to each individual billing claim, not just the overall misconduct.
Relators can receive a percentage of any recovery obtained by the government, generally calculated as:
-15%–25% if federal prosecutors intervene in the case.
-25%–30% if the whistleblower litigates without government intervention.
Awards within these ranges depend on the degree of help the whistleblower and the whistleblower’s lawyers contribute to the investigation and litigation.
The FCA protects employees and contractors who report suspected fraud or attempt to stop FCA violations. Employers may not legally retaliate through termination, demotion, harassment, or other workplace punishment.
A whistleblower who suffers retaliation may pursue compensation that includes:
-Reinstatement to their position
-Double back pay
-Compensation for emotional or professional harm
-Recovery of legal fees and court costs
These protections can apply even in circumstances where no qui tam if filed, or where the qui tam does not result in any recovery to the government.
