The False Claims Act (FCA), initially passed during the Civil War in 1863 and significantly amended since then, represents a unique legal mechanism in the American legal system. The FCA allows private individuals, known as whistleblowers or “relators,” to file lawsuits on behalf of the federal government against entities that have defrauded government programs. These lawsuits, known as qui tam actions, are distinct from other types of lawsuits in several important ways. In order to thoroughly address how FCA lawsuits differ from other legal actions, it is essential to examine their purpose, procedural aspects, parties involved, remedies, and the ethical implications that come with them.
Purpose and Legal Framework
At its core, the False Claims Act is designed to combat fraud against the federal government. Its original intent was to target contractors who sold defective products to the Union Army during the Civil War, but the law has since expanded to cover a wide range of fraudulent activities involving government funds. In comparison, other lawsuits typically serve broader objectives such as enforcing contracts, protecting personal rights, seeking compensation for injuries, or settling disputes between private parties.
The FCA incentivizes whistleblowers to expose fraud by allowing them to receive a portion of the financial recovery. Under 31 U.S. Code § 3730, relators in successful qui tam actions can receive between 15% and 30% of the recovered damages, depending on whether the government intervenes. This differs markedly from other legal frameworks, which do not typically incentivize third parties in this manner.
The FCA lawsuit serves both punitive and restorative functions. While it punishes fraudulent entities through heavy fines (up to three times the amount of actual damages, plus additional penalties), it also seeks to restore funds to the defrauded government programs. Most civil lawsuits, by contrast, focus on resolving a wrong between private parties rather than fulfilling public interests. This broader public mission aligns the FCA closely with other public interest statutes, yet remains highly specific to cases involving government fraud.
Parties Involved: Relators and the Government
Another key distinction of an FCA lawsuit lies in its parties. Unlike typical civil lawsuits, which involve private plaintiffs and defendants, FCA cases involve a unique triad: the whistleblower (relator), the government, and the defendant (often a corporation or contractor). In a qui tam suit, the relator brings the case forward in the name of the government, even though the government is the real party in interest.
In standard civil cases, the plaintiff bears the burden of prosecuting the case. However, in FCA lawsuits, the federal government has the right to intervene after investigating the allegations. If the government chooses to intervene, it assumes primary responsibility for prosecuting the case, often leading to greater resources being allocated to the legal battle. If the government declines to intervene, the relator can still proceed independently, but at a significant disadvantage, as private parties often lack the financial resources and legal expertise of the government. This dual nature of the lawsuit, in which private citizens and the government collaborate, sets FCA cases apart from typical civil litigation.
Additionally, in many other types of lawsuits, the parties involved are motivated by personal or private interests, such as seeking damages for injuries or breaches of contract. In FCA cases, while the relator has a financial stake, the underlying motivation is often a combination of personal gain and civic duty—the goal is to expose fraudulent conduct harming the public. This intertwining of personal and public interests further distinguishes FCA actions from most civil lawsuits.
Procedural Distinctions: Sealing and Government Intervention
The procedure for filing an FCA lawsuit introduces several unusual features not commonly seen in other types of lawsuits. When a relator files a qui tam complaint, the case is filed under seal, meaning it is kept confidential for an initial period while the government investigates the allegations. This sealed period can last for 60 days but is often extended, sometimes for years, as the government assesses the merits of the case and decides whether to intervene. During this time, the defendant is not informed of the lawsuit, which allows the government to investigate without tipping off the accused party. This secrecy is rare in other forms of litigation, where the defendant is typically served notice of the lawsuit soon after filing.
Moreover, the government’s right to intervene is a crucial aspect of FCA lawsuits. Once the government completes its investigation, it can decide to take over the case, which significantly increases the likelihood of success for the relator. In contrast, in other types of lawsuits, the plaintiff typically bears the full responsibility for prosecuting the case. Government intervention in FCA cases introduces an additional layer of complexity and resources that is generally unavailable in other civil litigation.
Should the government choose not to intervene, the relator can still proceed independently, but with the burden of proving the case without the resources and support of the federal government. The decision to proceed without government intervention is a risky one, as the relator must cover legal costs and face potentially powerful and well-funded defendants, such as large corporations or government contractors.
Remedies and Financial Penalties
The remedies available in an FCA lawsuit are another significant distinguishing factor from other types of civil litigation. Under the FCA, violators can be held liable for treble damages (three times the government’s actual losses) and face civil penalties for each false claim, which range from $5,000 to $25,000 per false claim, adjusted for inflation. These penalties are designed not only to compensate the government for its financial loss but also to deter future fraudulent conduct.
However, the whistleblower’s reward—the 15-30% share of the total recovery—is distinct from these penalties and damages. When a False Claims Act lawsuit succeeds, the federal government recovers the fraudulent amount plus penalties and damages. The whistleblower (also known as the relator) is then entitled to a percentage of that total recovery:
- ol]:!pt-0 [&>ol]:!pb-0 [&>ul]:!pt-0 [&>ul]:!pb-0″ value=”2″>If the government declines to intervene and the whistleblower proceeds independently, the reward increases to 25-30%, compensating them for the additional risks and legal expenses of pursuing the case without government support.
This combination of potentially massive financial penalties for violators and a generous incentive structure for whistleblowers makes FCA lawsuits uniquely powerful tools both for punishing past fraud and deterring future fraudulent conduct. The substantial financial rewards for whistleblowers encourage individuals with insider knowledge of fraud to come forward, ensuring that fraudulent activity affecting government funds is more likely to be exposed and prosecuted.
In contrast, in most other civil lawsuits, remedies are generally focused on compensating the plaintiff for direct losses or damages. While punitive damages may sometimes be awarded in other cases, they are typically much smaller in scope compared to the treble damages and additional penalties seen in FCA lawsuits. Moreover, other lawsuits lack the unique incentive structure of the FCA, where private citizens can earn a significant share of the total recovery in return for their role in exposing fraud.
Ethical and Public Policy Considerations
Ethical and public policy considerations also make FCA lawsuits stand out from other legal actions. The act of filing a qui tam suit as a whistleblower raises complex questions of loyalty, ethics, and morality. Relators are often insiders with detailed knowledge of the fraudulent conduct, which can create significant tension in their professional and personal lives. In many cases, whistleblowers risk their careers and reputations by coming forward, which is why the FCA includes protections against retaliation. Employees who are fired, demoted, or otherwise discriminated against for participating in an FCA lawsuit can seek additional remedies under the Act.
While other civil lawsuits may involve personal or professional risks, the stakes are rarely as high as they are in FCA cases. The ethical dimension of blowing the whistle on fraud against the government involves considerations of public duty and personal integrity that are less pronounced in typical civil litigation. Moreover, the public interest component of FCA cases—ensuring the integrity of government programs—aligns whistleblower actions with broader societal goals, further distinguishing these lawsuits from private disputes or tort claims.
Conclusion
False Claims Act lawsuits differ from other types of lawsuits in several fundamental ways, from their purpose and structure to the unique procedural and ethical challenges they present. While most civil cases involve private disputes, FCA cases serve a broader public interest by targeting fraud against the government. The involvement of whistleblowers, the government’s potential intervention, the possibility of treble damages, and the ethical complexities surrounding whistleblowing all combine to make FCA lawsuits distinctive legal actions. Understanding these differences is essential for anyone involved in or affected by FCA litigation, as they fundamentally alter the dynamics of the legal process and the stakes involved.