False Claims Act Qui Tam Defense Attorney: Key Corporate Defense Strategies

A qui tam action allows a private individual, known as a relator, to file a lawsuit on behalf of the government alleging corporate fraud. Relators are frequently current or former employees, business competitors, or subcontractors who gain access to internal financial records. Under 31 U.S.C. § 3730(b), the relator files the complaint under seal, providing the Department of Justice time to review the evidence. If the action succeeds, the relator receives between 15% and 30% of the recovered funds.

The federal False Claims Act exposes government contractors and healthcare providers to severe civil exposure. Under 31 U.S.C. § 3729(a)(1), potential penalties include mandatory civil monetary penalties per false claim alongside statutory treble damages. Liability attaches to actions taken in deliberate ignorance or reckless disregard of the truth.

Traditional common law fraud requires proof of specific intent to deceive, actual reliance by the victim, and direct damages. Conversely, statutory enforcement under Qui Tam Litigation does not require proof of specific intent to defraud the government. Plaintiffs must demonstrate that a defendant knowingly submitted a false or fraudulent claim for payment.

Government contractors face enforcement actions stemming from cost misallocation, unallowable expense requests, and non-compliance with contract specifications. Submitting invoices for goods or services that fail to meet contractual standards triggers severe liability under federal procurement rules.

Healthcare entities regularly encounter regulatory scrutiny regarding Medicare and Medicaid reimbursements. Common triggers include:

• Upcoding billing codes to seek higher reimbursement rates for medical procedures
• Billing for services or medical equipment never provided to patients
• Submitting claims resulting from violations of the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b))
• Performing medically unnecessary tests or treatments to artificially inflate billing volumes

Defense contractors face heightened scrutiny regarding material substitution and falsified testing certifications. When a company certifies compliance with federal supply schedules while knowingly providing non-compliant parts, relators often file sealed enforcement complaints.

Upon discovering a sealed or unsealed complaint, counsel executes an immediate internal factual investigation. Securing billing records and interviewing key management personnel allow corporate leadership to evaluate actual liability exposure.

Defense counsel scrutinizes the relator’s employment history and potential personal financial motives. Demonstrating that a relator altered internal records or copied proprietary data without authorization weakens the relator's credibility during initial negotiations with prosecutors.

In Universal Health Services, Inc. .. United States ex rel. Escobar, 579 U.S. 176 (2016), the U.S. Supreme Court held that implied false certification creates liability only under specific conditions. First, the claim must make specific representations about the goods or services provided. Second, the defendant's failure to comply with a requirement must be material to the government's payment decision.

Federal Rules of Civil Procedure Rule 9(b) requires plaintiffs to state with particularity the circumstances constituting fraud. Defense attorneys move to dismiss complaints that fail to specify the precise details of the alleged fraudulent scheme. The FCA's public disclosure bar (31 U.S.C. § 3730(e)(4)) mandates dismissal if the allegations were already disclosed in news media or government reports.

The government's decision to intervene significantly impacts the trajectory of a suit. When the government intervenes, it assumes primary control of the prosecution. If the government declines intervention, the relator pursues the action independently, though historical success rates for non-intervened cases drop significantly.

Settling a qui tam action requires negotiating with both federal prosecutors and the relator’s counsel. Corporate defendants must resolve civil monetary exposure while securing comprehensive releases to prevent subsequent administrative exclusion from government programs.

Establishing an internal compliance framework reduces statutory exposure under the False Claims Act. Effective compliance programs include:

• Confidential internal reporting hotlines and clear non-retaliation workplace policies
• Routine independent audits of government billing records and coding practices
• Mandatory compliance training for billing staff and corporate executives
• Prompt internal investigation protocols when employee grievances surface