Violating the False Claims Act: Penalties

The False Claims Act of 1863, 31 U.S.C. §§ 3729-3733, also known as the “Abraham Lincoln Law,” is one of the federal government’s most powerful weapons against fraud. Although meant for both civil and criminal proceedings, the civil application of the Act is the primary means of federal action and is now most heavily used in the growing area of health care fraud, followed by procurement fraud and other types of fraud in a diversity of arenas.

The False Claims Act provides that any person who knowingly submits a false claim for payment to the government is liable for the government’s damages, as well as additional monetary penalties. False claims typically include unlawful requests for government money such as overbilling government funded programs, misrepresenting the amount of a product delivered, underrepresenting an obligation to pay the government, or billing government funded programs for services never rendered.

While the government itself is the real injured party in a False Claims Act suit, the person who discovers that fraudulent behavior, known as a whistleblower or relator, brings the suit on behalf of the government and may receive up to 30% of the government’s award if the suit is successful.

When the act was originally enacted in 1863 violators of the act were liable to pay double the government’s damages plus a $2000 penalty for each claim. In 2019 the Department of Justice recovered over $3 billion in fraud and False Claims Act cases. For someone considering filing a False Claims Act lawsuit, understanding how the penalties work will help to understand what the potential whistleblower portion of the payout would be.