The False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., is the Government’s primary tool to recover losses due to fraud and abuse by those seeking payment from the United States. See S. Rep. No. 345, 99 Cong., 2nd Sess. at 2 (1986) reprinted in 1986 U.S.C.C.A.N 5266. The FCA is a whistleblower statute, meaning that any person, whether a citizen of the United States or not, can bring information to the Government that a Company is committing fraud. As a reward, the individual can receive up to 25% of the recovery. 31 U.S.C. § 3730(d).
One might think that this incentive structure would lead to an oversupply of whistleblowers. However, the FCA is woefully underutilized to combat fraud against the United States, both within the country and abroad. For example, in 2017, the Department of Justice recovered $3.7 billion from FCA cases, which seems pretty substantial until it is compared to the estimated $98 billion per year the Government loses in health care fraud alone.
Why is there such a disparity between these two amounts? There are many potential answers. First, it takes a special person to become a whistleblower; exposing the company and the people that the whistleblower has worked with to financial and possible criminal penalties takes a lot of chutzpah. Second, there are legal impediments to prove that the individual or company defrauded the Government. The Company or individual must know they committed fraud or at least be recklessly indifferent that they committed fraud. The fraud also must be material to the Government, meaning the Government cannot rely on obscure provisions of the U.S. Code to prove fraud. See, e.g., U.S. ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211, 1221 (10th Cir. 2008) (“[A]lthough the government considers substantial compliance a condition of ongoing Medicare participation, it does not require perfect compliance as an absolute condition to receiving Medicare payments for services rendered.”). Further, combatting fraud is labor-intensive; it requires the collective knowledge of the whistleblower, plaintiff lawyers, the Department of Justice, agencies of the Government, and company witnesses.
One other potential answer is that individuals are unaware of the available resources to combat fraud. There is likely a remedy available to a whistleblower when they are aware that their company has engaged in unscrupulous activity. There is the FCA, the Dodd–Frank Wall Street Reform and Consumer Protection Act, § 922(a), 15 U.S.C. § 78u–6, the Motor Vehicle Safety Whistleblower Act, 49 U.S.C § 30172, the Financial Institutions Reform, Recovery and Enforcement Act, 12 U.S.C. § 1833a, the Internal Revenue Service Whistleblower Act, 26 U.S.C. § 7623, and other federal and state specific fraud statutes. These statutes cover: fraud within and outside the United States, see e.g., U.S. ex rel. Miller v. Bill Harbert Int’l Const., Inc., 608 F.3d 871, 886 (D.C. Cir. 2010), fraud against the Government or against the shareholders of a company, fraud which threatens the economic safety or the physical safety of citizens, and many other types of fraud. A claim of fraud can be made under one of these statutes individually or under multiple fraud statutes simultaneously in order to maximize the possibility of a recovery.
While the False Claims Act may be the Government’s primary tool to combat fraud, it is not the only one. Whistleblowers and lawyers need to be aware of all the statutes at their disposal to combat fraud in order to rectify the disparity between the fraudulent activity and recovery.