False Claims Act: When the Government Pays for a False Story

The False Claims Act is a civil law that reaches knowingly false claims for government money and knowing, improper avoidance of money owed to the government. The false story can begin well before a bill: in a diagnosis, a contract price, a grant application or a declaration about imported goods. If you know how that story differs from what happened inside the business, you may know the part the government cannot see.

What Does the False Claims Act Cover?

The False Claims Act follows government payment through businesses that provide care, supply goods, administer programs or receive federal funding. A claim can go directly to a federal agency or through a contractor, grantee or other recipient spending federal money on a government program. The company sending the final bill is only one possible participant.

A healthcare provider supplies a service and records what the patient received. The billing information tells Medicare or Medicaid what to pay. In Medicare Advantage, diagnosis information supplied to a health plan can affect the government’s payment to that plan. The person changing a diagnosis and the organization receiving the government payment can occupy different places in the same transaction.

Government procurement has its own chain. A contractor supplies cost and pricing information during negotiations, then seeks payment under the resulting contract. A supplier’s product qualifications can matter before anything reaches the government. Research funding runs through applications and progress reports. Federal mortgage insurance depends on information about the loans the government is asked to insure.

These arrangements give insiders different views of the same money. A clinician knows what care was appropriate. A contract employee knows what the pricing disclosure left out. A laboratory employee knows whether the experiment behind a grant report happened as described. The useful connection is between that knowledge and the information that secured or increased government payment.

The law also reaches money moving the other way. Customs duties and repayment obligations put the government on the receiving end. A company can face a false claims case for knowingly and improperly keeping money it owes, including through a false record concealing the obligation.

Why the Law Gives Whistleblowers a Share

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The whistleblower reward gives someone with knowledge of the business a financial stake in recovering public money. The government gains access to facts that a payment system alone may never reveal.

That design has a history. Congress enacted the law in 1863. The Congressional Research Service’s 2009 report, Qui Tam: The False Claims Act and Related Federal Statutes, traces how Congress strengthened private enforcement in 1986 after evidence of extensive fraud against the United States. It increased the available whistleblower share and made the knowledge standard explicit. In 2009, Congress broadened coverage of claims moving through recipients of federal money and of obligations improperly avoided.

Congress built a way for people outside the government to pursue money owed to it. The history of the False Claims Act is also a history of making the insider’s information worth bringing forward.

What Do False Claims Act Recoveries Show?

False Claims Act settlements and judgments in fiscal year 2025 totaled $6,888,096,266 in the Department of Justice’s annual figures. Within that total, cases the government declined to take over accounted for $2,288,271,506.

Those enforcement statistics make a pointed case for the whistleblower’s role: cases the government passed on still brought billions in settlements and judgments.

The law ordinarily provides for three times the government’s damages and a civil penalty for each violation.

What Makes a False Claims Act Violation?

The False Claims Act elements connect the false claim, what the company knew, and why the information mattered to payment. The work is in those connections: which statement reached the payment system, who understood it was wrong, and what the government was paying for.

False Claims, False Records and Money Kept

The law reaches knowingly submitting a false claim or causing someone else to submit it, and knowingly making or using false information that matters to a false claim. A company can supply the false information even when another business sends the bill. Agreeing to commit the fraud can connect participants across that chain.

Reverse false claims concern money owed to the government. The law reaches knowingly using false information that matters to that obligation, or knowingly concealing or improperly avoiding or reducing it. This includes health care overpayments knowingly and improperly retained after the repayment deadline. The original payment and the later decision to keep it are different events.

The law also covers knowingly handing over less government money or property than a person controls, false receipts made with intent to defraud, and knowingly buying or taking public property as security from a government seller who cannot legally offer it.

What the Company Knew When It Acted

Knowledge includes actual knowledge, deliberate ignorance and reckless disregard. What the company understood at the time matters: the warning it received, the question it avoided, or the risk it consciously accepted when submitting the claim.

In its 2023 decision involving SuperValu and Safeway, the Supreme Court focused on the companies’ knowledge and beliefs when they submitted their claims. The dispute concerned pharmacy prices reported to government programs despite discount programs. An interpretation developed afterward could not erase evidence that a company believed its claims were false when it made them.

We care about the explanation people gave before the payment, when they were making the decision. A polished explanation afterward cannot change that earlier understanding.

Why the False Information Mattered to Payment

Materiality asks whether the false information could influence the government’s payment or receipt of money. What the government actually pays for, and how it responds when it knows of a violation, matter more than a label on a form.

In the case involving Universal Health Services, the Supreme Court explained how a bill can mislead by leaving out who did the work. The allegations concerned Medicaid billing for services without required qualifications, licensing or supervision. A claim describing services can conceal facts about who supplied them that matter to payment.

That is the practical issue behind false certification and implied certification. The services described, the qualifications promised, and the facts left out belong together. The government’s response to known violations is part of that picture too.

Who Brings a False Claims Act Case?

A private person or company can bring a qui tam case in the government’s name. The whistleblower who brings it is called the relator. Whistleblowers can bring different kinds of business knowledge: the cases include employees, industry specialists and competitors.

The False Claims Act case process brings that evidence to the Department of Justice, which decides whether to take over the case. If the government joins, it takes primary responsibility and the whistleblower remains a party. If it declines, the whistleblower can continue the case.

The government’s intervention decision and the evidence of fraud are separate questions. The payment records, warnings and people who can explain them still matter after that decision.

Questions about anonymity, retaliation, another case filed first, public disclosure or your own role in the conduct belong in a conversation with us. You can start that conversation with what you know about the business. Our whistleblower experts work through those issues with you and False Claims Act whistleblower lawyers who know the industry involved.

Federal Money and State Money

Federal and state false claims laws have different coverage. Some state laws reach a broad range of public spending, while others focus on health programs. Their rules for private cases also differ.

The District of Columbia’s false claims overview gives a concrete example: its law reaches contractors and grantees seeking payment from the District for work not fully or properly performed. Medicaid cases can involve both federal and state money. Identifying the program and the money behind the claim helps identify which law belongs in the case.

The whistleblower program that fits the conduct depends on the money and the scheme. We assess that fit with you.

False Claims Act Fraud in the Business Records

False Claims Act case examples show the same connection across different industries: information inside a business changes what the government pays or receives. The records look different, but the question is concrete. What did the company tell the government, and what did people inside it know?

Healthcare Billing Fraud

Medically unnecessary therapy allegations led to a $145 million settlement with Life Care Centers of America in 2016. The Department of Justice alleged corporate reimbursement targets and continued treatment despite therapists’ recommendations to discharge patients. The government’s filing quoted Life Care’s own words:

We see the problem in that choice of words: how much a patient can tolerate becomes a way to describe how much the facility can bill. Care by revenue target. The therapists’ recommendations and the billing targets tell different parts of the alleged scheme. An insider who understands both can explain why the claim changed.

Defective Contract Pricing

False Claims Act contracting cases reach the negotiation table: Raytheon agreed to a $428 million civil settlement in 2024 over pricing disclosures. The Department of Justice alleged untruthful certified cost and pricing disclosures during government contract negotiations.

The important record can precede the invoice. Pricing information shapes the bargain itself. Fraud used to obtain a contract can affect later claims even when an invoice accurately describes work performed. Someone who knows what the negotiation team knew may see a problem that accounts payable cannot.

Research Grant Fraud

Duke University agreed to pay $112.5 million in 2019 to resolve allegations that fabricated research supported federal grant applications and progress reports. A former employee brought the case. The government did not take over the case.

The Department of Justice’s settlement announcement connects the disputed science to the funding. For someone inside a laboratory, the experiment, the data reported and the grant application can explain how the government came to fund the work. That payment connection gives the allegation its False Claims Act significance.

Customs Fraud

Reverse false claims reach unpaid customs duties: Toyo Ink agreed to a $45 million settlement in 2012 over alleged duty avoidance on pigment. The Department of Justice alleged that pigment from China and India underwent finishing in Japan and Mexico, then entered the United States with origin declarations that did not reflect the production required to change its origin.

The alleged false information reduced money owed to the government. Production records and the import declaration connect the commercial goods to the unpaid duty.

Mortgage Insurance Fraud

Wells Fargo agreed to a $1.2 billion civil settlement in 2016 over mortgage lending practices. The Department of Justice described allegations of certifications for ineligible loans and failures to report defects.

Here, the information concerned whether loans qualified for federal mortgage insurance. The loan file and the certification connect the lender’s knowledge to the government’s financial exposure. Across these cases, evidence of a false claim starts with the business record that explains why public money was put at risk.

You Know What the Government Was Told

If you can explain the gap between the business records and what a company billed or declared it owed the government, speak with our whistleblower experts about a False Claims Act case. We build your strongest case with you, bring in False Claims Act whistleblower lawyers with the right industry experience, and remain your partners from the first conversation through the case.