USA - Nationwide: A False Claims Act: Plaintiff Overview

The False Claims Act: A Powerful Tool for Fighting Fraud

Enacted over 150 years ago, the federal False Claims Act (FCA) is the most powerful tool for fighting fraud on the government in the United States. Revitalised in 1986 and further amended in 2010-2011, the FCA is designed to reach any area where government money is involved. This includes, but is not limited to, Medicare, Medicaid, and other government health plans; housing and mortgage programmes; educational programmes and institutions; construction, road, and railway projects; military and defence spending; and the many grants and contracts provided by the US government. In recent years, the government has identified fraud in the health care, customs, and benefits programme areas as priorities for FCA-related enforcement. Numerous state FCAs seek to replicate the scope and impact of the FCA on state and locally funded programmes.

To date, the government has recovered over USD85 billion from FCA cases. In fiscal year 2025 alone, the government recovered over USD6.8 billion.

The penalties wrongdoers face under the FCA are harsh by design. In order to punish past and deter future misconduct, the FCA provides for recoveries of three times the actual financial loss to the government plus a civil penalty of up to USD28,618 for each false claim.

In recognition of the statute’s overwhelming success, the Department of Justice (DOJ) has called the FCA the “single most important tool US taxpayers have to recover funds lost due to fraud against the government.”

Whistle-Blowers

A primary driver of the FCA’s success is its “qui tam” provision, which allows whistle-blowers who know about fraud against the government – also known as “relators” – to file a case on the government’s behalf. Allowing whistle-blowers to bring cases under the FCA has been crucial to the statute’s success because fraud is often hard to detect. Without whistle-blowers who know about fraud – whether they are corporate insiders, outsiders like vendors or customers with specific knowledge, data analysis experts, or others – the government would often be unable to recover its losses.

Whistle-blowers provide invaluable assistance to the government not just in identifying fraud at the outset but also in providing additional information and assistance as the government investigates the case. To motivate whistle-blowers to come forward and help the government, and in recognition of their value, the FCA generally entitles whistle-blowers to an award of at least 15% and up to 30% of the government’s recovery, depending on the circumstances.

Notably, the FCA’s qui tam provision has come under recent scrutiny following Justice Thomas’ dissent in United States ex rel. Polansky v Executive Health Resources, Inc., which questioned whether qui tam FCA lawsuits were constitutional. The vast majority of courts have rejected this premise, citing the long history of qui tam suits, though it remains to be seen whether the Supreme Court will take up this issue in the future.

What It Takes to Bring a Successful FCA Case

Elements and award limits

In addition to the basic element that defendants must submit (or cause to be submitted) a false claim or statement, the FCA requires that defendants have knowledge (or scienter) that they are committing the fraud and the fraud must be material to the government’s decision to pay funds. Notably, knowledge is not limited to “actual knowledge”, but includes “deliberate ignorance” and “reckless disregard”. Mere negligence, however, does not suffice.

To encourage whistle-blowers to report fraud promptly, the statute has a first-to-file bar, meaning if two or more whistle-blowers file cases regarding the same fraud, only the earliest filer can recover. In addition, whistle-blowers are not entitled to an award if their case is based on public information unless they are the original source of that information or if they have information that significantly adds to the public disclosure. Finally, whistle-blowers who planned or initiated the fraud may have their awards reduced, and those who are criminally convicted for their role in the fraud are not entitled to any award.

Process

In a qui tam FCA case, the whistle-blower files a complaint describing the alleged fraud in court under seal. This means the complaint is confidential unless and until the court orders that it be unsealed. After the complaint is filed, it is served on the government along with a confidential statement of all the material facts and underlying documentation in the whistle-blower’s possession.

While the complaint is under seal, the government investigates the whistle-blower’s claims and determines whether to “intervene” – or join – the case. The government’s investigation often includes an interview of the whistle-blower during the early stages. During the interview, the government asks the whistle-blower any questions it may have regarding the allegations in the complaint and the whistle-blower’s background. Though the default period under the FCA statute for a case to remain under seal is 60 days, the government generally applies to the court to extend the seal period, and investigations in FCA cases can take years. Sometimes, courts deny seal extension requests and require the government to make an intervention decision if they believe the government’s investigation has taken too long.

If the government intervenes, the government takes over the litigation, and the whistle-blower is eligible for an award of 15-25% of the government’s recovery. If the government declines to intervene, the case will come out from under seal. The government may apply to the court to dismiss the case, but otherwise the whistle-blower may continue the lawsuit on behalf of the government. Successful whistle-blowers who pursue declined cases are eligible for an award of 25-30% of the recovery.

Related Whistle-Blower Programmes in the United States

In addition to the FCA, there are numerous whistle-blower reward programmes in the United States through which fraud can be reported to the government. Unlike the FCA, these programmes do not require a lawsuit to be filed and do not necessarily involve fraud on the government. Given the success of established programmes, such as the SEC Whistleblower Program, there has been a fast-paced expansion of whistle-blower award programmes over the past few years. Each programme is subject to its own regulations and award eligibility requirements. These programmes include:

• SEC Whistleblower Program;
• CFTC Whistleblower Program;
• IRS Whistleblower Program;
• NHTSA Motor Vehicle Safety Whistleblower Program;
• FinCEN Anti-Money Laundering and Sanctions Whistleblower Program;
• DOJ, Criminal Division, Corporate Whistleblower Awards Pilot Program; and
• DOJ, Antitrust Division, Antitrust Whistleblower Program.

Fighting Fraud Abroad: The United Kingdom HMRC’s Tax Rewards Programme

An exciting development internationally is the addition of whistle-blower reward programmes abroad. In November 2025, His Majesty’s Revenue and Customs (HMRC) in the United Kingdom launched a “Strengthened Reward Scheme” for reporting serious tax avoidance or evasion, under which individuals can receive a financial award for helping the UK recover unpaid taxes. If an eligible individual’s report leads to the HMRC collecting at least GBP1.5 million in tax, that person may receive 15% to 30% of the proceeds (excluding penalties and interest).

HMRC’s programme is modelled on the IRS Whistleblower Program in the United States and has the potential to return to the UK substantial revenue from tax evaders.