The False Claims Act (FCA) is a statute that allows for the federal government to recover damages when it has been defrauded. The law primarily targets cases involving knowingly false or fraudulent claims for payment submitted to the federal government or federally funded programs,with healthcare fraud, defense contractor fraud, and education fraud being common categories. Cases may be brought directly by the government or by private individuals as “qui tam” actions on the government’s behalf, seeking civil penalties, treble damages, and costs.
These qui tam actions have the potential to be lucrative for whistleblowers. In January, the Department of Justice reported that a record $2.9 billion was paid out to whistleblowers in fiscal year 2024.
Recently, the law has also been used to recover against fraud under the Paycheck Protection Program (PPP), enacted in the wake of the COVID-19 pandemic. According to Docket Alarm data, FCA cases have increased steadily over the last five years, and the outbreak of the pandemic.
Far and away, the judicial district that saw the most FCA cases was the Northern District of Mississippi. That district hosted over 600 such lawsuits since 2020, whereas the next highest jurisdiction – the Southern District of New York – saw under 100. There could be a number of reasons for this disparity – the district may enforce these cases particularly aggressively, or they may classify cases differently than other districts. There was a large spike in FCA cases filed in May 2023, largely driven by Mississippi cases.
Despite the volume of litigation, False Claims Act cases tend to close very quickly – of the cases in which Docket Alarm reports timing date for the case, they tend to close within 30 days. This suggests that the cases settle or are otherwise resolved out of court in short order.
Critically, many False Claims Act claims brought by whistleblowers may not make it to the filing stage. The true scope of FCA enforcement – and the rewards available to whistleblowers – could be far greater than the litigation data suggests.
