Skip to main content

Search

Federal Deception Law: 1.3 Topics Covered by Other NCLC Treatises

This treatise and Unfair and Deceptive Acts and Practices set out consumer remedies for broad forms of marketplace conduct, in particular the sales aspects of consumer transactions. Other NCLC titles focus on credit and collection of credit obligations. NCLC treatises dealing with credit origination include:

Federal Deception Law: 1.4.1 The Chapters

This chapter provides background information on this treatise and an overview of its organization. Chapter 2, infra, examines eight of the most important Federal Trade Commission (FTC) trade regulation rules defining unfair and deceptive practices in commerce.

Federal Deception Law: 1.4.2 The Appendices

The appendices are generally organized in the same order as the chapters to which they relate. FTC rulemaking legislation and nine FTC trade regulation rules (organized by their Code of Federal Regulations number) are found in Appendix A, infra.

Federal Deception Law: 1.4.3 Pleadings and Primary Sources

This treatise’s digital edition includes a number of companion materials—sample pleadings, discovery material, and primary sources—all of which can easily be downloaded and copy/pasted. These companion materials are fully searchable and search filters allow users to search only for pleadings or only for primary sources.

Federal Deception Law: 10.1.1 Introduction

The federal False Claims Act (FCA) imposes liability on entities and individuals that make false or fraudulent claims to the government for payment for services and products, or that improperly avoid an obligation to repay overpayments to the government.1 Although FCA cases have traditionally been used to file claims against government defense and health care contractors and suppliers, they arise as well in other areas—such as insurance, housing, government entitlement programs, government loan programs, and environmental and labor laws—that offe

Federal Deception Law: 10.1.2.1 Early History

Qui tam actions originated in England8 around the end of the thirteenth century, when private individuals who had suffered injury began bringing actions in the royal courts on their own and on the Crown’s behalf.9 In the fourteenth century, Parliament began enacting statutes that specifically provided for qui tam suits.

Federal Deception Law: 10.1.2.2 Civil War Origins of the Federal False Claims Act

The False Claims Act13 was originally known as the “Informer’s Act” or “Lincoln’s Law.” It was enacted during the height of the Civil War at the urging of President Abraham Lincoln when dramatically increased government spending on military procurement led to widespread fraud by private contractors.14 The most glaring examples of fraud included sawdust sold as munitions and transported to Union soldiers; supplies such as horses and mules sold to units of the Union cavalry and then resold to other un

Federal Deception Law: 10.1.2.3 1943 Amendments

After the Civil War, the False Claims Act fell into disuse, but the military build-up prior to World War II and expansion of the federal government’s economic role provided new opportunities for private contractors to profit through fraud.20 However, because of perceived abuse of the system by qui tam plaintiffs who had no direct knowledge of fraud—yet were able to recover monies under the FCA after a public disclosure of a government criminal investigation—amendments were made in 1943 that restricted the FCA’s qui tam provisi

Federal Deception Law: 10.1.2.5 2009 and 2010 Amendments

In 2009, Congress passed the Fraud Enforcement and Recovery Act of 2009 (FERA),29 which was designed to address a broad range of issues relating to fraud and fraud enforcement, particularly as related to the contemporaneous economic stimulus package. FERA amended the False Claims Act to reverse a number of restrictive court interpretations and to clarify Congressional intent in enacting the 1986 amendments.

Federal Deception Law: 10.2.1 Rights of Relators Under the False Claims Act

False claims acts provide a unique weapon in the consumer attorney’s arsenal—not one used every day, but one whose impact can be dramatic for the wrongdoer and extremely important for the public interest. Consider a whistleblower or other individual who comes to an attorney’s office with inside information about systematic wrongdoing that involves government funding, but a major class action is impractical because:

Federal Deception Law: 10.2.2 Rights of the Government Under the False Claims Act

There are a number of ways in which the government, rather than the relator, exercises control over an FCA case. The lawyers at the Department of Justice determine the nature and scope of the government’s investigation of FCA claims while the case remains under seal, which can typically last three or more years. The government is under no obligation during this time to inform the relator of the progress of its investigation or to involve the relator or their counsel in that investigation.

Federal Deception Law: 10.3.1 False Claims Covered by the Statute

Almost any action that involves fraud in the payment of government funds or in the improper retention of government funds may impose liability under the FCA.42 The FCA is “intended to reach all types of fraud, without qualification, that might result in financial loss to the Government.”43

Federal Deception Law: 10.3.2 Standards for Liability

In order to prevail on an FCA claim, the elements of the action must be proven by a preponderance of the evidence.52 The standard for liability under the FCA makes it clear that it is not a fraud statute to which common law fraud principles invariably apply, although the requirements of Federal Rule of Civil Procedure 9(b) to plead with particularity are imposed.53 Instead, the FCA imposes liability based upon a scienter standard that requires actual knowledge, or deliberate ignorance of—or

Federal Deception Law: 10.3.3.1 Introduction

Most often relators are employees or former employees of a defendant who have direct knowledge of its fraudulent activity and have complained directly or indirectly to company management. Relators may also be outsiders, such as consultants or subcontractors or even competitors who have discovered fraudulent activity by another company.

Federal Deception Law: 10.3.3.2 Persons Excluded from Bringing a False Claims Act Case

The FCA contains few restrictions barring an individual from serving as a relator in a qui tam action. A present or former member of the armed forces is, for example, barred from serving as a relator in a suit against another “member of the armed forces.”59 Such an individual may, however, bring suit against government contractors working for the armed forces.60 Relators also may not bring qui tam actions pro se.

Federal Deception Law: 10.4 The False Claims Act’s Litigation Procedures

The statute of limitations for FCA claims is six years from the date of the violation, or as long as ten years if the case is brought within three years of when the government knew or should have known of the facts underlying the claims.78 To commence an FCA case, the relator files a complaint under seal and serves a copy upon the United States.79 Violation of the seal requirements, either at the time of filing a complaint or thereafter, may lead to dismissal of the case or other sanctions.

Federal Deception Law: 10.8 Examples of False Claims Act Cases

Due to the immense size and scope of government expenditures, the fact patterns giving rise to False Claims Act liability are extremely varied. Traditional areas include fraud by government contractors, fraud by companies marketing and selling drugs, and Medicare and Medicaid fraud by health care providers. Such areas offer tremendous opportunity for a consumer attorney seeking to establish a false claims act practice. However, less traditional or common areas also exist and may provide fertile ground for use of the FCA:

Federal Deception Law: 10.9.1 General

The FCA prohibits discriminatory or retaliatory acts against an employee who takes actions in furtherance of an FCA case.142 The federal FCA and most state false claims acts provide protection to qui tam relators who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the false claims act.143 Under the federal FCA, retaliating against an