The False Claims Act (FCA) authorizes individuals to bring civil actions, also named qui tam actions, on behalf of the United States of America against the entities or the individuals who engage in fraud against the government. Fraudulent actions against the government may happen in the form of overcharging the government or failure to pay the funds due to the government. The U.S. Court of Appeals for the Third Circuit has recognized liability claims under FCA based on failure in payment, which are called “reverse false claims.” For example, an importer’s “failure to pay marking duty on imported products” constitutes fraud under the FCA, see Customs Fraud Investigations v. Victaulic, 839 F.3d 242, 258 (3d Cir. 2016).

The individuals who bring qui tam actions, called “relators” or “whistleblowers” may request penalties and treble damages. After the relator brings an action, the government may intervene and take over the action, intervene partially, intervene at a later stage or refuse to intervene. The statute aims at reducing the possibility of such fraud going undetected. To avoid opportunistic suits based on already known information, however, the FCA prohibits actions based on certain publicly available information requiring the courts to dismiss such actions, 31 U.S.C.A. Section 3730(e)(4). This provision is called “the public disclosure bar” and has considerable implications for a successful pleading of FCA allegations by plaintiffs to which qui tam attorneys must pay close attention.

Prior Public Disclosure