Appendix - Facts about False Claims
The Federal False Claims Act (31 U.S.C. §§ 3729-3733)
- The Federal False Claims Act Defined.
The Federal False Claims Act was written by Congress to deter fraudulent conduct by persons against the United States government. Under the Act, any person who knowingly submits, or causes another person or entity to submit, a false or fraudulent claim for payment by the United States government is liable for three times the amount of each false or fraudulent claim and a penalty of $5,500 to $11,000 for each false claim submitted.
- "Person" Defined.
The Act applies to "persons." While that includes all natural persons, the United States Supreme Court has determined that state governments and state entities (such as the University of Virginia) are not persons. This means that UVa as a state institution cannot be held liable under the False Claims Act. However, the employees working within the UVa system may possibly be held liable under the Act if they act "knowingly."
- "Knowingly" Defined.
Under federal, state, and local laws, the state of mind of a person committing an act is important. Different rules apply if the person is acting intentionally, knowingly, recklessly, or innocently. The False Claims Act applies to people who act "knowingly." In order for a person to "knowingly submit" a fraudulent claim, that person must:
- have actual knowledge that the claim is false;
- act in deliberate ignorance of the falsity of the claim; or
- act in reckless disregard of the falsity of the claim.
- "Claim" Defined.
The Act defines a "claim" as any request or demand for the payment of money by the United States Government. UVa continually submits claims such as these to the Medicare and Medicaid programs.
- False Written Statements and Administrative Proceedings (31 U.S.C. §§ 3801-3812).
Claims made by persons to the government that involve written statements which knowingly assert false facts or omit material facts also are punishable by two times the amount of the false claim and a penalty of up to $5,000. These amounts are in addition to any penalties assessed under the primary False Claims Act detailed above. The procedures under this statute occur administratively within the Department of Health and Human Services (as opposed to the primary False Claims Act which is enforced by the Department of Justice). Additionally, the matter may be referred to the U.S. Attorney General for criminal proceedings. This variant of the False Claims Act has not been interpreted by the United States Supreme Court. Therefore, it is possible that UVa might be considered a "person" under this statute, and thus be liable as an institution. Employees of UVa may possibly be personally liable under this statute as well.
The Virginia Fraud Against Taxpayers Act (Va. Code §§ 8.01-216.1-216.19)
The Virginia Fraud Against Taxpayers Act is the Commonwealth of Virginia's equivalent to the Federal False Claims Act. Its language is nearly identical to that of the federal statute. It states that any person who knowingly presents, or causes another person to present, a false or fraudulent claim for payment or approval, or makes a false statement, is liable for three times the amount of the claim and a penalty of between $5,500 and $11,000.
Virginia defines "person" to exclude the Commonwealth. A "person" under Virginia law is defined as including a natural person, corporation, or business. Therefore, a UVa employee who acts "knowingly" may possibly be held liable under this statute, but UVa would not.
Virginia uses the same definition of "knowingly" as the federal government.
Virginia uses substantially the same definition of "claim" as the federal government. UVa submits claims to the Medicaid program.
Protections for "Whistleblowers"
Both the Federal False Claims Act and the Virginia Fraud Against Taxpayers Act contain provisions encouraging people to report false claims. These individuals, known as "whistleblowers," must have direct knowledge of the false claim and be the first person to call the claim to the government's attention. The whistleblower can file a lawsuit in the government's name against the alleged false claimant. The government then may choose to join the lawsuit against the alleged false claimant. If the suit is successful, the whistleblower may receive from 15%-30% of the federal or Commonwealth claim.
A person who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of his or her employment by his or her employer because of participation in any way in a false claims act suit, shall be entitled to all relief necessary to make the employee whole. This includes reinstatement, two times the amount of back pay with interest, and any litigation costs, as well as reasonable attorneys' fees.