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Hinton & Bailey LLP

False Claims

Houston Fraud Defense Lawyers

The Hinton & Bailey Law Firm has significant experience in advising and defending clients in False Claims Act matters.

False Claims Act Explained

  • The federal False Claims Act applies to any individual or business that directly or indirectly contracts with and is paid for services by the United States government. The False Claims Act creates liability against any person, organization, corporation, or prime contractor that knowingly submits or causes to be submitted a false or fraudulent claim with intent to procure payment or approval from the government.
  • The submission of an inaccurate claim occurs knowingly if it was submitted with actual knowledge or even when the person or entity failed to conduct due diligence. In other words, liability under the False Claims Act already arises if an actor should-have-known that, for example, a billing code had changed, but lacking diligence, nonetheless submitted an obsolete (false) code.

What Are the Penalties?

False Claims Act investigations present severe challenges to any business because the statute contains both civil and criminal penalties and it is often not clear at the beginning of a case whether the government investigates the matter civilly or intends to press felony charges against the business owners.

  • Civil Liability: Triple damages and a penalty of up to $ 11,000 per claim for anyone who knowingly submits or causes submission of a false or fraudulent claim to the United States.
  • Criminal Liability (18 U.S.C. § 287): Health care providers who intentionally present false claims to the government for reimbursement with the knowledge that such claims were false, fictitious, or fraudulent are exposed to five year imprisonment and a fine of $ 250,000 (individuals) or $ 500,000 (companies) for federal felony convictions and $ 100,000 (individuals) or $ 200,000 (companies) for misdemeanor convictions— for each claim.

What Is a Qui Tam Lawsuit?

Most False Claims Act investigations are not initiated by the government but by former employees and competitors. The False Claims Act contains a provision that allows private citizens (so-called “relator”) to file so-called qui tam lawsuits (short for the Latin expression: “he who sues for the king and himself”) to recover monies on behalf of the United States by simply alleging that an individual or a business defrauded the federal government, see 31 U.S.C. § 3729.

Complaint. The qui tam relator (the plaintiff) files a complaint against an individual, a business, or both (the defendants) with a federal court. To protect the anonymity of the plaintiffs, qui tams are filed under seal and the court’s clerk will provide a copy of the complaint only to the assigned judge and certain government officials at the U.S. Attorney’s Office. Extensions to keep the case sealed are regularly granted for segments of six months and can be renewed until the government had a chance to investigate the matter.

Evidence. The government will immediately reject entirely unsubstantiated complaints. If the complaint appears promising, the government may investigate the facts with the help of federal law enforcement agencies such as the FBI, the DEA, or the U.S. Attorney’s Office. This factual investigation is typically done through OIG subpoenas that require the accused wrongdoers to produce specified corporate, financial, billing, business, and communications records.

Government Intervention. Upon review of those records and negotiations with the health care defense attorneys, the government must decide if it will support the plaintiff and intervene in the case or whether it will drop out and let the realtor continue on its own. Interventions require an approval process that involves the Department of Justice’s Washington D.C. headquarters. If the government does intervene, the Department of Justice will typically amend the complaint to include additional causes of actions such as the Anti-Kickback Act and the Truth in Negotiation Act.

Case Settlement. Parallel to the government serving subpoenas and thereby notifying the defendants about the pending investigation, negotiations between the government and defendants’ lawyers take place. Depending on the complexity of the case and the difficulty of the analysis, it may take several months before the government starts evaluating a qui tam and even longer before an opened matter is fully resolved.

Liability and Rewards. If found liable, the individuals and companies accused of fraud in the qui tam lawsuit may be ordered to pay as much as three times the government’s losses plus penalties of up to $ 11,000, per claim, which can quickly amount to millions of dollars. The law incentivizes qui tam plaintiffs by allowing them keep up to 25 percent of any amount collected if the government participates in the litigation and up to 30 percent if the plaintiffs collect on their own without the government’s intervention.

Proven Defense Strategies

The difference between human error and liability is often a fine line that requires convincing negotiation skills, industry experience, and attention to details. The defense attorneys and former government officials of the Hinton & Bailey law firm has handled False Claims Act cases throughout the United States. The following are our maxims and guiding principles.

  • No Criminal Charges. Our top priority in every False Claims Act case is to avoid criminal charges. Years of experience as former federal health care prosecutors in charge of False Claims Act investigations and a focused practice on health care fraud defense work allow us to quickly determine whether the investigation is civil or criminal, what the government’s objectives are, and how to efficiently resolve the matter.
  • No Government Intervention. Because False Claims Act cases are often initiated by whistle-blowing ex-employees or competitors with disingenuous agendas, we will aggressively confront the plaintiffs and destroy their credibility. Doing so is critical in order to convince the government that the accusations lack merit and do not deserve government intervention and support.
  • Favorable Resolution. In instances, in which civil liability was indicated, we have negotiated the damages to fractions of the government’s demand. To date, not a single settlement forced any of our clients to cease operations or to close their business.

If you would like to learn more about fraud defense and the U.S. legal system, then contact us at 713-864-4477 to schedule a legal consultation.