What Are Fraudulent Claims?

Fraud is generally defined as the intentional deception or misrepresentation of fact that results in injury or loss to an individual who relied upon that fact. The intentional deception is usually motivated by personal or monetary gain or advantage. Because the definition of fraud can be applied to many situations involving intentional dishonesty, the parties or entities involved can vary widely. Some well-known examples of fraud or fraudulent behavior include tax fraud, identity theft, healthcare and insurance fraud, and counterfeiting. The objects of fraud can be individuals, businesses, financial institutions or government authorities. It is this last type of “victim,” the government, which is the subject of this text. In the context of this article, the word “claim” means the assertion of a right to something such as money, property or action. It is the presentation of a claim to a person or entity that establishes the claimants desire to collect that which they believe they are owed. Taken in conjunction, the definition of a fraudulent or false claim is therefore an assertion of a right to something that is made on the basis of a misrepresentation of fact. The individual presenting the claim is not, in fact, entitled to receive the benefit. The presentation of a fraudulent claim is done with the intent to falsely obtain money or property. The presentation of a false or fraudulent claim, regardless of the outcome or gain to the perpetrator, is a crime. A federal law exists in United States that encourages the reporting of fraudulent claims perpetrated against the government. The law was created at the urging of Abraham Lincoln in 1863 in response to numerous and costly fraudulent claims against the U.S Treasury. It allows an individual, or “relator,” to provide information to the government regarding fraudulent activity. The role of the actual “whistleblower” was redefined and expanded when the law was amended in 1986. It is unique in that it allows individuals who are not affiliated with the federal government to bring legal action on behalf of the government against the perpetrator. The individual filing such action is the “relator” in this scenario. An interesting facet of this right of action is that the relator need not have been personally harmed by the deception in any way. They are viewed, in a legal sense, to have been partially assigned the injury suffered by the government. The law is called the False Claims Act (Title 31 of the United States Code) and is commonly referred to as the “whistleblowing” law. The provision of the False Claims Act that allows this right of recovery and reward to the relator is called qui tam, and lawsuits filed for this are often referred to as “qui tam” actions. Specifically, qui tam provides an incentive to “whistleblowers” by offering them between 15% and 25% of any recovery that results from prosecution.