The False Claims Act was enacted in 1863, over a century before Medicare or CMS came into being. It was passed by President Lincoln to combat widespread fraud by companies selling rancid food, ailing mules and defective weapons to the Union Army during the Civil War. The Act incentivizes whistleblowers, or Relators as they are known, to report a fraud on the government by rewarding them with a percentage of the amount the government successfully recovers as a result of the whistleblower’s False Claims Act case. From the outset, and through several amendments enacted over the past thirty years to increase the scope and reach of the statute, both Congress and the Supreme Court have repeatedly highlighted that (1) the False Claims Act is to be applied broadly and flexibly to reach all types of fraud that cause financial loss to the Government, and (2) private parties (relators) should be strongly encouraged to bring actions under the statute to supplement the Government’s limited resources to combat fraud.
Today, the False Claims Act remains one of the federal government’s most effective weapons in fighting fraud on the government, and Ms. Ormsby’s case is an important addition to the growing body of case law recognizing that RAF fraud, or fraud on the Medicare Advantage program, can form the basis of liability under the False Claims Act.
Ms. Ormsby’s landmark settlement recovering $90 Million for the government also add to the significant recoveries that other whistleblowers have made on behalf of the government since the modern amendments were passed in the mid-1980’s.
Many states, including California, have followed the federal government in adopting whistleblower statutes to combat fraud on state and local governments. These laws all contain important protections for whistleblowers who expose a fraud on the government. If an employer retaliates against a worker who has taken measures to expose wrongs they witness on the job, that employee has rights under federal law, including the False Claims Act, and the laws of many states.