www.loubar.org 14 Louisville Bar Briefs PROFESSIONAL EXCELLENCE Elizabeth Monarch MBA, CAI, CRI Auctioneer/Realtor 2023 KYR Realtor State President Lonnie Gann GRI, CAI Auctioneer/Realtor 502.551.1286 auctionsolutionsllc.com Real Estate & Auction Specialist Providing Real Estate & Auction Services: • Estate Liquidation • Senior Living Transitions • Divorce Property Settlements • Business Liquidation • Real and Personal Property Evaluation Serving all of Kentucky and Indiana Clean as a Whistle? Rooting Out Fraud with the False Claims Act C. Dean Furman, Jr. “Just whistle while you work, And cheerfully, together we can tidy up the place . . .” –From the film Snow White and the Seven Dwarfs Fortunately, no need to be a mythical dwarf or the fairest princess in the land to whistle or to be an effective whistleblower. A fed- eral statute, the False Claims Act (FCA), 31 U.S.C. § 3729, et seq., allows anyone who meets the statutory criteria to blow the whistle on federal contractor fraud and not only tidy up the contractor’s conduct, but also be rewarded for doing so. Originating in the 1860s as a response to Civil War profiteers defrauding the Union, the application and expansion of the FCA since its enactment allowed it to become an effective enforcement tool for recovering tax dollars from federal contractors who cheat the government. In fact, fiscal year 2024 broke the all-time record for the most whistleblower lawsuits, called qui tams, filed in a year. See United States Department of Justice Press Release, January 15, 2025. At its core, the FCA penal- izes federal contractors who submit false or fraudulent claims for payment while protect- ing whistleblower employees from retaliation. The statute requires liable contractors (1) to repay the government up to three times the amount of the false claims and (2) to pay statutory penalties, currently set at an inflation adjusted maximum of $28,619, for each false claim. In other words, $1,000,000 paid for 1,000 false claims could result in an FCA award to the government in excess of $31,000,000. These penalties alone are not the only deter- rent for stealing taxpayer funds. Through the FCA process, the federal government can also exclude fraudulent contractors from government programs, meaning debarring individuals and companies from participating in Medicare, Medicaid, defense and general procurement contracts, service contracts, grants and other government payment sys- tems. Rather than excluding defendants as sanctions for violating the FCA, the govern- ment alternatively can require a corporate integrity agreement to monitor the contrac- tor’s federal payments more closely and place restrictions on how the contractor operates. By creating this statutory system, the purpose of the FCA is to deter fraudulent conduct, to prevent fraudulent actors from repeating the fraud, and to reward whistleblowers, formally called “relators” in qui tam litigation, who bring these claims to the government. Attorneys should know the basics of the statute to ensure their clients can either be referred to an attorney who practices FCA law or be prepared themselves to learn more about the intricacies of FCA practice to represent a whistleblower or a defendant accused of FCA violations. Even without representing an FCA party, every attorney should be aware the FCA exists in the event a client or potential client inquiries about conduct falling under the FCA’s scope. Many of these whistleblower cases involve health care fraud because almost every community in America has physicians, who are govern- ment contractors if they receive Medicare, Medicaid or other government payer ben- efits. From hospitals to durable medical equipment suppliers to testing laboratories to even chiropractors, health care providers must be cognizant and careful about their billings to federal programs. Besides the health care sector, federal contractors in- clude defense manufacturers, road builders, schools, grant recipients and other types of government vendors. State contractors may also be subject to the FCA if state payments are federally funded or the state has a separate state false claims act statute. For instance, a physician who defrauds the state Medicaid program by falsely billing Medicaid patients for services is subject to the FCA because Medicaid pay- ments are currently funded partially by the federal government. A state road contractor who defrauds the state on a road repair proj- ect can be subject to the FCA because states receive federal funding for interstate highway and other infrastructure projects. Unfortu- nately, Kentucky does not have a state false claims act statute allowing a whistleblower to bring a claim based on the fraudulent receipt of exclusively state funds, but Indiana and 31 other states have state-specific false claims act statutes mirroring or similar to the FCA, allowing the recovery of fraud against state taxpayer dollars. (Continued on next page) David Tachau ([email protected]) Why Use Kentucky Mediation? I’ve been litigation counsel in dozens of mediations for 25 years. I’ve appreciated mediators who were tenacious, patient, creative – and who understood the pressures I faced as counsel. I want to use this experience to make your mediation successful. 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