Key Takeaways
- The False Claims Act lets the government recover up to three times its losses, plus penalties, from anyone who knowingly submits false claims for federal money.
- Private whistleblowers, called relators, can file qui tam suits on the government's behalf and may receive 15 to 30 percent of what is recovered.
- The Act protects whistleblowers from workplace retaliation, so a strong internal compliance and reporting program is a company's best defense.
Trillions of dollars in federal pandemic relief went out quickly. Who makes sure it went where it was supposed to, and what happens to companies that took money they should not have?
In this TalksOnLaw Brief, Marisa Darden, a former state and federal prosecutor who now chairs the White Collar, Government Investigations & Regulatory Compliance practice at Benesch, explains the False Claims Act, the whistleblower provisions that power it, and how companies receiving CARES Act funds can protect themselves.
What the False Claims Act Covers
Darden explains that the False Claims Act has been used by the government for more than 150 years to recover losses caused by fraud against it. It is most common in health care, but it reaches any sector where public funds are distributed or used: Medicare and Medicaid programs, hospitals, public-private partnerships, and organizations that take federal grants or loans, including CARES Act money. Coronavirus-related concerns she flags include deficient or substandard personal protective equipment, electronic health records and patient information, and investigations into patient care, management of systems and funds, and research.
Knowledge and Damages
She emphasizes that the government does not have to prove that a company or its executives actually knew a fraud was being committed; recklessly disregarding the signs can be enough. Under the statute, acting knowingly includes actual knowledge, deliberate ignorance, and reckless disregard, and no specific intent to defraud is required. Damages can be steep, often triple the amount the government lost.
Whistleblowers and Qui Tam
The qui tam provisions let a whistleblower, or relator, who learns of alleged wrongdoing file a complaint on the government's behalf. The government then tells the court whether it will pursue the case or decline. To keep incentives high, a relator can recover roughly 15 to 25 percent of the money recovered, which can mean millions of dollars. Just as important, the statute protects whistleblowers from retaliation, discrimination, and harassment at work. She notes that the Justice Department recovered about $2.5 billion from the health care industry in a single year through qui tam cases.
Her advice for companies: leadership that models open communication and compliance; document, document, document; and an internal culture where people feel comfortable reporting concerns first, so problems can be fixed before the government intervenes.
What to Know Now
Pandemic fraud enforcement became a lasting priority. In 2022 Congress extended the statute of limitations for fraud involving Paycheck Protection Program and Economic Injury Disaster Loan funds to ten years, and the Justice Department reported more than $230 million from over 200 pandemic-fraud settlements in fiscal year 2025, when total False Claims Act recoveries reached a record of more than $6.8 billion. The Supreme Court has refined the law. In United States ex rel. Schutte v. SuperValu (2023), it held that scienter turns on what the defendant actually knew and believed. In Polansky v. Executive Health Resources (2023), it confirmed the government may seek dismissal of a qui tam suit even after declining to intervene. A Florida district court held the qui tam provisions unconstitutional in the Zafirov case in 2024; in 2026 the Eleventh Circuit rejected that Appointments Clause holding, joining other circuits, while leaving other arguments for remand. When the government declines and the relator proceeds alone, the share can reach 30 percent.
