In essence, government fraud refers to illegal acts that intentionally divest the government of funds through deception or scams. When the government gets swindled, taxpayers pay the price.
Government fraud is a serious crime, and is generally pursued to the fullest extent of the law. In fact, in many government fraud cases, both criminal and civil charges are brought against the defendant. Whistleblowers, also called qui tam relators, are often the first to report government fraud; they then share in the awards of the case.
Types of Government Fraud
Fraud against the government can take multiple forms. Among the most significant are procurement fraud, false claims, and Medicare/Medicaid fraud.
Procurement and Contractor Fraud
Procurement and contractor fraud are two of the most costly types of government fraud. An example of procurement fraud is a company using bribes to win a contract even when it did not make the lowest or best bid. Other examples of contractor fraud include billing the government for incomplete work, inflating the cost of labor or supplies, and issuing kickbacks. Under the Federal False Claims Act, which was revamped in 1986, both criminal and civil charges can be brought against contractors who are accused of procurement fraud.
False Claims and False Statements
The Federal False Claims Act makes it illegal to present a false claim in order to defraud the government, or to conspire to do so. False claims may pertain to Social Security, defense contracts, healthcare company fraud, or other instances in which a company or individual attempts to be paid by the government for an invalid reason. The penalties for government fraud under the False Claims Act are quite harsh. A convict must pay back three times the amount stolen in addition to a civil fine of $5,000 to $10,000.
The False Claims Act rewards qui tam relators, or whistleblowers, by allowing them to receive a share of the award for cases in which they expose government fraud. Qui tam laws also offer protections for employees who report wrongdoing by their employers. Although most qui tam cases are in the areas of government healthcare or defense fraud, any type of government fraud can be brought to light by a whistleblower.
Some of the largest government fraud lawsuits have dealt with government healthcare fraud. Medicare and Medicaid fraud occur when healthcare companies overestimate clinical costs, ask for reimbursement for lab tests or procedures that were never performed, or otherwise attempt to defraud the government. Whistleblowers are often the ones to report Medicare fraud.