False claims laws are designed to prevent fraud against government programs by allowing the government – and sometimes private individuals – to take legal action against those who submit fraudulent claims for payment. In Chicago, Illinois, and at the federal level, false claims laws provide strong enforcement mechanisms, including financial penalties for violators and rewards for whistleblowers who expose fraud.
What Are False Claims Laws?
False claims laws prohibit individuals or businesses from knowingly submitting fraudulent claims for government funds. These laws are often used to combat fraud in government contracts, healthcare programs like Medicaid and Medicare, and other taxpayer-funded services.
Federal False Claims Act (FCA)
The Federal False Claims Act (31 U.S.C. § 3729-3733) is the primary law used to fight fraud against the U.S. government. It allows whistleblowers (also called relators) to file lawsuits on behalf of the government under the qui tam provision and receive a portion of any recovered funds.
Common violations under the FCA include:
- Overbilling or charging for services not provided in Medicare or Medicaid
- Selling defective products to the military or government agencies
- Falsifying research data to obtain federal grants
- Misrepresenting compliance with government contract requirements
Penalties:
Violators of the federal False Claims Act may be liable for:
- Treble damages (three times the amount of the fraud)
- Civil penalties of up to $27,018 per false claim
- Exclusion from future government contracts
Example:
A pharmaceutical company falsely bills Medicare for prescriptions that were never provided. A former employee reports the fraud under the qui tam provision, leading to a federal investigation. The company is fined millions, and the whistleblower receives 15–30% of the recovered amount.
Illinois False Claims Act (740 ILCS 175/)
The Illinois False Claims Act mirrors the federal FCA but applies to fraud against state and local government programs in Illinois. It includes the same qui tam provisions, allowing whistleblowers to file lawsuits on behalf of the state.
Common violations under the Illinois FCA include:
- Overbilling Medicaid for unnecessary procedures
- Fraud in public construction contracts
- Misuse of state grant funds
Penalties:
- Treble damages
- Fines of up to $11,000 per false claim
- Whistleblower rewards of 15-30% of the recovered funds
Example:
A contractor inflates costs on a public school renovation project funded by the state. An accountant inside the company notices the fraud and files a claim under the Illinois False Claims Act. The contractor is required to repay the state triple the overbilled amount, and the whistleblower receives 20% of the recovered funds.
Chicago False Claims Ordinance (MCC § 1-22-010)
Chicago also has its own False Claims Ordinance, which applies to fraudulent claims for city funds, contracts, and services. Like the state and federal laws, it allows whistleblowers to bring qui tam actions against those who defraud the city government.
Common violations under the Chicago False Claims Ordinance include:
- Fraud in city contracts for public works
- False claims related to affordable housing subsidies
- Fraudulent applications for business grants funded by the city
Penalties:
- Treble damages
- Fines of up to $2,000 per violation
- Whistleblower awards based on the recovered amount
Example:
A real estate developer falsely claims affordable housing tax credits from the city while renting units at market rates. A former employee exposes the fraud, leading to an investigation. The developer is fined and ordered to return funds, with the whistleblower receiving a share of the recovered money.
How Whistleblowers Can Take Action
If you suspect someone is defrauding the government, you may be able to file a False Claims Act lawsuit. Whistleblowers play a critical role in exposing fraud and recovering taxpayer dollars, but filing a claim can be complex.
Steps to take:
- Gather evidence – Keep records of fraudulent transactions, emails, or internal reports.
- Consult an attorney – False Claims Act cases require legal expertise to ensure proper filing.
- File under the qui tam provision – You may be eligible for a reward of up to 30% of the recovered funds.
- Remain protected – The law includes whistleblower retaliation protections, preventing employers from firing or punishing employees who report fraud.
Get Legal Help for False Claims Cases
If you have evidence of fraud against the government, you may have a strong legal claim under federal, Illinois, or Chicago false claims laws. Whistleblowers can recover millions of dollars in damages while protecting public funds.
Justice Legal Counsel represents individuals in False Claims Act cases and whistleblower retaliation claims. Contact us today for a consultation.