language: Deutsch   Français   italiano   Español   Português   日本語   russian   arabic   norwegian   swedish   danish   Nederlands   finland   ireland   English  

Deadline of August 2019 set for PPI complaints by FCA | This is Money complaint definition fca

Deadline set for PPI complaints: 'Victims' must act by August 2019 as curtain comes down on UK's biggest mis-selling scandal

Customers have until August 2019 to complain about historic mis-sold PPI  PPI mis-selling scandal has seen banks pay back billions Number of complaints and payouts relating to PPI starting to slow 

e-mail 21 shares

13

View
comments

Deadline: People will have until August 2019 to complain about mis-sold PPI

The final deadline for making a complaint about mis-sold payment protection insurance will be 29 August 2019, the Financial Conduct Authority has announced this morning.

The PPI scandal, which has resulted in Britain's biggest banks compensating customers with tens of billions of pounds, has seen a slowdown in complaints in recent years.

To encourage people to decide whether to act about PPI before the deadline, the FCA will run a two-year campaign which will be launched in the summer.

It is estimated that more than £40billion of PPI policies, which tacked on insurance to a loan product, were sold between 1990 and 2010 – and a large chunk of this is believed to have been mis-sold.

The majority of complaints to the Financial Ombudsman Service has been related to PPI since the scandal came to light.

In the year ending March 2016, the FOS received 188,712 fresh cases, making 56 per cent of its workload.

This has slowed somewhat from the highs seen in the 12 months to March 2013 and 2014 – in those years, there were 399,393 and 378,699 cases respectively, making up nearly 80 per cent of all complaints received at FOS.

Meanwhile FCA data shows there was £213.1million in redress paid out in December 2016 – this is the lowest figure since July 2011.

RELATED ARTICLES

Previous 1 Next How to reclaim your mis-sold payment protection insurance... Lloyds Banking Group in best shape since financial crisis as...

Share this article

Share

HOW THIS IS MONEY CAN HELP

LETTER TEMPLATE FOR MIS-SOLD PPI: Use these to make your own PPI claim

Andrew Bailey, chief executive of the FCA said: 'Putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off.

'We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint.

'We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers.'

The FCA launched a consultation looking at setting a deadline back in November 2015. The city watchdog said then it was likely to be set for 2018.

PPI was sold to borrowers alongside credit products. It was meant to help repay some or all of their borrowing if they lost their income for a period (if, for example, they had an accident, became unemployed or sick, or died).

The FCA says the most commonly sold types of PPI were single premium policies on unsecured loans (around 48 per cent of all PPI policies sold), credit card PPI (36 per cent), and regular premium policies on loans or mortgages (15 per cent).

Lloyds has been worse hit by PPI mis-selling claims, forking out more than £10billion in redress. It has also cost Barclays, HSBC and RBS billions.

Vickie Sheriff, director of campaigns and communications at consumer group Which?, said:

'It's been clear for years that the banks should be working much harder to resolve PPI claims fairly. 

'The current process has been wholly inadequate and driven too many consumers to use claims management companies. 

'Now the regulator has confirmed a deadline for the victims of this mis-selling scandal to make a claim, it must ensure that banks are doing much more to help customers get back the money they are owed.' 

The FCA has also revealed that some customers have new grounds to complain if they were not told about commission being paid when they were sold PPI.

It follows a Supreme Court judgment in November 2014 - known as the Plevin decision - which extended the definition of mis-selling.

The court agreed the company's failure to tell its client that it was receiving a large commission for the sale was unfair.

As a result, the city watchdog has decided redress will be calculated if more than 50 per cent commission was paid.

Anyone who had complaints rejected will receive a letter explaining that they might have new grounds for a claim.

The FCA says that consumers who are unhappy about PPI should continue to complain to the firms concerned and to the Financial Ombudsman Service if they are not satisfied with the response.

Complaints about PPI policies sold after 29 August 2017 are not subject to the deadline.

Many claims management firms will offer to make the claim on your behalf – but you can do it yourself without having to pay hefty commission. 

Read our guide here: Letter templates for mis-sold PPI

#fiveDealsWidget .dealItemTitle#mobile {display:none} #fiveDealsWidget {display:block; float:left; clear:both; max-width:636px; margin:0; padding:0; line-height:120%; font-size:12px} #fiveDealsWidget div, #fiveDealsWidget a {margin:0; padding:0; line-height:120%; text-decoration: none; font-family:Arial, Helvetica ,sans-serif} #fiveDealsWidget .widgetTitleBox {display:block; float:left; width:100%; background-color:#B11B16; } #fiveDealsWidget .widgetTitle {color:#fff; text-transform: uppercase; font-size:18px; font-weight:bold; margin:6px 10px 4px 10px; } #fiveDealsWidget a.dealItem {float:left; display:block; width:124px; margin-right:4px; margin-top:5px; background-color: #e3e3e3; min-height:200px;} #fiveDealsWidget a.dealItem#last {margin-right:0} #fiveDealsWidget .dealItemTitle {display:block; margin:10px 5px; color:#000; font-weight:bold} #fiveDealsWidget .dealItemImage, #fiveDealsWidget .dealItemImage img {float:left; display:block; margin:0; padding:0} #fiveDealsWidget .dealItemImage {border:1px solid #ccc} #fiveDealsWidget .dealItemImage img {width:100%; height:auto} #fiveDealsWidget .dealItemdesc {float:left; display:block; color:#e22953; font-weight:bold; margin:5px;} #fiveDealsWidget .dealItemRate {float:left; display:block; color:#000; margin:5px} #fiveDealsWidget .dealFooter {display:block; float:left; width:100%; margin-top:5px; background-color:#e3e3e3 } #fiveDealsWidget .footerText {font-size:10px; margin:10px 10px 10px 10px;} @media (max-width: 635px) { #fiveDealsWidget a.dealItem {width:19%; margin-right:1%} #fiveDealsWidget a.dealItem#last {width:20%} } @media (max-width: 560px) { #fiveDealsWidget #desktop {display:none} #fiveDealsWidget .widgetTitleBox {background-color:#e3e3e3; } #fiveDealsWidget .widgetTitle {color:#000} #fiveDealsWidget #mobile {display:block!important} #fiveDealsWidget a.dealItem {background-color: #fff; height:auto; min-height:auto} #fiveDealsWidget a.dealItem {border-bottom:1px solid #ececec; margin-bottom:5px; padding-bottom:10px} #fiveDealsWidget a.dealItem#last {border-bottom:0px solid #ececec; margin-bottom:5px; padding-bottom:0px} #fiveDealsWidget a.dealItem, #fiveDealsWidget a.dealItem#last {width:100%} #fiveDealsWidget .dealItemContent, #fiveDealsWidget .dealItemImage {float:left; display:inline-block} #fiveDealsWidget .dealItemImage {width:35%; margin-right:1%} #fiveDealsWidget .dealItemContent {width:63%} #fiveDealsWidget .dealItemTitle {margin: 0px 5px 5px; font-size:16px} #fiveDealsWidget .dealItemContent .dealItemdesc, #fiveDealsWidget .dealItemContent .dealItemRate {clear:both} } EDITOR'S DEALS OF THE WEEK Sky Movies deal Broadband deal Sky Movies & 17Mbps broadband £27.99 per month Current account Current account £130 to switch, £10 monthly cashback 3% interest on up to £1.5k Credit card Credit Card 5% cashback for 3 months, then 1.25% £25 annual fee Savings account Savings Account Easy access savings 1.2% AER variable Low cost advice Invest your pension Trusted affordable financial advice Retirement help *Rate drops to 0.8% after a year. For current account rewards and interest conditions may apply eg. using provider's full switching service, min deposits and direct debits. For savings, access maybe limited, min/max deposits may apply. See T&Cs. Representative example: If you spend £1,200 at a purchase interest rate of 18.95% p.a. (variable) your representative rate will be 18.9% APR (variable).

 

Share or comment on this article e-mail 21 shares Most watched Money videos Award winning 412GW Next Base dash cam records in 1440p resolution SEAT's new smart car featuring protection against drunk driving Behind the scenes at Argos as it gears up for Black Friday mayhem HSBC UK takes first step into Open Banking with HSBC Beta Life hack: Save money by installing foil behind your radiators How to invest a pension pot in retirement Key points from Philip Hammond's Budget speech Brexit a waste of time and energy, European Parliament co-ordinator claims Big Money Questions: What is an Isa and how do you pick one? F1 driver Max Verstappen takes on the 2018 Aston Martin Vantage Ray Massey test drives the new £350K Rolls-Royce Phantom How to invest like Warren Buffett in the UK Households face 'lost decade' of falling living standards... Harrods to get the biggest facelift in its history in a... Britain's debt sinkhole: Why Hammond's budget will make... All Bar One owner Mitchells & Butlers sees shares slip as... Mothercare's share price crashes after slumping to £16.8m... MARKET REPORT: Pub chain Mitchells & Butlers blames... More than 650,000 investors hit as British Gas owner's... Aston Martin accelerates to record profits as car sales... Chancellor slammed by Argos boss for 'tinkering around... DAILY BRIEFING: Trump is likely to only last one term,... Former chiefs of failed UK tech darling 'owe... Project Tuna! High risk trading firm plan to lure... Unilever starts hunt to replace long-serving boss Paul... The £2.3bn meerkat! Compare the Market calls off London... IN THE MONEY: Thomas Cook boss Peter Fankhauser took home... CITY DIARY: HSBC's global banking boss Matthew Westerman... Thames Water drops the Cayman Islands: New chairman... Executive chairman of specialist lender Provident...

MOST READ MONEY

Previous Next ● ● ● ● Comments 13

Share what you think

Newest Oldest Best rated Worst rated   View all

The comments below have not been moderated.

  View all

The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.

Add your comment Enter your comment Post comment to your Facebook Timeline What's This?

By posting your comment you agree to our house rules .

Close

 

No Yes Close

We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook.


You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy .

More top stories Portfolio Newsletter Guides Savings rates Deals Calculators THIS IS MONEY PODCAST   What will be in the Budget... and what should be? Listen to the This is Money podcast Best buy savings tables   Cash Isa rates   Instant access rates   Fixed-rate bonds   Monthly income rates   Phone/postal accounts   Junior Isas and children's accounts   National Savings & Investments   MORE... QUICK WAYS TO SAVE MONEY Credit cards Cheaper insurance Savings accounts Best mortgages Cut your energy bills Current accounts Cheapest loans £12.50 share dealing a.fbpuffbutton { height: 40px; width: 308px; background-image: url("http://i.dailymail.co.uk/i/furniture/articles/like-follow-308.png"); display: block; color: white; background-position: 0px 0px; }     DON'T MISS How will the Budget cut your tax bill? Those on £50,000 a year will get a £236 tax cut , while those on £30,000 save £101 The British business making leather jackets for Batman, Superman and Thor Matchless boss on kickstarting a dormant brand Pension savers dodge a Budget hit as Chancellor resists cuts to tax relief Safe for now... Shamed: The firms that charge you up to 3% to pay by credit card Rip-off continues How the super rich in London can pay LESS council tax than a family in Wiltshire We reveal the baffling quirks Five years after we told about David's mis-sold annuity, Prudential has finally paid up Victory! Should I take my delayed state pension as lump sum or a bigger income? ASK TONY: We go behind the scenes at Argos as it gears up for Black Friday mayhem Lee Boyce inside the retail machine UK manufacturers in highest demand for 30 years thanks to climb in exports But prices keep rising, CBI said. Seven in ten teenagers believe they will NEVER be able to buy a home as prices continue to rise The funds that invest in the new wave of digital payments How to profit from the rise of cashless shopping. We expect banks to pass on the interest rate rise to savers, Bank of England says... - but we cannot force them to, says policymaker. Home buyers in London pay three times their annual income tax bill in stamp duty just to move home Property and inheritance taxes to hand Hammond more than £160bn over the next five years How the Government plans to cash in on homes. Say hello to the new Aston Martin Vantage - the car that the James Bond movie bosses wanted 007's most recent ride to look like What is an Isa? We explain what they do, how to pick the best one for you... - and how they can make you richer.     DON'T MISS... Our savings picks This is Money's five favourite best buy cash Isas for 2017 Will the Budget help savers, investors and pensions... or stage a tax grab on them? Here's what could happen What is an Isa? We explain what they do, how to pick the best one for you and how they can make you richer Will this make it easier to buy and spend cryptocurrencies such as bitcoin and ethereum? London Block Exchange launches with a debit card 'Where's our £275k gone?!' Frantic couple's cash goes missing for ten days after they transfer it to buy a house in Cornwall - until we step in Is your bank playing fair on savings? Most fail to pass on the full 0.25% base-rate rise to their customers Are naive bank staff making it EASIER for fraudsters? Sophie lost £7,300 to eBay car con despite seeking advice The crypto currency revolution! Is it a passing craze or the next big thing for investors? Will 'open banking' be an open door to fraudsters? Fears mount that freeing up your data will help the conmen Why would anyone want NatWest's pitiful 0.01% Instant Saver rate? SIMON LAMBERT asks the bank to explain... NS&I to BOOST rates by full 0.25% on savings and Isa accounts While Premium Bonds odds will shorten with a bigger pot on offer to 21m savers Revealed Banks' plan to stop fraudsters vanishing into the ether with your cash Fight back against the £4M-a-day interest rate betrayal... That's what banks pocket by failing to pass on the rise to savers How TSB's current account can earn you £255 in a year Bank now offers sign up bonus plus other perks, but should you up sticks? Half of you say hike in interest rates to 0.5% is good news But expert warns that link between savings deals and base rate is 'severed' I've got five WWF 50p coins that I've saved from my change Are they really worth much more? Looking for a better bank? This is Money's five of the best current accounts Latest from Saving & banking The Budget with ZERO mentions for savers: Hammond fails to offer any cheer - and the Isa limit won't rise Savers switch to easy-access accounts as a staggering £13bn floods out of fixed-rate bonds in just one year Ditching your bank? Watch out for traps as attractive savings deals vanish off the back of base rate increase We expect banks to pass on the interest rate rise to savers, Bank of England says – but we cannot force them to… Will this make it easier to buy and spend cryptocurrencies such as bitcoin and ethereum? London Block Exchange launches with a debit card Looking for a better bank? This is Money's five of the best current accounts We are sorry for PIN bungle, says Barclays: Customers hit by fraudsters after bank mistakenly sent them at the same time as new cards Is your bank playing fair on savings? Most fail to pass on the full 0.25% base-rate rise to their customers Premium Bond holders have a better chance of wining as odds are shortened to 24,500 to 1 'Where's our £275k gone?' Frantic couple's cash goes missing for ten days after transfer to buy a house in Cornwall - until we step in     Inside saving & banking Our pick of the best ISAs
Everything you need to know Best savings rates
Our unique best buys tables Savings accounts finder
Browse the market, apply online Current accounts finder
Check the latest offers     DON'T MISS How will the Budget cut your tax bill? Those on £50,000 a year will get a £236 tax cut , while those on £30,000 save £101 The British business making leather jackets for Batman, Superman and Thor Matchless boss on kickstarting a dormant brand Pension savers dodge a Budget hit as Chancellor resists cuts to tax relief Safe for now... Shamed: The firms that charge you up to 3% to pay by credit card Rip-off continues How the super rich in London can pay LESS council tax than a family in Wiltshire We reveal the baffling quirks Five years after we told about David's mis-sold annuity, Prudential has finally paid up Victory! Should I take my delayed state pension as lump sum or a bigger income? ASK TONY: We go behind the scenes at Argos as it gears up for Black Friday mayhem Lee Boyce inside the retail machine UK manufacturers in highest demand for 30 years thanks to climb in exports But prices keep rising, CBI said. Seven in ten teenagers believe they will NEVER be able to buy a home as prices continue to rise The funds that invest in the new wave of digital payments How to profit from the rise of cashless shopping. We expect banks to pass on the interest rate rise to savers, Bank of England says... - but we cannot force them to, says policymaker. Home buyers in London pay three times their annual income tax bill in stamp duty just to move home Property and inheritance taxes to hand Hammond more than £160bn over the next five years How the Government plans to cash in on homes. Say hello to the new Aston Martin Vantage - the car that the James Bond movie bosses wanted 007's most recent ride to look like What is an Isa? We explain what they do, how to pick the best one for you... - and how they can make you richer. Premium Bonds winners November 2017 Prize value Winning bond No. Area £1,000,000 235XY200329 Cambridgeshire £1,000,000 211HV345974 Edinburgh £100,000 198EC563509 Northamptonshire £100,000 190PX535493 Essex £100,000 143VH210000 Essex £50,000 283XZ475986 Manchester £50,000 266RE374700 Inner London £50,000 256ZV188814 Bedfordshire £50,000 218XH060858 Hereford and Worcester £50,000 199XP768208 Norfolk £25,000 48YX923215 Wiltshire More Premium Bonds winners     More must reads... 'Momentous day in the history of the cheque' Now cheques will clear in just one day thanks to new image system Big five get behind our campaign to pay back fraud victims They call on the Government to unlock £130m in frozen accounts for compensation 'I lost £109k in Santander smishing scam - and the bank DID refund' Three key steps to stop you falling victim to fraud at the bank I have bitcoin worth £4million that I bought five years ago for £5,000 Will I have to pay tax if I sell? Coventry BS launch three-year Poppy Bond and cash Isa paying 2% And donates another 0.15% to the Royal British Legion Does Nationwide now offer the best current account? Building society attracts four times as many switchers as its nearest rival A call claiming to be from BT to fix my phone and then £8k was gone from my account The lives ruined by oh-so plausible calls from fraudsters Pay back bank fraud victims There's £130m in frozen accounts once used by fraudsters and a simple change in the law could pay it to victims Two of Britain's biggest savings providers cut rates to the bone Lloyds and Halifax easy-access accounts now pay just 0.05% Current account battle hots up Now get £250 for switching to Clydesdale and Yorkshire Banks or B Are Pensioner Bonds really back? The one-year bond with a familiar name paying 4.24% - but it's not official and your money is at risk Six steps to stop the inflation monster eating your money From saving to investing and your mortgage, how to get richer even as prices rise Revealed The 'ludicrously generous' and little-known credit card that's the best to reward big ticket purchases Dial 555 for bank fraud Police plan new hotline modelled on 999 emergency number for victims to call if they fear they have been scammed Money that's worth more than face value Do you know what these coins and banknotes are actually worth? Take our quiz... Why fingerprints can never replace bank passwords High-tech logins fail as your skin fades with age Victory for Paul Hardcastle and This is Money Santander donates missing £3k to charity after 1980s pop star threatens to set bailiffs on the bank One of Britain's best surviving savings accounts gets the chop Thousands of loyal Yorkshire BS savers to see 3.55% rate slashed Open Banking rules mean banks can share YOUR data Here's how to OPT OUT and keep your money safe online The smaller banks rescuing savers Top savings rates nudge higher as challengers leap frog bigger rivals The new tenner that sold for £7,200! Jane Austen £10 note smashes its estimate at Bank of England auction How to be a successful investor Get your free guide to investing written by This is Money Three simple steps to switch your current account to a better deal Checking whether you can get a better current account is a wise move - we explain how to do it SAVE SAFELY: We explain the rules on savings compensation, updated as they change, and how to keep your money safe SAVINGS COMPENSATION & PROTECTION: A comprehensive list of bank ownership and licences Money Markets Saving & banking Investing Bills Cars Holidays Cards & loans Pensions Mortgages & home Experts Buy-to-let Sitemap Archive Video Archive Topics Index Mobile Apps Screensaver RSS Text-based site Reade kezbtapo. complaintr Prints Our Papers Top of page Daily Mail Mail on Sunday This is Money Metro Jobsite Mail Travel Zoopla.co.uk Prime Location

This is Money is part of the Daily Mail , Mail on Sunday & Metro media group

© Associated Newspapers Ltd Contact us How to complain Advertise with us Contributors Terms Discount Codes Privacy policy & cookies      
complaint definition fca

complaint letter template
complaint letter restaurant
moncler jacket mens ebay
mens moncler acorus down jacket black
outlet moncler online recensioni Complaint Handling changes: what you need to know before 30 June 2016 Share Tweet

From 30 June, the Financial Conduct Authority (FCA) is introducing new rules for handling informal complaints. This could affect the way you work. There are also some changes to the FCA reporting rules; these take effect on 1 July. Here, we provide a simple guide to these new rules:

What is the FCA changing about the way informal complaints are handled?

The FCA has extended the timeframe for handling informal complaints. Instead of being required to resolve the complaint by close of play on the next business day following receipt, you will now have until close of play on the third day following receipt to accept or reject the customer's dispute.

The introduction of Summary Resolution Communication

After resolving an informal complaint by close of play on the third business day following receipt, you will need to send the customer a 'summary resolution communication'. This will tell the customer how they can escalate their complaint internally and include details of the Financial Ombudsman Service.

Where a complaint cannot be resolved informally, within the new timescale, your standard escalation procedures should still apply.

Changes to reporting requirements

The FCA has also made some significant changes to their reporting requirements, which includes:

The need to include informal complaints data A breakdown of complaints by product A sub-set of compalint categories within the existing FCA categories

RSA's responsibility

Unless RSA has specifically delegated its authority for complaints handling to you (including informal), RSA will continue to be responsible for the handling, logging and reporting of all complaints, about its regulated activity.

Where we identify a complaint that is a matter for you, as the intermediary, we shall pass this on immediately upon identification.

What you need to do

Unless RSA has specifically delegated its complaints handling authority to you (including informal), it will remain your responsibility to pass complaints relating to RSA's regulated activity, to RSA, immediately upon identification, in accordance with existing business procedures.

For complaints that fall within your responsibility, as intermediary, you should retain, log, handle and report them, in accordance with the FCA rules.

Contract changes

In most circumstances it won't be necessary to make changes to contracts. This is because the existing requirements and processes for passing complaints back to RSA already exist.

Delegated Complaint Handling

Where we have delegated our formal and/or informal complaints handling authority to you, we will be providing you with more detail about the changes and how this impacts upon your responsibilities.

Any required changes to the MI you provide, and any amendments to your Delegated Complaints Handling Agreement, will be discussed with you directly.

Questions or queries

If you have any questions, please raise them with your usual RSA contact.

 

Back to news...



A Brief Introduction to The Federal Civil False Claims Act

I. WHY IS FAMILIARITY WITH THE FALSE CLAIMS ACT SO IMPORTANT?

The False Claims Act (FCA), 31 U.S.C. Sections 3729-3733, has become the primary enforcement mechanism employed by the government in to combat healthcare fraud, defense industry contractor fraud, and fraud in any other government-funded program. The qui tam or whistleblower provisions (Section 3730) recently have assumed significant importance, especially in the healthcare area. Enhanced powers vested in the Department of Justice through the provision for Civil Investigative Demands (CIDs) are frequently employed to secure documentation and testimony prior to any complaint being served. Moreover, given the increasing incidence of compliance plans, it is essential for any compliance officer to be conversant with the general provisions of the FCA.

II. DEFENDING FALSE CLAIMS ACT/QUI TAM ACTIONS

See article titled, Some Strategies for Defending Healthcare Fraud Qui Tam Cases .

III. SECTION 3729: WHAT ARE "FALSE CLAIMS" UNDER THE FCA?

Section 3729 is the core provision of the FCA. It defines false claims liability, establishes the Act's scienter requirement, defines "claims," and contains a voluntary disclosure provision. A. Liability The Act provides: Liability: Any person who -- a. "knowingly" presents, or causes to be presented to the United States a false or fraudulent claim for payment or approval (Section 3729(a)(1)) or b. "knowingly" makes, uses, or causes to be made or used a false record or statement to get a false or fraudulent claim paid or approved (Section 3729(a)(2)) or c. conspires to defraud the government by getting a false or fraudulent claim allowed or paid (Section 3729(a)(3)) or d. "knowingly" makes, uses or causes to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the United States (Section 3729(a)(7)) [the so-called "reverse false claim"] is liable for treble damages and penalties of $5,000-$10,000 for each false claim submitted, unless the person satisfies the "volunteer" provisions of the Act, in which case damages may be assessed at not less than double (Section 3729(a)(7)(A)-(C)).

There are four principal types of false claims that the FCA seeks to foreclose. First, one may submit a claim to the government which, on its face, contains false or fraudulent information--the "classic" false claim. This is addressed in Section 3729(a)(1).

An example would be billing Medicare for having provided laboratory tests which were never actually performed. Second, one may utilize a false document in order to get a false or fraudulent claim paid or approved. For example, if a defense contractor submits a written certification declaring that certain tests were performed on equipment manufactured for the Army, but in fact those tests were never performed, and the certification is relied upon as part of the payment process, then a violation of Section 3729(a)(2) has occurred.

Frequently, counsel not familiar with the FCA will mix-up the two sections. The distinction between Sections 3729(a)(1) and (a)(2) of the FCA is well illustrated by Jana v. United States, 34 Fed. Cl. 447 (1995). There, the government's counterclaim alleged that false progress payments had been submitted "substantiated by individual daily time cards" that were fraudulent. Id. at 448. The time cards were actionable under Section (a)(2). "The difference between Section 3729 (a)(1) and Section 3729(a)(2) is that the former imposes liability for presenting a false claim, while the latter imposes liability for using a false record or statement to get a false claim paid." Id. at 449. Third, the FCA addresses conspiracies to engage in any of the acts forbidden by the Act in Section 3729(a)(3).

Finally, Section 3729(a)(7), contains the so-called "reverse false claim" provision. The basic purpose of this provision is to address situations where an individual or entity has already received funds or material from the government which ought to be returned. An example would be a situation where a government contractor falsely accounts for the value of government property in its possession, to avoid having to compensate the government. See, e.g., United States v. PEMCOAEROPLEX, INC., 195 F.3d 1234 (11th Cir. 1999).

Penalty Provisions

Section 3729(a) contains the awesome penalty provisions of the FCA. As a starter, the government is entitled to three times the amount of its loss (also known as "single damages"). However, the more severe penalty provision is that which addresses penalties: between $5,000 and $10,000 for each false claim submitted and/or false document used to get a false claim approved for payment. In the healthcare fraud area, it should be noted that the civil penalties apply to each request to the Department of Health and Human Services for reimbursement, causing a defendant's potential exposure to mount very quickly.

As a result, for every 100 false claims a government contractor or healthcare provider submits, it can face liability of one million dollars or more in penalties alone. Because of the large number of claims generated by healthcare providers, the penalty provisions of the Act play a more important role in defining total provider liability than does the treble damages provision. Generally speaking, for defense contractors, the opposite is true--the damages provision is predominant.

Voluntary Disclosure Provision

It is frequently overlooked that the FCA contains its own voluntary disclosure provision at Section 3729(a)(7)(A)-(C). Please note that all three provisions therein specified must be satisfied -- an extremely difficult undertaking when negotiating with the Department of Justice.

Compliance officers, in particular, should become conversant with this provision which can result in some substantial benefit if properly invoked. Most importantly, in recognition of cooperation with the government, a court may assess "not less than 2 times the amount of damages which the Government sustains because of the act of the person." Notice that this language suggests that no penalties will be assessed. In actuality, this section is never applied by courts; its real significance is in negotiations with DOJ where it can afford an effective argument for reducing ambitious government damage demands.

Definition of "Knowing" (Section 3729(b))

In 1986, the False Claims Act was substantially amended to improve and enhance the government's ability to recover federal funds lost through fraud. One important change was the clarified definition of "knowing" found at Section 3729(b). The amended Act now mandates that a person (including any healthcare provider or contractor) can be held liable if it submits or causes to be submitted3 a false or fraudulent claim or a false statement in support of a claim: a. with actual knowledge that it is false (Section 3729(b)(1)); b. in deliberate ignorance of the truth or falsity of the information (Section 3729(b)(2)); c. or in reckless disregard of the truth or falsity of the information (Section 3729(b)(3)).

Moreover, Congress clarified that no proof of specific intent to defraud is required. (Section 3729(b)(3)). One of the most grievous mistakes counsel unfamiliar with the FCA make is to equate the scienter requirement of the FCA with criminal fraud statutes. Not only does the statute state on its face "no specific intent" is necessary, it offers three varying definitions of "knowing" which do determine the scienter requirement.

The first definition, actual knowledge (Section 3729(b)(1)), is entirely straightforward. If a false claim is submitted, or a false or fraudulent document submitted, and the submission is from a person who knows the document or claim is false or fraudulent, then a knowing submission has occurred. The next two definitions are somewhat more illusive. A good illustration of acting in deliberate ignorance of the truth or falsity of information (Section b(2)) is found where, for example, a physician practice does not properly supervise or train its billing staff, so that inappropriate claims are submitted.

The practice cannot avoid liability by asserting that it relied upon the billers if it could have exercised appropriate supervision over them; the same is true of independent billing companies. This provision is sometimes said to deal with the "ostrich with its head in the sand" problem.

Put simply, you cannot look the other way and thereby avoid FCA liability. The third definition, acting in "reckless disregard" is very difficult to assess. Probably, this provision relates to negligence of a very high category. An example might be utilizing a computer billing program for Medicare billing that has not been updated for five years to see, nonetheless, how many claims would be paid. The important point to bear in mind is that nobody quite knows what the second and third categories of "knowing" mean and how a court would interpret these provisions.

Therefore, compliance officers, in particular, should act upon the assumption that careless or mistaken claims can serve as the basis for an FCA prosecution.

What is a "Claim" under the FCA (Section 3729(c))?

It is important remember that the definition of "claim" is broadly specified in the act: any request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is required or demanded, or if the Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded [emphasis added]. Therefore, false claims or fraudulent documents do not have to be submitted to the government directly; the provision covers virtually anything of value, and the Act follows the flow of government money or property. The safest rule of thumb is that if the money or property at issue originated with the government, the FCA will reach it.

IV. THE QUI TAM OR WHISTLEBLOWER PROVISIONS OF THE FCA

In 1986 the qui tam, or private citizen suit provisions of the False Claims Act (found at 31 U.S.C. Section 3730), was substantially strengthened and liberalized to provide greater incentives for private individuals (designated as "relators") to come forward and report fraud against the government. Any violation of the Act may be brought by a private person in the name of the United States--the cases are captioned U.S. ex rel. [relator] v. Defendant--on behalf of the government as a qui tam action. Particularly in the healthcare area, qui tam actions alleging fraud increasingly are becoming the predominant source of the government's actions under the Act.

The key provisions of Section 3730 are:

Section 3730(b)--Filing the Complaint

Section 3730(b)(1) states the basic authority of a relator to act on behalf of the United States. Please note that the relator cannot dismiss an action on its own; the Attorney General must consent. Section 3730(b)(2) specifies the procedures that must be followed in terms of serving the government with the qui tam complaint. Briefly, the relator files a complaint under seal, serves the Attorney General and the appropriate U.S. Attorney, and, in addition, furnishes the government with a statement of material evidence in support of the complaint's allegations of fraud. The government has an initial 60 days to investigate the allegations.

However, pursuant to Section 3730(b)(3), the Department of Justice may (and almost always does) request extensions of time. Eventually, the government must either "intervene" and litigate the case, or "decline" to do so and let the relator pursue it. Section 3730(b)(4). Once a complaint has been filed, "no person other than the government may intervene or bring a related action based on the facts underlying the pending action (the so-called "first to file" rule). Section 3730(b)(5); see U.S. ex rel. Erickson v. Am. Inst. of Biological Sciences, 716 F. Supp. 908 (E.D. Va. 1989).

Section 3730(c)--Rights of Relator and Government

This section states the respective rights of the relator and the government. The government may dismiss an action without the consent of the relator as long as the relator can contest the issue in a hearing. Section 3730(c)(2)(A). Similarly, the government may settle the action with the defendant(s) even if the relator opposes the resolution, as long as the district court affords the opportunity for a hearing on the merits of the proposed settlement. Section 3730(c)(2)(B). If the government declines participation, the relator may conduct the litigation on its own. Section 3730(b)(4)(B).

Section 3730(d)--Financial Consequences

The relator is entitled to between 15 and 30 percent of the recovery/ settlement/judgment, depending on whether the government intervenes and conducts the litigation and other factors (less than 15 percent under some circumstances). Section 3730(d)(1) & (2). However, there are some substantial statutory limitations on a relator's potential recovery. If the relator participated in the underlying actions giving rise to the claim, the relator's share may be reduced or eliminated in its entirety by the district court. Section 3730(d)(3). If the government declines participation, and the defendant is successful, it may be entitled to "reasonable attorneys' fees and expenses" pursuant to Section 3730(d)(4). See article titled, Recovering Attorney's Fees and Expenses from Unsuccessful Relators in Qui Tam Cases Pursuant to Section 3730(D)(4) of the False Claims Act.

A particularly critical section of Section 3730(d)(1) is that provision which specifies that the relator "shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant" [emphasis added]. Unlike the relator's recovery, which is deducted from the government's total recovery, the relator's expenses and costs are separately assessed against the defendant. A common mistake of inexperienced counsel is to either (a) assume that any such award is also subtracted from the settlement or judgment paid the government, or (b) assume that the issue of attorney's fees is governed by the prevailing "American rule" which usually forecloses such an award.

Consequently, no settlement agreement should be entered into with the government until the issue of how much the relator will be paid under this provision is determined. This is because awards under this provision can prove to be enormous; by contrast, defendants have maximum leverage when negotiating the underlying settlement and can utilize the government's desire to settle to restrain overly ambitious relators seeking exorbitant compensation under this provision. Otherwise, a district judge will decide what are the relator's "reasonable" expenses in a proceeding which itself can prove exceedingly expensive to defend.

Section 3730(e)--Jurisdictional Foreclosure; Public Disclosure Bar and Original Source

This section is of crucial importance to defendants in qui tam actions. This is because Section 3730(e) contains jurisdictional provisions that limit the ability of relators to institute actions. For example, Section 3730(e)(3) forecloses any action which "is based upon allegations or transactions which are the subject of a civil suit or an administrative civil monetary penalty proceeding in which the Government is already a party."

This provision is rather straightforward; not so for other components of the section. The most important jurisdictional bar relied upon by defendants to terminate qui tam litigation is found in Section 3730(e)(4)--the so-called "public disclosure bar." The reported cases construing this section run into the hundreds--stark tribute to its potent power to terminate qui tam suits in their tracks. This is because unless a relator can satisfy Section 3730(e)(4), its action is jurisdictionally barred.

An extensive analysis of this section is beyond the scope of this essay; however, every unfortunate recipient of a qui tam complaint should initially direct their counsel to this provision. The best starting point to understand this concept is the language of section (e)(4)(A) itself: No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional administrative, or Government Accounting Office report, hearing, audit or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information [emphasis added].

Simply put, if the allegations or transactions upon which the qui tam complaint is based have been publicly disclosed in judicial proceedings, in government reports or audits/investigations or in the media, a "public disclosure" has taken place. The intent of Congress here is explicit.

What is a Public Disclosure?

The qui tam provision of the FCA was enacted by Congress in an effort to financially reward individuals who come forward with information about fraud against the government. The legislative history of the FCA suggests the legislative purpose was to use the public disclosure jurisdictional bar to ensure that plaintiffs who have not significantly contributed to the exposure of the alleged fraud would not share in the bounty. United States ex rel. Devlin v. California, 84 F.3d 358, 362 (9th Cir.), cert. denied, 519 U.S. 949 (1996). The public disclosure bar and the original source exception, therefore, embody the legislative effort to strike a balance between encouraging whistleblowing and discouraging so-called parasitic suits.

In order to qualify, a plaintiff "must be a true whistleblower. [A relator] is unable to pursue the suit and collect a percentage of the recovery if the case is based upon information that has previously been public or if the claim has already been filed by another." United States ex rel. McKenzie v. Bellsouth Telecommunications, 123 F.3d 935, 939 (6th Cir. 1997) (quoting United States ex rel. Taxpayers Against Fraud v. General Elec., 41 F.3d 1032, 1035 (6th Cir. 1994)), cert. denied, 522 U.S. 1077 (1998).

Put differently, whistleblowers sound an alarm while "second toots" merely mimic allegations already exposed. Wang ex rel. United States v. FMC Corp., 975 F.2d 1412, 1419 (9th Cir. 1992) ("Qui tam suits are meant to encourage insiders privy to a fraud on the government to blow the whistle on the crime. In such a scheme, there is little point in rewarding a second toot.")

Relators must not be "opportunistic late-comers who add nothing to the exposure of the [alleged] fraud." See United States ex rel. Rabushka v. Crane Co., 40 F.3d 1509, 1511 (8th Cir. 1994) (discussing the purpose of the FCA), cert. denied, 515 U.S. 1142 (1995). An allegation of fraud has been publicly disclosed when it is in the public domain. United States ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 18 (2d Cir. 1990) (discussing the meaning of "public disclosure" in the context of the FCA). Stated differently, "potential accessibility [of the information] by those not party to the fraud [is] the touchstone of public disclosure." United States ex rel. Doe v. John Doe Corp., 960 F.2d 318, 322 (2d Cir. 1992) (citing United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1161 (3d Cir. 1991).

Additionally, where the allegations are not just potentially accessible to the public but were actually divulged to "strangers to the fraud," the requirements of a public disclosure have been met. United States ex rel. Doe v. John Doe Corp., 960 F.2d at 322. When a relator's complaint "merely echoes publicly disclosed, allegedly fraudulent transactions that already enable the government to adequately investigate the case and to make a decision whether to prosecute, the public disclosure bar applies." United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 688 (D.C. Cir.), cert. denied, 118 S. Ct. 172 (1997).

In fact, the jurisdictional bar may apply even if the public disclosure and the qui tam complaint are not identical. Some courts have held that the public disclosure need only raise an inference of fraud. See United States ex rel. Springfield Terminal, 14 F.3d at 654. Other courts have required that the publicly disclosed allegations or transactions "encompass the essential element of the fraud alleged." United States ex rel. Rabushka, 40 F.3d at 1514 . Clearly, though, where the qui tam plaintiff's complaint mirrors or "substantially repeat[s] what the public already knows," the jurisdictional bar is triggered. See United States ex rel. Findley, 105 F.3d at 687. A qui tam plaintiff's complaint is "based upon" a public disclosure if it merely repeats what the public already knows via the public disclosure. See United States ex rel. Biddle v. Board of Trustees of the Leland Stanford, Jr. Univ., 161 F.3d 533, 537-40 (9th Cir. 1998), cert. denied, 119 S. Ct. 1457 (1999); see also United States ex rel. Findley, 105 F.3d at 683 (finding that the purpose and legislative history of the FCA support a construction of "based upon" as requiring only that the qui tam plaintiff's allegation parrot information in the public domain.) A complaint is "based upon" a public disclosure even if the qui tam plaintiff did not derive his knowledge of the alleged fraud from the public disclosure. See United States ex rel. Precision Co. v. Koch Indus., Inc, 971 F.2d 548, 552 (10th Cir. 1992), cert. denied, 507 U.S. 951 (1993); United States ex rel. Doe v. John Doe Corp., 960 F.2d at 324; United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148, 1158 (2d Cir. 1993); But see United States ex rel. Siller v. Becton Dickinson & Co., 21 F.3d 1339, 1348 (4th Cir.), cert. denied, 513 U.S. 928 (1994). In fact, several courts have held that a qui tam plaintiff's complaint can be "based upon" a public disclosure of which the plaintiff had no knowledge. See United States ex rel. Findley, 105 F.3d at 683.

Who is an Original Source?

Once the complaint is challenged as being based upon publicly disclosed information (such as in a motion to dismiss under FRCP 12(b)(1)), the relator's only device to survive is to demonstrate that she qualifies as an "original source, as defined in Section (e)(4)(B): For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information [emphasis added]. The litigation interpreting the "original source" provision has, as can be surmised from the language of the pertinent section, involved several key concepts.

A vital threshold concept is what constitutes direct knowledge? For example, must the relator have actually been involved or had first-hand knowledge of the pertinent events, or even actually witnessed those events; or will indirect knowledge (such as hearsay) suffice? A related issue is whether the relator must have had direct knowledge of the information that was released into the public domain. See Findley, 105 F.3d at 690. A second hotly-debated issue is how one establishes "independent knowledge."

Interpretative case authority suggests that this term means (a) knowledge gained independently of the public disclosure, or (b) knowledge obtained independently of the government. One interesting issue is whether if any of relator's knowledge is derived from information available in the public domain, that triggers the entire issue of whether the relator is an original source. In all the fuss over the original source provision, an important procedural element is often lost in the shuffle.

Section (e)(4)(B) also mandates that a prospective relator must "voluntarily" disclose his information to the government before filing his complaint. In contrast to other elements of the original source provision, this requirement has undergone limited interpretation. Interesting issues nonetheless present themselves. What if the government contacts a potential relator before the relator has contacted the government? What is a public disclosure takes place prior to the relator contacting the government, which has by then derived some knowledge at least of the allegations from the public disclosure.

If the prospective relator is a government employee; can he ever "voluntarily" disclose information? Finally, one of the most intriguing issues is whether a relator's status as an original source survives if despite meeting the direct and independent knowledge thresholds, he has no connection with the public disclosure that occurs.