Written by Attorney Zachary Newland. Last Updated July 24, 2026

False Claims Act Internal Investigations: What You Need to Know Before the Government Gets Involved

On This Page

• What Is at Stake When the False Claims Act Applies to Your Organization
• What the False Claims Act Actually Prohibits
• How False Claims Act Internal Investigations Work
• The Mandatory Disclosure Rule and Overpayment Obligations
• DOJ Voluntary Self-Disclosure Policy
• What You Should Do Now: A Step-by-Step Guide
• How Evergreen Attorneys Can Help with False Claims Act Internal Investigations
• Frequently Asked Questions

False Claims Act internal investigations carry consequences that extend well beyond civil penalties. When a company, healthcare provider, or government contractor discovers potential false billing, fraudulent certifications, or overpayments to a federal program, the decisions made in the first days of an internal investigation often determine whether individuals face federal criminal prosecution.

If your organization has identified a compliance problem that may implicate the False Claims Act, understand this: the Department of Justice treats how you respond to the problem as seriously as it treats the underlying conduct. Be proactive and call the Colorado False Claims Act team at Evergreen Attorneys today.

What Is at Stake When the False Claims Act Applies to Your Organization

The False Claims Act, codified at 31 U.S.C. §§ 3729–3733, imposes civil liability on any person or entity that knowingly submits false or fraudulent claims for payment to the federal government. Civil penalties under the FCA include treble damages (three times the government’s loss) plus per-claim penalties that currently exceed $13,000 for each false claim submitted.

But the criminal exposure is what demands immediate attention. The same conduct that triggers FCA civil liability often supports federal criminal charges for healthcare fraud (18 U.S.C. § 1347), wire fraud (18 U.S.C. § 1343), or conspiracy (18 U.S.C. § 371). Healthcare fraud alone carries a maximum sentence of 10 years per count, or 20 years if the fraud results in serious bodily injury. Individual officers, executives, and compliance personnel can be charged personally, not just the entity.

A qui tam whistleblower may have already filed a sealed complaint under the FCA’s relator provisions, meaning DOJ could be investigating your organization right now without your knowledge.

What the False Claims Act Actually Prohibits

The FCA applies to anyone who “knowingly” presents, or causes to be presented, a false or fraudulent claim for payment or approval to the federal government. “Knowingly” under the statute does not require specific intent to defraud. The FCA defines it to include actual knowledge, deliberate ignorance, and reckless disregard of the truth or falsity of information.

This broad knowledge standard is critical for anyone conducting an internal investigation. A company that discovers over-billing and continues the practice, or that avoids looking at a known problem area, satisfies the FCA’s knowledge requirement.

The statute also prohibits making or using false records or statements material to a false claim, conspiring to violate the FCA, and reverse false claims (knowingly avoiding an obligation to repay money to the government).

For healthcare providers receiving Medicare or Medicaid reimbursement, for defense contractors certifying compliance with federal specifications, and for any entity receiving federal grant funding, virtually every claim for payment is a potential FCA claim if it rests on false information or noncompliant conduct. The law is incredibly broad.

How False Claims Act Internal Investigations Work

A corporate internal investigation process under the FCA typically begins when an organization identifies a potential compliance failure through an audit, a hotline report, an employee complaint, or a pattern of billing anomalies. The investigation’s purpose is to determine whether false claims were submitted, quantify the scope of the problem, identify responsible individuals, and decide how to respond.

The critical mistake most organizations make is treating the internal investigation as a purely civil compliance exercise. Every document created, every interview conducted, and every decision about scope and methodology may later be scrutinized by federal prosecutors, the Office of Inspector General, or a qui tam relator’s counsel.

Key structural decisions include:

• Whether to engage outside counsel to direct the investigation under attorney-client privilege?
• How to preserve documents and electronic communications without triggering spoliation concerns?
• Whether employee interviews should be conducted under Upjohn warnings?
• How to handle ongoing billing during the investigation period?
• Whether and when to make a disclosure to the government?

The Mandatory Disclosure Rule and Overpayment Obligations

For organizations receiving Medicare or Medicaid payments, the Affordable Care Act’s “60-day rule” (42 U.S.C. § 1320a-7k(d)) imposes a separate and independent obligation: once an overpayment is identified, the provider must report and return it within 60 days or the date any corresponding cost report is due, whichever is later. Failure to timely report and return an identified overpayment converts the retained amount into a “reverse false claim” under the FCA, exposing the provider to treble damages and per-claim penalties on top of the repayment obligation.

For government contractors, the Federal Acquisition Regulation’s mandatory disclosure rule (FAR 52.203-13) requires contractors to disclose credible evidence of violations of federal criminal law involving fraud, conflict of interest, bribery, or gratuity, as well as violations of the civil False Claims Act. Failure to disclose can result in suspension or debarment from future government contracting, independent of any FCA liability.

These mandatory disclosure obligations create a tension that only experienced federal defense counsel can properly navigate: the organization may be legally required to disclose, but premature or poorly structured disclosure can dramatically worsen criminal exposure for individuals within the organization.

DOJ Voluntary Self-Disclosure Policy

The Department of Justice has increasingly emphasized voluntary self-disclosure as a factor in its charging and resolution decisions. Under current DOJ policy, organizations that voluntarily self-disclose misconduct, cooperate with the investigation, and remediate the problem may receive reduced civil penalties and, in some cases, a declination of criminal prosecution.

However, voluntary self-disclosure is not an automatic safe harbor. The DOJ evaluates the timeliness, completeness, and good faith of the disclosure. A disclosure that is incomplete, misleading, or made only after the organization learns of a government investigation may not qualify for favorable treatment.

The decision to self-disclose must be made only after a thorough internal investigation has produced a reliable factual record and counsel has assessed the full range of civil and criminal exposure.

What You Should Do Now: A Step-by-Step Guide

1. Retain federal criminal defense counsel before beginning or continuing any internal investigation so that the investigation is structured to preserve attorney-client privilege and work-product protection.
2. Issue a litigation hold to preserve all potentially relevant documents, electronic communications, billing records, and compliance files.
3. Conduct employee interviews under proper Upjohn warnings so that participants understand they are speaking with counsel for the organization, not personal counsel.
4. Quantify the scope of the potential false claims, including the number of claims, dollar amounts, time period, and programs affected.
5. Evaluate whether the organization has a mandatory disclosure obligation under the 60-day overpayment rule or the FAR mandatory disclosure requirement.
6. Make a strategic decision about voluntary self-disclosure only after the investigation has produced a reliable factual record and counsel has assessed the criminal exposure for the entity and for individuals.
7. Implement remedial measures to stop ongoing false billing and correct the compliance failures that caused the problem.

How Evergreen Attorneys Can Help with False Claims Act Internal Investigations

Evergreen Attorneys represents companies, executives, healthcare providers, and individuals facing federal criminal exposure arising from False Claims Act matters. The firm’s attorneys direct privileged internal investigations, advise on mandatory and voluntary disclosure obligations, and defend clients in parallel civil FCA actions and federal criminal prosecutions.

When the government issues a civil investigative demand or a federal grand jury subpoena related to suspected FCA violations, Evergreen Attorneys provides representation that accounts for both the civil consequences and the criminal risk. The firm serves federal criminal defense clients nationwide, with the experience to handle matters involving complex healthcare billing, government contracting fraud, and federal grant fraud.

Evergreen Attorneys won 9-0 in the U.S. Supreme Court in United States v. Hemani in June 2026, demonstrating the firm’s ability to prevail at the highest levels of federal litigation.

Frequently Asked Questions

What is the difference between a civil FCA action and a federal criminal prosecution for the same conduct?

A civil FCA action seeks monetary penalties: treble damages plus per-claim penalties. The government or a qui tam relator brings these cases in federal court under a preponderance-of-the-evidence standard. A federal criminal prosecution for the same underlying conduct (typically charged as healthcare fraud, wire fraud, or conspiracy) seeks imprisonment and criminal fines and requires proof beyond a reasonable doubt. The government can pursue both tracks simultaneously against the same organization and individuals. The existence of a parallel criminal investigation is one reason every internal investigation must be directed by counsel experienced in federal criminal defense.

Can an internal investigation trigger more government scrutiny rather than less?

Yes. An internal investigation that is poorly structured, inadequately privileged, or prematurely disclosed can expand the government’s interest rather than contain it. If investigation documents are not protected by attorney-client privilege and work-product doctrine, they can be obtained by the government through a subpoena or CID.

If the investigation reveals problems that the organization then fails to disclose or remediate, the government will treat the organization’s awareness as evidence of the “knowing” element under the FCA.

The scope of attorney-client privilege and other work-product doctrines are usually hotly contested matters in these types of cases. Experienced internal investigation counsel will guide their clients to the best outcome by carefully navigating these rules.

Does returning a Medicare overpayment eliminate FCA liability?

Returning an identified overpayment within the 60-day window satisfies the statutory obligation under 42 U.S.C. § 1320a-7k(d) and prevents the retained amount from becoming a reverse false claim. However, if the overpayments resulted from a pattern of false billing that satisfies the FCA’s knowledge standard, the government or a relator may still pursue FCA liability for the original false claims that generated the overpayments. Returning the money is necessary but may not be sufficient to resolve all exposure.

What happens if a qui tam whistleblower has already filed a sealed complaint?

A qui tam complaint is filed under seal and served on the Department of Justice, which then has at least 60 days (often extended for months or years) to investigate and decide whether to intervene. During the seal period, the defendant typically does not know the case exists. If the government intervenes, it takes over the litigation. If it declines to intervene, the relator may proceed independently. The existence of a sealed qui tam complaint means the government may already have access to internal documents, cooperating witnesses, and billing data that the organization believes is private.

When should a company or individual involve federal criminal defense counsel in a False Claims Act matter?

The answer is before the internal investigation begins, not after it produces findings. Federal criminal defense counsel should be involved from the moment the organization identifies a potential compliance failure that could give rise to FCA liability. Early involvement ensures the investigation is structured to preserve privilege, that document preservation is adequate, that employee interviews are conducted properly, and that no premature disclosures are made. Waiting until the government contacts you, whether through a target letter, a CID, or a grand jury subpoena, means the most important strategic decisions have already been made without counsel’s input.

If you are facing a False Claims Act internal investigation or have identified potential federal fraud exposure, contact Evergreen Attorneys at (303) 948-1489 for a confidential consultation and case evaluation.