Why Evidence Failure Drives 73% of FCA Losses - And What to Do About It

The False Claims Act (FCA) remains one of the most powerful enforcement tools against fraud in government-funded programs. Yet industry data shows compliance officers, potential whistleblowers, corporate attorneys, and healthcare administrators fail 73% of the time because they do not document evidence properly. This article explains the problem in plain terms, shows the immediate costs, examines why evidence is so often lost or undermined, and lays out a pragmatic, legally sound approach to collecting and preserving evidence that improves the odds of success.
Why Evidence Gaps Turn Promising FCA Matters into Dead Ends
At first glance, many FCA matters seem straightforward - billing anomalies, false certifications, or improper use of grant funds. But courts and investigators do not accept allegations on faith. They demand proof: contemporaneous records, clear chains of causation, and admissible documents that tie a defendant to knowing false claims.

Common failures that turn a winnable case into an untenable one include:
Missing timestamps or metadata that would connect documents to key events. Lack of contemporaneous witness statements showing knowledge or intent. Spoliated or altered electronic records with no forensic preservation. Records that violate privacy laws if produced without counsel coordination. No audit trail showing who created, modified, or approved a claim.
When these gaps appear, judges and government lawyers often conclude the relator or plaintiff cannot meet the FCA’s requirement to plead and prove that false claims were submitted knowingly. The 73% failure statistic reflects how often evidentiary shortcomings end cases before meaningful discovery.
How Poor Documentation Raises Costs and Risks for Everyone Involved
Poor documentation does not https://www.barchart.com/story/news/37369313/record-setting-false-claims-act-recoveries-signal-expanded-whistleblower-role-federal-accountability only hurt whistleblowers. The ripple effects are broad and immediate.
Costs to whistleblowers and relators
Without verified records, a relator risks dismissal, sanctions, or not receiving any award even where misconduct occurred. The personal and financial costs of pursuing a case without solid evidence are high: legal fees, career disruption, and reputational exposure if allegations do not survive early motion practice.
Costs to companies and compliance programs
When companies lack reliable documentation, they face higher exposure to exaggeration claims and extended investigations. Ironically, the same poor recordkeeping that hurts whistleblowers often becomes the basis for more aggressive government scrutiny because regulators view weak internal controls as a compliance red flag.
Costs to healthcare administrators and public programs
Billing errors and incomplete clinical documentation can trigger costly audits, recoupment, and long-term damage to program integrity. Delays in establishing the facts extend disruption to patient care and program operations.
Why urgency matters
Evidence decays quickly. Electronic systems get upgraded, staff change roles, and routine data purging can erase metadata or system logs within weeks. The statute of limitations under the FCA also pressures prompt action: six years from the violation, with a discovery rule that may add complexity but not indefinite time. These realities make early, disciplined preservation non-negotiable.
3 Common Ways Evidence Gets Destroyed or Undermined in FCA Matters
Understanding how evidence breaks down helps focus prevention. Below are the most frequent pathways to lost or unusable proof.
1. System upgrades and routine data retention policies
Hospitals, billing vendors, and contractors routinely archive or overwrite data. When IT runs routine purges, audit logs and temp files that contain metadata vanish. Without a litigation hold, crucial proof disappears under ordinary business processes.
2. Informal handling of witness information
Employees often share relevant details in casual chats or informal emails. If that information is not memorialized in a controlled, timestamped way, it becomes "he said, she said" evidence. Courts prefer contemporaneous writings or recorded statements that show what someone knew and when.
3. Attempts to "clean up" or fix problems
When managers discover errors, their instinct may be to correct the record. Editing or deleting entries without documenting the correction can look like spoliation or bad faith. Even well-meaning edits can make documents inadmissible or trigger sanctions.
A practical evidence-first strategy that improves FCA outcomes
Solving the documentation problem requires a strategy designed for legal scrutiny. The approach below is built around three principles: preserve what exists, document the human story, and coordinate legal and technical steps so evidence is admissible and ethically handled.
Preserve first, analyze second
When fraud is suspected, preservation should begin immediately. Do not wait for a perfect theory. Preservation preserves options. Erroneous fixes and normal data retention will destroy evidence faster than you can evaluate it.
Document both records and context
Evidence combines data and narrative. A flawless invoice still needs context about who approved it and why. Witness declarations, contemporaneous notes, and chain-of-custody logs turn raw records into proof of knowledge.
Bring privilege-aware counsel into the loop
Coordination with counsel matters early. Counsel helps issue litigation holds, oversee forensic collection, and protect privileged communications. It also ensures that sensitive patient data or attorney-client communications are not mishandled.
7 Steps to build admissible, persuasive evidence in False Claims matters Act immediately to preserve evidence.
Issue a litigation hold to relevant custodians. Ensure IT suspends routine purges and images relevant servers, EHRs, billing systems, and mobile devices. Confirm preservation in writing and log every preservation instruction.
Capture source data with full metadata.
Export documents rather than printing unless printouts are authenticated with metadata logs. Preserve email headers, system logs, and audit trails. Metadata often establishes timing, authorship, and modification history - all vital in FCA matters.
Secure eyewitness accounts contemporaneously.
Obtain written statements from witnesses as soon as possible. Use declarations or affidavits when appropriate. Date and sign each statement and record how the facts came to the witness's attention.
Maintain a clear chain of custody.
Document who collected each item, where it was stored, and who accessed it. Forensic imaging should include hash values and chain-of-custody forms. Courts treat chain of custody as central to admissibility.
Coordinate on privilege and privacy.
Work with counsel to differentiate privileged internal investigations from non-privileged evidence. Ensure HIPAA and other privacy rules are addressed before producing clinical records. When in doubt, get protective orders or counsel input before disclosure.
Use secure, immutable storage and logging.
Store evidence in write-once media or in systems that log access and edits. Use access controls and audit logs to show that records were not tampered with. Retain backups in separate locations to reduce risk of loss.
Create a centralized evidentiary index.
Build a document index linking each item to the claim it supports, the custodian, and key metadata. This index becomes your roadmap for investigators, counsel, and, if necessary, the court.
What to Expect After You Follow an Evidence-First Process - Timeline and Realistic Outcomes
Applying disciplined preservation and documentation changes how an FCA matter unfolds. Below is a realistic timeline and probable outcomes for cases handled with solid evidence practices.
Immediate to 30 days - Preservation and initial assessment Litigation hold issued and confirmed. Forensic imaging completed for primary custodians and systems. Preliminary witness statements collected. Initial legal assessment delivered to relator, compliance team, or counsel.
Outcome: The case moves from "would-be" to "ready for preliminary submission." Parties are positioned to present a coherent narrative to the Department of Justice (DOJ) or an internal review board.
30 to 90 days - Investigation and government review Document productions assembled and indexed. Government or internal auditors begin review. If a qui tam action exists, the government decides whether to intervene, often guided by the quality of the evidentiary record. If the government declines intervention, a relator with strong evidence may proceed under seal with a higher chance of success.
Outcome: Strong documentation increases the likelihood the government will intervene, which often leads to larger recoveries and higher probabilities of settlement rather than protracted litigation.
90 days to 18 months - Discovery and negotiation If the government intervenes, discovery focuses on the preserved records - metadata, emails, and witness statements - all of which the defendant will scrutinize. Rigorous documentation narrows factual disputes and facilitates settlement talks sooner.
Outcome: A well-documented matter typically resolves faster and at more predictable costs. If litigation proceeds, the relator’s odds of surviving dispositive motions increase markedly.
18 months to years - Litigation or resolution FCA litigation can stretch for years if the defendant contests liability. The evidentiary record established early remains the foundation for trial strategy. Potential remedies include civil penalties per false claim and damages up to three times the government’s loss. Relator awards typically range from 15% to 30% of recovery, depending on government intervention and court discretion.
Outcome: Cases with disciplined evidence preservation are more likely to settle on terms that recognize actual losses and mitigate excessive penalties. Weak records often result in dismissal or a poor settlement for the relator and unpredictable enforcement for the defendant.
Contrarian viewpoints and when restraint matters
Not every suspected irregularity should trigger full-blown preservation. Some argue that aggressive evidence collection leads to overreach and wastes resources. Two contrarian points deserve attention:
Over-preservation can be costly and disruptive. Spreading litigation holds to wide groups creates noise and can erode trust within an organization. A targeted preservation plan minimizes disruption while protecting key facts. Not every billing error equals fraud. Honest mistakes are distinct from knowing submission of false claims. Preservation should be proportionate to the level of suspected scienter - the legal standard requires knowledge, recklessness, or deliberate ignorance. Jumping to full-scale forensic measures for clerical errors invites expense without a commensurate benefit.
Balance is the goal. Preserve what is necessary to support credible claims or defenses while avoiding excessive collection that courts might view as fishing for wrongdoing.
Final practical tips When in doubt, preserve first and analyze second. Preservation keeps options open without committing to a course of action. Document decisions about what to preserve and why. A short decision memo can justify steps taken and show proportionality. Train staff on basic preservation steps: don't delete emails, don't alter files, and notify counsel promptly. Keep a running log of who performed what collection or interview and when. That log often becomes one of the most persuasive exhibits at summary judgment or trial.
Fixing the 73% failure rate starts with simple discipline: prompt preservation, contextualized documentation, and careful coordination with counsel. For compliance officers, corporate attorneys, healthcare administrators, and potential whistleblowers, an evidence-first approach turns vague suspicions into actionable cases and reduces the risk of losing meritorious claims before they make it to a fair hearing.