The False Claims Act Story
During the Civil War, unscrupulous defense contractors drained the U.S. Treasury with impunity. In response, Congress and President Abraham Lincoln enacted the False Claims Act (FCA) to unleash whistleblowers to help the government suppress fraud that was plaguing the Union Army.
During World War II, Congress overreacted to a situation in which a False Claims Act suit was filed based entirely on the information in a government indictment. In response, Congress weakened the law and limited relators' ability to sue on the Government's behalf. The amendments to the False Claims Act made at that time had the unfortunate effect of disabling the FCA at the very moment when government programs entered an era of major growth. Not surprisingly, without whistleblowers to unravel the inner workings of fraudulent schemes, federal law enforcement officials were overwhelmed by fraud and outmatched by a well-funded army of dishonest government contractors.
The FCA was revived in 1986 after congressional hearings and GAO reports exposed rampant fraud in the defense industry. Senator Charles Grassley and Congressman Howard Berman collaborated to push amendments through Congress that President Ronald Reagan signed into law, reenlisting whistleblowers in a national effort against fraud. Congress’s intent was to reinstate a “coordinated effort” between private citizens and the government, so as to “enhance the Government’s ability to recover losses sustained through fraud against the Government.”
Today, the False Claims Act is the single most effective tool U.S. taxpayers have to recover the billions of dollars stolen through fraud every year.
Under the False Claims Act, those who knowingly submit, or cause another person to submit, false claims for payment of government funds are liable for up to three times the government’s damages plus civil penalties of $10,957 to $21,917 for each false claim (2017).
The False Claims Act contains qui tam provisions, which allow people with evidence of fraud against the government to sue on behalf of the Government.
People who sue under the FCA are called “relators” or “whistleblowers,” and are eligible for 15 to 30 percent of the amount recovered.