Case EvaluationSpeak to a Whistleblower
False Claims Act
False Claims Act
The False Claims Act, or whistleblower law, has emerged as one of the best ways to combat fraud against our country. Despite the best efforts of our law enforcement professionals, our government simply can’t keep up with the companies and people who steal billions per year through healthcare, tax and government contract fraud.
This little known law, however, which was initially enacted in 1863, puts control over fraud back in the hands of every American. People who witness deceit can make a difference for everyone and also be rewarded for doing what is right.
The qui tam provisions of the law allow whistleblowers to file lawsuits directly against companies and individuals that cheat the government. This has been crucial in raising public awareness and participation, with remarkable results. Since altering the law in 1986, the government has recovered more than $14 billion from False Claim lawsuits and rewarded whistleblowers with more than $2.2 billion.
The False Claims Act, also known as the "Lincoln Law" because President Lincoln pushed for its passage during the Civil War, was originally designed to fight fraud that was being committed on the Union Army by war supply companies.
What began with selling old horses, sick mules, defective arms, and rotten food eventually became so bad that suppliers would sell the army the same horse twice and crates of sawdust instead of guns.
The original False Claims Act heralded by Lincoln charged violators double damages plus a $2,000 civil penalty for each false claim submitted. It also contained a novel concept called “qui tam,” which allowed any citizen to sue companies or people who were cheating the government. "Qui tam" is an abbreviation of the Latin phrase, "qui tam pro domino rege quam pro se ipso in hac parte sequitur," which roughly means "he who brings an action for the king as well as for himself."
The new law was passed by Congress on March 2, 1863. People who discovered fraud and filed lawsuits on behalf of the government were known as "relators," and were entitled to receive 50 percent of the amount the government recovered from their case.
The False Claims Act remained almost the same until 1943, when Congress made drastic and ultimately debilitating changes to the qui tam provisions. They significantly cut the reward amount for relators and also added a provision prohibiting any whistleblower lawsuit that was based on evidence already held by the government. This double-edged sword prevented most whistleblowers from filing lawsuits and reduced the incentive for the rest.
The Act was so weakened by the 1943 amendments that it fell into almost complete disuse.
Amid news of defense contractors committing widespread fraud on the government with ineffective enforcement agencies in the 1980s, Congress took a fresh look at whether the False Claims Act could help. Following President Reagan’s goal of privatizing more roles of government, they sought to combine the interests of public agencies and private citizens once again. To do so, Congress revised the Act to offer greater rewards for whistleblowers coming forward with information as well as incentives for private attorneys to investigate fraud on their own. The proposed amendments received wide support from both political parties and President Reagan signed the bill into law on Oct. 27, 1986.
The revised False Claims Act offers whistleblowers who bring successful cases between 15% to 30% percent of the government’s recovery, and the attorneys who represent them are guaranteed payment of their regular hourly fees by the defendant. Companies that cheat the government face judgments amounting to triple the amount of damage they cause, plus a $5,000 to $10,000 penalty for each false claim.
With the revised False Claims Act in effect the number of whistleblowers coming forward has drastically increased. Over 3,000 qui tam cases have been filed since 1986.