President Signs Deficit Reduction Act Which Includes Increased False Claims Act Incentives

Published on February 09, 2006

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President Signs Deficit Reduction Act Which Includes Increased False Claims Act Incentives

Washington, D.C. February 9, 2006. Yesterday President Bush signed the Deficit Reduction Act. The Act contains monetary incentives to state governments for enacting False Claims Act (“FCA”) provisions which are equivalent to the federal FCA.

Since it was amended in 1986 the federal False Claims Act has proven to be the strongest whistleblower protection law in the United States. In addition to prohibiting the wrongful discharge of employees who “blow the whistle” on fraud against the federal government, the law contains a “qui tam” provision which permits whistleblowers to share in any recovery obtained by the United States in a contract-fraud case. In 2005 alone the federal government recovered over 1 billion dollars in fraud.zfq

Because of the success of the federal law, a number of states and municipal governments have enacted similar legislation permitting employees to “blow the whistle” on fraud in state and local government contracts. State and local governments which have enacted FCA’s include the District of Columbia, New York City, the Commonwealth of Virginia, and the States of California, Florida and Texas.

In a statement released by Sen. Chuck Grassley, chairman of the Committee on Finance, the senator said, “The False Claims Act has been the federal government’s number one tool for fighting fraud, waste and abuse for the past 20 years. The passage of the Deficit Reduction Act marks a new day for the False Claims Act. It enhances and strengthens this valuable tool for fighting fraud and waste in government programs.”

The Chairman of the Board of Directors of the National Whistleblower Center issued the following statement:

“State governments no longer have any excuse not to enact local versions of the highly successful federal False Claims Act (“FCA”). The FCA prohibits the wrongful discharge of employees who disclose contractor fraud in government-financed projects. Every state and local government has a duty to protect the taxpayers money. The FCA has proven the most successful law in preventing and exposing corruption in publicly financed projects. Now that the federal government is enacting direct monetary incentives to state governments which enact local versions of the FCA, taxpayers should insist that FCA are immediately passed in every state.

The best way to weed out corrupt contractors is to protect and reward those courageous “insiders” who risk their careers to protect the public interest. It has worked in the context of federal contracts, it will also work in the context of state contracts.”

Any employee with information on fraud, misconduct or mis-charging on any government-sponsored project is strongly encouraged to report these concerns to the confidential Report Fraud Now hotline sponsored by the National Whistleblower Legal Defense Fund. All communications to this hotline are confidential and protected under the attorney-client privilege.

Report Fraud Now