The False Claims Act is America’s First Whistleblower Law
President Abraham Lincoln signed the False Claims Act (“FCA”), 31 U.S.C. §§3729-2733 on March 2, 1862, to target fraud in government contracting and against the government. The FCA creates liability for individuals who make false claims, and enacts substantial liability and powerful disincentives for these crimes, making the criminal,
is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410 ), plus 3 times the amount of damages which the Government sustains because of the act of that person.
One of the most important aspects of the False Claims Act are the qui tam, or whistleblower, provision. It allows any individual or non-governmental organization to file a False Claims Act lawsuit on behalf of the United States Government. The government is required to investigate all whistleblower claims and can either “intervene” and proceed with the case or decline, in which case the whistleblower may proceed with the action. As the FCA incentivizes reporting and is the first whistleblower law, it is the model for all current whistleblower reward laws.
The FCA can be used to impose liabilities on individuals or companies who commit customs violations at the U.S.’ borders, using paperwork to catch other illegal activities. Whistleblowers have filed successful FCA cases exposing violations of customs laws and import laws. Customs violations have include undervaluation and misclassification of goods entering the U.S. The FCA requires that damages be trebled, and that wrongdoers pay a large penalty for each false claim.
The framework for the law is simple.
- Initial disclosures are confidentially filed with the U.S. government.
- The emphasis is on the truthfulness of the information, not on a whistleblower’s employment discrimination case.
- Compensation is based on whether the information provided by the whistleblower can support a successful prosecution.
- Whistleblowers are awarded a mandatory reward of between 15%-30% of the collected proceeds.
The False Claims Act is Enormously Successful
Since the FCA was signed into law it has become the most successful anti-fraud act in the United States. According to a DOJ press release, in Fiscal Year 2017, $3.7 billion in FCA settlements and judgements were recovered. $3.4 billion of the recovered monies can be attributed to whistleblower-initiated cases, and $392 million were given as rewards to relators. There are now around 600 new whistleblower cases annually.
In 1986, major changes were made to the FCA, which increased damages significantly for these cases. Since the Act was amended, the U.S. government has recovered over $56 billion. The U.S. Assistant Attorney General has said that this whistleblower reward law is “the most powerful tool the American people have to protect the government from fraud”. While a large portion of this taxpayer recovery is returned to the government, whistleblowers are awarded significant amounts of the settlement for their bravery and in recognition that many of them have risked their livelihoods. Not only do these whistleblower cases play an instrumental role in outing fraudulent behavior within the U.S., they also aid in the fight against international corruption.
“Going after waste, fraud, and abuse without whistleblowers is about as useful as harvesting acres of corn with a pair of rusty old scissors.”
NWC Action Alert Network Members Start 2019 with a Win! Attorney General Nominee Agrees to Protect the False Claims Act!
In December 2018, President Trump nominated a radical anti-whistleblower advocate to be the new U.S. Attorney General of the United States. The National Whistleblower Center learned that in 1998 and again in 2002, William Barr made statements in which he strongly opposed the highly successful qui tam whistleblower provisions in the False Claims Act.
Under pressure from whistleblower advocates throughout the country and with the advocacy of the National Whistleblower Center, Attorney General Nominee agrees to protect the False Claims Act.
The National Whistleblower Center immediately issued a press release and an action alert to call attention to Barr’s history of hostility toward the False Claims Act. Continue Reading…
Ongoing Threats Against the False Claims Act
The U.S. Chamber of Commerce (“the Chamber”) has made its opposition to the False Claims Act very clear over the years. The law has been extremely effective returning billions of dollars to taxpayers from fraudulent government contractors.
We need to do everything we can to ensure that major corporate interests don’t hijack the best tool we must protect the fiscal responsibility of the government, and ensure the False Claims Act remains just as effective as ever.
Sign up to the NWC Action Alert Network to be notified of our next FCA call to action, or make a recurring monthly donation to the National Whistleblower Center to ensure that we can continue to fight the good fight!