The Federal False Claims Act is widely regarded as the most effective tool in combating fraud against the federal government. Congress enacted the Federal False Claims Act during the Civil War to combat fraud against the federal government by suppliers to the Union Army. The False Claims Act, often referred to as “Lincoln’s Law,” was used relatively sparingly as an enforcement tool during the century that followed its enactment. Despite some use during World War II, the False Claims Act was largely ineffective at combating fraud against the federal government until the statute was dramatically revamped in 1986.
The 1986 amendments to the False Claims Act were motivated in large measure by highly publicized accounts of abuses in the defense contracting industry, with the government being charged tens of thousands of dollars for everyday items such as hammers and toilet seats. These amendments significantly expanded the role of whistleblowers, increased financial incentives, and reduced a number of critical barriers to bringing actions against persons and entities alleged to have submitted false or fraudulent claims to the federal government.
Since the 1986 amendments were passed, the False Claims Act has become the federal government’s most effective and successful tool in combating waste, fraud and abuse in federal spending. From 1986 to 2013, the federal government recovered in excess of $35 billion as a result of cases filed under the False Claims Act. Nearly one-half of all recoveries, and the majority of the largest settlements, have come from health-care related cases. The False Claims Act also has been highly effective in combating fraud and abuse in government contracts for defense, energy, construction, housing, natural disaster recovery, Iraq War reconstruction, and other forms of government procurement.
The success of the False Claims Act has resulted in large measure from lawsuits brought by whistleblowers (otherwise known as “Relators”), under the qui tam provisions of the False Claims Act. In general, the qui tam provisions permit any person or entity to file a False Claims Act case on behalf of the federal government. The motivation behind the qui tam provisions of the False Claims Act was the recognition that the government lacks the information and resources to pursue all those who submit false and fraudulent claims to the government. Private citizen-whistleblowers have proven to be a vital resource for the government by bringing to light evidence of fraud that would have otherwise have gone undetected. Nearly one-half of the $35 billion recovered since 1986 has come from False Claims Act lawsuits brought by whistleblowers. Whistleblowers have been paid upwards of $2 billion in statutory rewards for filing False Claims Act cases on behalf of the federal government.