What is the False Claims Act?
During the Civil War, fraud against the federal government was rampant. Shoddy goods of all types—uniforms, rifles, rations—were hamstringing the Union Army. With few federal enforcement resources at his disposal, President Lincoln urged Congress to pass the 1863 False Claims Act (also known as “Lincoln’s Law”), which gave financial incentives to private citizens who took action against companies or individuals that were defrauding the government.
While the statute was effective for a time, it did not stop fraud. In 1986, Sen. Charles Grassley, a conservative Iowa Republican, teamed up with Rep. Howard Berman, a liberal California Democrat, to pass legislation that strengthened “Lincoln’s Law.”
The amended False Claims Act (FCA) allows whistleblowers—who are called “relators” —to get up to 30 percent of any money recovered by their lawsuit. It also protects whistleblowers by allowing for claims to be made under confidential seal and prohibiting retaliatory action by a whistleblower’s employer.
If a defendant is found liable under the FCA, it could be forced to pay as much as three times the amount of money it has been found to have defrauded the government. The defendant will also have to pay other penalties.
Since 1987, whistleblowers have helped the U.S. government recover over $42.5 billion in taxpayer funds. Whistleblowers have received over $7 billion as their share of the government’s recovery.