The False Claims Act, also known as the “Lincoln Law,” is the federal government’s primary litigation tool in combating government fraud. It is notable because it has a qui tam provision which allows people non-affiliated with the government to file actions on the government's behalf.
When they do, they stand to receive a portion of any recovered damages—usually about 15-25%. Since healthcare fraud and government fraud investigations usually recover millions of dollars in revenue, the whistleblower reward is typically a formidable sum.
This reward aspect makes the False Claims Act highly effective at encouraging whistleblowers to speak up, despite the risks of doing so. Between 1987 and 2015, the government recovered about $48 billion under the False Claims Act, about $27 billion of which was from qui tam cases brought by whistleblowers.
As of 2012, over 70% of all government FCA actions were initiated by whistleblowers.
History of the False Claims Act
Qui tam laws have existed since the Middle Ages, and possibly even earlier. English kings such as King Edward II and Henry VIII created laws which allowed common informers to bring suit for damages to the Commonwealth “on behalf of the King.”
Qui tam is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means “he who brings a case of our Lord the King, as well as for himself”.
The False Claims Act originated in the American Civil War, hence the term “Lincoln Laws”. The War was marked by fraud both in the Union North and Confederate South. Unscrupulous contractors would sell the Union Army decrepit horses and mules, faulty rifles and ammunition, and rancid provisions.
To prevent this, Congress passed the False Claims Act in 1863, allowing citizens to sue on behalf of the government and receive a percentage of the recoveries.
U.S. Senator Jacob M. Howard, who sponsored the legislation, justified giving rewards to whistleblowers, despite the fact that many had engaged in unethical activities themselves.
He said, “I have based the [qui tam provision] upon the old-fashioned idea of holding out a temptation and ‘setting a rogue to catch a rogue,’ which is the safest and most expeditious way I have ever discovered of bringing rogues to justice.”
The law has always primarily been used by defense contractors, but by the late 1990s, healthcare fraud began to receive more attention. By 2008, healthcare fraud accounted for over 50% of False Claims Act recoveries.
1986 Whistleblower Reward Revamp
After the Civil War, the False Claims Act was largely forgotten, though it was used sparingly throughout WWII. In 1986, President Ronald Reagan’s Cold War military buildup led to a huge increase in defense contracting fraud.
These highly publicized cases, in which the government paid hundreds or thousands of dollars for everyday items such as hammers and toilet seats, led to a public outcry for action.
In response, Congress dusted off the False Claims Act and dramatically revamped it to expand the role of whistleblowers. It also increased the financial incentives that were offered and reduced a number of critical barriers to bringing about actions.
Congress recognized, and still recognizes, that fraud is so extensive that the government lacks the resources to combat it—and that private citizen-whistleblowers are the strongest weapons it has.
Government Fraud Case Management Software
Private citizens aren’t the only ones cracking down on government fraud. Hundreds of law firms, agencies, and case investigation companies are seeking out perpetrators of fraud and bringing them to justice.
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Case management software helps keep fraud cases organized, managed, and recorded so that case investigators and auditors can communicate efficiently. To learn more about the benefits or our case management software or request a free demo, click here.