What is the False Claims Act?
The False Claims Act is a United States federal law also known by the name “Lincoln Law”. This law imposes liabilities on companies and individuals who defraud government programs, and includes “qui tam” provisions allowing individuals not affiliated with the federal government to file actions informally known as “whistleblowing”. An individual who files under this Act can potentially receive a percentage of any damages recovered.
History of the False Claims Act
The False Claim Act's history stretches all the way back to March 2, 1863. The American Civil War was a time of high levels of fraud in both the north and south, as many unscrupulous contractors sold the armies sick packs animals, faulty weapons and rotten provisions, among many other things. In response to this, Congress decided to pass the False Claims Act, including an important “qui tam” provision in which citizens could be rewarded by filing lawsuits on the government's behalf and receive portions of the legal injury's restitution in return.
Provisions in the False Claims Act
The False Claims Act prohibits such actions as presenting a false claim in return for payment or approval, knowingly making false statement material for the false claim, falsifying the terms of the property that the government would use, certifying receipt of property without proof, knowingly purchasing government property from any unauthorized government officer, knowingly using a false record to avoid or decrease obligation to remit payment or property to the government, and conspiring to commit any of these violations. Tax fraud is a notable exemption to the False Claims Act, since there are many laws specifically devoted to taxes.
Amendments to the False Claims Act
In 1943, the most notable amendment made to the False Claims Act reduced the relator's portion of recovered proceeds. By 1986, other amendments were made, including an establishment of liability for defendants in deliberate ignorance of a truth, the imposition of larger civil fines for false claims, and employee protection for whistleblowers. Many new changes to the False Claims Act were brought about by 2009, one of the more notable being an increase in qui tam plaintiff protection extending beyond employees to contractors or agents.
Practical Application of the False Claims Act
There is a detailed process involved in making claims under the Act. A mere complaint to government agencies is not sufficient – a formal suit must be filed under seal in the United States District Court. The Department of Justice will investigate the suit within 60 days to decide whether or not it will pursue further. Should the case be pursued, the reward amount will be less than the cost of the plaintiff handling the suit him or herself without the Department of Justice. However, in the cases the Department of Justice does pursue, the success rate has proved much higher.
Even in the earliest United States history there have been many instances of companies and individuals seeking to take advantage of governmental institutions, but with the False Claims Act in place, the government has legal recourse against fraudsters in order to better protect its citizens.