30 Years Strong: The Modern False Claims Act and The Fight Against Fraud

In a nation as demographically complex as the United States, it is nearly impossible for all citizens to be on the same page about all issues. Particularly in these divided times, it can be difficult to see through partisanship to those few issues on which we can all agree.

America’s tax system is one of the issues that causes the most contentious debates. We struggle to come to a consensus about what tax rates should be for different income brackets, as well as how those taxes should be allocated once they are paid.

There is one piece of legislation related to our tax system that should be universally embraced, however: The False Claims Act. The False Claims Act (FCA) is the legislative framework that helps recover taxpayer dollars that have been stolen or misused. It is one of the most powerful and effective means for taxpayers and the government alike to preserve the integrity of our economy.

This year, the modern version of this essential law celebrated its 30th anniversary, and due to its overwhelming success, it will likely be around for a long time to come.

President Reagan signs the 1986 Amendments

The False Claims Act has its origins in the Civil War, when fraud became common practice for sellers of soldier’s clothing, horses, weaponry and other wartime necessities.

The FCA, which became known as “The Lincoln Law,” enacted penalties for submitting false claims to the federal government, and offered rewards to those brave enough to report fraud.

 

Over 100 years after the original FCA was created, it was in need of an update. Changes were made to the  FCA in that time, but mostly to the detriment of whistleblowers and the government’s ability to recover lost taxes.

In the 1980’s, defense contractor fraud had made a serious comeback and appeared to be defrauding millions from the government every year.

In response to these concerns, President Ronald Reagan signed the False Claims Act Amendments in 1986. The effort to approve these amendments was led by Representative Howard Berman and Senator Charles Grassley.

Among the changes proposed by the 1986 amendments were:

  • To increase the financial incentives that could be offered to whistleblowers.
  • To increase the penalties exacted on companies proven to be fraudulent to treble damages–that is, three times the defrauded amount.

These changes and the greater specificity provided by the amendments strengthened the capabilities of the FCA. As a result, from 1987 to 2015, FCA actions recovered nearly $50 billion in defrauded taxpayer funding. The majority of that amount was recovered in whistleblower cases.

Uncovering fraud in the healthcare industry

The success of the 1986 Amendments was significant not only because of the amount defrauded, but because of what it revealed about the nature of fraud in industries other than defense.

In recent years, healthcare qui tam cases have prompted the vast majority of False Claims Act recoveries.

This is troublesome because of the significant potential for patient harm, but unfortunately the scope of Medicare, Medicaid, and TRICARE make it difficult for the government to track the accuracy of every single claim submitted.

Though the use of predictive analytics and other preventive tactics are helping to stop healthcare fraud in its tracks, whistleblowers are still very much needed in this sector.

When doctors, nurses, billing specialists and other healthcare professionals speak up about upcoding and other false claims submissions at work, the government is often able to recover significant amounts of taxpayer funding.

Furthermore, the False Claims Act ensures that these whistleblowers have legal protection from retaliation, and can be eligible for financial rewards.

The future of the fight against fraud

Senator Grassley, who was instrumental in getting the amendments passed in 1986, remains a vocal False Claims Act advocate and spokesperson to this day. In a statement in April 2016, Grassley said:

“One of the smartest things Congress has ever done is to empower whistleblowers to help the government combat fraud. They get results. Without whistleblowers, the government simply does not have the capability to identify and prosecute the ever-expanding and creative schemes to bilk the taxpayers. That is not rhetoric. That is history.

It’s important to recognize all that the False Claims Act means for the American economy, and to protect it from corporate lobbyists or other private interests that seek to loosen anti-fraud regulations.

Ultimately, laws like the False Claims Act exist to preserve the integrity of the industries that are essential to our safety and growth as a nation. To protect whistleblower laws to is protect our national interests.

To learn more about the False Claims Act and what it means to whistleblowers today, subscribe to the Whistleblower Attorneys Podcast, hosted by qui tam attorney James Young.