The False Claims Act is also known as the “Lincoln Law,” signed into effect during the American Civil War as a reaction to contractors selling the Union Army things like sick horses and mules. Designed to help U.S. taxpayers recover money that has been stolen from the federal government, the law allows any person who has information regarding a false claim to bring a whistleblower lawsuit against the company or organization that committed the fraud.
The False Claims Act holds anyone who knowingly provides false claims to the government financially accountable. The law contains a “qui tam” (pronounced “kee tam” or “kwee tam”) provision allowing private citizens with knowledge of fraud against the United States government to file a lawsuit on behalf of the government. These patriotic citizens are rewarded by a substantial share in any financial recovery that is made.
The role of the federal government
Under the False Claims Act, the government has the primary responsibility for prosecuting the case. After the suit has been filed, the Attorney General’s office or the Department of Justice will investigate the allegations contained in the case. This investigation may involve one or more law enforcement agencies, such as the FBI or the Office of the Inspector General.
Following this investigation, the Department of Justice may intervene in the case. This means that the Department of Justice believes the whistleblower has a strong case and has exposed fraudulent activity. If the Department of Justice declines to intervene in the lawsuit, the whistleblower may proceed with the case and prosecute the lawsuit on behalf of the U.S. government.
Examples of fraudulent activities
Fraud that constitutes a violation of the False Claims Act can occur in any industry that enters into a government contract. Often, False Claims Act cases involve Medicare and Medicaid, healthcare fraud, or defense contractor fraud.
Healthcare fraud cases may involve fraudulent cost reports, fraudulent billing, charging for unnecessary services, and kickbacks for patient referrals. Similarly, defense contractor fraud consists of a number of fraudulent schemes, such as cross-charging and product substitution.
Colleges, universities, and other education programs can also commit False Claims Act violations. These organizations must be accredited by an authorized organization to receive government funds and receive tuition payment through the government loan programs. In recent years, for-profit colleges and online colleges have been accused of submitting false or misleading information to attain accreditation and therefore become eligible for student loan programs offered by the federal government.
FCA Recoveries from 1987-2015
- Total recovered amount: $48,370,504,273
- Total number of qui tam actions: 10,593
- Amount recovered in qui tam cases: $33,230,410,007
- Recoveries from cases in which the U.S. government intervened: $31,074,452,032
- Recoveries from cases in which the U.S. government declined to intervene: $2,155,957,974
- Total whistleblower reward amount: $5,328,756,494