What is The False Claims Act?

The False Claims Act (FCA), also known as the "Lincoln Law," is a federal law in the United States that imposes liability on individuals and companies (typically federal contractors) who defraud governmental programs. It includes a "qui tam" provision that allows private individuals, known as whistleblowers or "relators," to file actions on behalf of the government and share in any recovery.

Here are the key features and functions of the False Claims Act:

1. Liability for Fraud: The FCA holds anyone liable who knowingly submits or causes the submission of false or fraudulent claims for payment to the federal government. This includes making false records or statements to get a claim paid or approved, conspiring to commit such fraud, or improperly retaining overpayments.
2. Qui Tam Provision: Private individuals, known as "relators," can file lawsuits on behalf of the government against entities or persons they believe have committed fraud against federal programs. If the government decides to join the lawsuit and it results in a recovery, the whistleblower can receive a portion of the recovered damages, typically between 15% and 30%.
3. Triple Damages and Penalties: The FCA provides for treble (triple) damages, meaning the government can recover three times the amount of the fraudulent claims. Additionally, those found liable can face substantial civil penalties for each false claim, adjusted periodically for inflation.
4. Protection for Whistleblowers: The FCA includes provisions to protect whistleblowers from retaliation by their employers. This protection covers demotion, suspension, harassment, or any other discrimination in terms and conditions of employment.
5. Amendments and Enhancements: The FCA has been amended several times to strengthen its provisions. Notable amendments include the 1986 changes, which increased incentives for whistleblowers, and the Fraud Enforcement and Recovery Act of 2009, which expanded liability to cover a broader range of fraudulent activities.

The False Claims Act is one of the government’s primary tools for combating fraud and recovering losses due to fraudulent activities. It has been particularly effective in sectors like healthcare, defense, and government contracting, where large sums of federal money are involved.

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