False Claims Act (FCA)

Originally enacted during the Civil War to fight profiteering by suppliers to the Union Army, the False Claims Act has evolved into a sweeping statute covering nearly every company doing business with the federal government. The law imposes liability on persons who knowingly submit false claims seeking government funds or who knowingly seek to avoid paying amounts owed to the government. Although well-intentioned, the law has been transformed into a lucrative money machine for plaintiffs’ lawyers and their clients – while hurting American businesses and taxpayers. read more...

While the need for an antifraud statute is clear, the False Claims Act’s broad language and overzealous enforcement have encouraged significant abuse—turning what should be simple contractual disagreements and paperwork mistakes into claims for fraud. 

The law allows the government to pursue any government contractor suspected of making “false claims” about their goods or services to the government. And it allows third-party whistleblowers (called qui tam relators) to sue in the name of the government and to keep a large part of any award or settlement. The statute allows for treble damages (damages three times the amount of the alleged fraud) as well as other potentially excessive penalties, including a prohibition on companies or individuals receiving federal contracts. Total monetary damages under the False Claims Act have risen from $272 million in 1992 to a record $5.69 billion in FY 2014.

Since the law was expanded in 1986, plaintiffs’ lawyers have built a cottage industry around qui tam lawsuits – netting tens of millions for whistleblowers and their lawyers instead of for taxpayers. In fact, the current application of the law is so unbalanced that some whistleblowers are receiving monetary awards for information on violations that they committed.

A number of reforms to the False Claims Act are needed to restore fairness and predictability and to prevent inappropriate payments. These include:

  • Providing a safe harbor for companies with robust compliance programs
  • Creating reasonable whistleblower incentives to ensure that legitimate fraud is reported, while preventing outrageous awards to whistleblowers and their attorneys
  • Clarifying the use and meaning of “implied certifications”—the doctrine that says a simple, non-monetary error (such as incorrect paperwork by a government contractor) can be used as the basis for a False Claims Act lawsuit
  • Limiting the government’s power to bar companies and individuals from federal contracts as a method to coerce massive settlements

 

Research

The ILR Research Review - Volume 2

May 18, 2015 | The ILR Research Review offers valuable insights from our preeminent experts and specialists on key topics addressed in the latest of ILR's research reports.

The ILR Research Review - Volume 1

December 18, 2014 | The second issue of the ILR Research Review offers valuable insights from our preeminent experts and specialists on key topics addressed in the latest of ILR's research reports.

All Results for False Claims Act (FCA)

In the News Today - July 31, 2015

July 31, 2015 | Insights

A Chicago personal injury lawyer specializing in litigation involving motor vehicle accidents will need to answer allegations he violated federal privacy laws in allegedly using personal information on police traffic accident reports to solicit potential new clients, after a federal judge declined to dismiss a class action lawsuit against him over the alleged business practices. (Cook County Record) Read More »

Tags: Class Actions, False Claims Act (FCA), Illinois

Wisconsin Legislature Passes Repeal of Medicaid "Whistleblower" Law

July 13, 2015 | Insights

The Wisconsin legislature passed a budget this week that includes a repeal of a Medicaid "whistleblower" law enacted in 2007. Modeled on the federal False Claims Act, the Milwaukee Journal-Sentinel notes that the Wisconsin law "has made millions of dollars for lawyers." Read More »

Tags: False Claims Act (FCA), Wisconsin

Supreme Court Issues Split Decision on Whistle-Blower FCA Cases

May 27, 2015 | Insights

The U.S. Supreme Court on Tuesday issued a split decision on two issues regarding the scope of liability under the False Claims Act (FCA). Read More »

Tags: False Claims Act (FCA)

The ILR Research Review - Volume 2

May 18, 2015 | Research

The ILR Research Review offers valuable insights from our preeminent experts and specialists on key topics addressed in the latest of ILR's research reports. Read More »

Tags: Third Party Litigation Funding (TPLF), Telephone Consumer Protection Act , State Legal Reforms, State Attorneys General, Securities Litigation Reform, Medical Liability, Lawsuit Abuse Impact, False Claims Act (FCA), Class Actions Around the Globe, Class Actions

Federal Judge Rejects Expansive Interpretation of False Claims Act

May 14, 2015 | Insights

An Ohio federal judge dismissed a False Claims Act lawsuit brought against U.S. Bank that could have expanded liability under the statute. The plaintiff, a legal aid group, claimed that U.S. Bank was defrauding the federal government through its mortgage practices. But as the New York Times reports, the judge rejected the lawsuit as based on publicly-known information. Read More »

Tags: False Claims Act (FCA), Ohio

DaVita to Pay Record $495M in False Claims Act Suit

May 05, 2015 | Insights

In what may be the largest settlement for an False Claims Act (FCA) case not brought by the government, DaVita Inc. has set aside $495 million to settle a suit involving allegations over reimbursements for its dialysis drug from the government and private insurers. Read More »

Tags: False Claims Act (FCA)

WSJ Editorial: 'Prevent Trial Lawyers from Becoming War Profiteers'

January 15, 2015 | Insights

The Wall Street Journal editorial board urges the U.S. Supreme Court to "prevent trial lawyers from becoming war profiteers" in a case that seeks to suspend the statute of limitations in civil False Claims Act cases. Read More »

Tags: Legal Ethics, False Claims Act (FCA)

The ILR Research Review - Volume 1

Author: Institute for Legal Reform | December 18, 2014 | Research

The second issue of the ILR Research Review offers valuable insights from our preeminent experts and specialists on key topics addressed in the latest of ILR's research reports. Read More »

Tags: State Legal Reforms, State Attorneys General, Lawsuit Abuse Impact, Foreign Judgment Enforcement, Foreign Corrupt Practices Act (FCPA), False Claims Act (FCA), Class Actions Around the Globe

Lawsuit Ecosystem II: New Trends, Targets and Players

Author: Victor E. Schwartz & Cary Silverman, Shook, Hardy & Bacon LLP | December 04, 2014 | Research

This report, authored by a distinguished group of practitioners, explores the evolving lawsuit "ecosystem." It considers how plaintiffs' lawyers generate litigation and significant developments that will spur more lawsuits or rein in excessive liability. Read More »

Tags: State Legal Reforms, State Attorneys General, Securities Litigation Reform, Lawsuit Abuse Impact, False Claims Act (FCA), Class Actions, Asbestos

In The News Today - December 1, 2014

December 01, 2014 | Insights

ILR President Lisa A. Rickard will moderate a panel, "Today's First Amendment Environment," at the U.S. Chamber Foundation event, "Free Speech & Business," to be held this Wednesday, December 3rd. Read More »

Tags: False Claims Act (FCA), Legal Ethics, West Virginia

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