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Originally enacted during the Civil War to fight profiteering by suppliers to the Union Army, the False Claims Act has evolved into a sweeping statute covering nearly every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 errors into claims for fraud. In addition, many states have their own state-level False Claims Acts that also suffer many of the same problems as the current federal statute. 

The law allows the government to pursue any government contractor suspected of making “false claims” about their goods or services to the government. It also 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. A successful False Claims Act case against a company or person can ultimately result in a prohibition against that company or person receiving future federal contracts or funds. Total monetary damages under the False Claims Act have risen from $272 million in 1992 to a record $4.7 billion in FY 2016.

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 themselves 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 (among others):

  • 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 ethical companies and individuals from federal contracts as a method to coerce massive settlements



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September 12, 2017 | A user's guide to state legal reforms, providing policymakers with a compendium of options available to foster a sound legal system and promote state economies. This resource also offers a compilation of recently-enacted legal reforms to show how legislators can move the proposals described in the guide from theory into practice.

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September 22, 2016 | This edition of the ILR Research Review offers valuable insights from ILR's latest research on over-criminalization and the challenges of business compliance, over-enforcement, third-party litigation funding in the UK, and asbestos trust claims.

All Results for False Claims Act (FCA)

Litigation Trends, Targets, and Players

October 24, 2013 | News and Blog

ILR released its "New Lawsuit Ecosystem" report at the 14th Annual Legal Reform Summit on Wednesday. Read More »

New Research on Lawsuit Trends Headlines Chamber's Legal Reform Summit

October 23, 2013 | Press Release

ILR today identified asbestos, class-action, data privacy, and False Claims Act lawsuits among the leading lawsuit trends, in a paper released at its 14th Annual Legal Reform Summit. Read More »

Legal Reformers Must Act to Heal the Lawsuit System

Author: Lisa A. Rickard, President, U.S. Chamber Institute for Legal Reform | October 23, 2013 | News and Blog

By being proactive and persistent, we can achieve a healthy lawsuit system. Read More »

The Great Myths of State False Claims Acts: Alternatives to State Qui Tam Statutes

Author: Jonathan L. Diesenhaus, Hogan Lovells. | October 23, 2013 | Research

Authored by Jonathan Diesenhaus of Hogan Lovells, this paper addresses the unexpected effects and complications from state laws that attempt to mirror the federal False Claims Act. Read More »

Fixing the False Claims Act: The Case for Compliance-Focused Reforms

Author: Peter B. Hutt II, Akin Gump and David W. Ogden, Wilmer Hale | October 23, 2013 | Research

Authored by Peter Hutt of Akin Gump and David Ogden of Wilmer Hale, this paper proposes a number of reforms to the False Claims Act. Read More »

The New Lawsuit Ecosystem: Trends, Targets and Players

Author: Victor E. Schwartz and Cary Silverman Shook, Hardy & Bacon L.L.P. | October 23, 2013 | Research

Authored by a distinguished group of practitioners, this report examines the developing lawsuit "ecosystem" and areas of litigation of most concern to the business community. Read More »

David W. Ogden on

Author: David W. Ogden and Elisebeth Colllins Cook of Wilmer Cutler Pickering Hale and Dorr LLP | October 26, 2012 | Video

At the 13th Annual Legal Reform Summit on October 24, 2012, we pulled aside David W. Ogden, Partner, Co-Chair, Government and Regulatory Litigation Practice Group, Wilmer Cutler Pickering Hale and Dorr LLP, to discuss a new paper entitled, "The Exclusion Illusion: Fixing a Flawed Health Care Fraud Enforcement System." Watch »

Federal Regulatory Overreach: Fresh Approaches

October 24, 2012 | Video

This panel at the 13th Annual Legal Reform Summit addressed federal regulatory and prosecution policies, focused on the false claims act, exclusion authority, foreign corrupt practices act and other Department of Justice activities. Watch »

Preventing Government Overpayments to Qui Tam Plaintiffs: Proposed Amendments to the False Claims Act

Author: Peter B. Hutt II and Anna R. Dolinsky of Akin Gump Strauss Hauer & Feld LLP | October 26, 2011 | Research

This paper examines the structure of the FCA's whistleblower provisions and available information on whistleblower motivation and concludes that the statute's existing structure systematically overpays Relators and their counsel. This paper identifies several simple legislative amendments that would address these systematic flaws and ensure that the government is getting its money's worth when it pays Relators under the FCA. Read More »

State Farm Urges SCOTUS to Dismiss Claim by ‘Whistleblower’ Who Leaked Suit to Media

February 16, 2011 | News and Blog

An attorney for State Farm urged the U.S. Supreme Court yesterday to "dismiss lawsuits by whistleblowers who violate a nondisclosure requirement in the federal law that targets fraud against the government," reports The National Law Journal's Marcia Coyle. Read More »

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