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Originally enacted during the Civil War to fight profiteering by suppliers to the Union Army, the False Claims Act has evolved into a sweeping statute covering nearly every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



101 Ways to Improve State Legal Systems: A User's Guide to Promoting Fair and Effective Civil Justice - FIFTH EDITION 2017

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.

The ILR Research Review - Fall 2016

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)

In the News Today- June 30, 2016

June 30, 2016 | News and Blog

ILR pushed back on the lawsuit lending industry's claims that it is promoting "self-regulation" legislation in states around the country. "They are running around the country 'lobbying' to put a frame of legitimacy on their business," said Bryan Quigley, ILR senior vice president of communications. Read More »

FedEx Fights the Feds -- and Wins

June 23, 2016 | News and Blog

Good news for all those sending graduation presents this month to your loved ones: FedEx won't be forced to open your packages to ensure you are sending only legal items! Read More »

In the News Today - June 22, 2016

June 22, 2016 | News and Blog

Between July 2014 and September 2015, a single Chicago attorney filed more than 500 Illinois False Claims Act suits in Cook County Circuit Court against out-of-state liquor sellers, 201 of which were dismissed by a judge. Read More »

6 Reasons We Should be Concerned about Federal Prosecutors Run Amok

June 22, 2016 | News and Blog

Last week, the federal government was in the middle of a trial against FedEx Corp. when it suddenly told the judge it wanted to drop its $1.6 billion case against the shipping giant alleging illegal shipments of online prescriptions. It took two years - and likely tens of millions of dollars - but FedEx fought the law, and won. Read More »

Analysis: Rise in Corporate Cooperation Agreements in False Claims Act Settlements

June 15, 2016 | News and Blog

A Bloomberg BNA analysis shows that as of May 20, 46 percent of health-care related False Claims Act settlements in 2016 have "included a corporate cooperation agreement." Read More »

In the News Today - June 1, 2016

June 01, 2016 | News and Blog

Congressmen Call for FDA to Clarify Position on Off-Label Uses: Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, and Rep. Joe Pitts (R-Pa.), chairman of the Energy and Commerce Health Subcommittee, have called on the FDA to "clarify its position on what drug and device companies can tell doctors about unapproved or off-label uses." Read More »

Enforcement Gone Amok: The Many Faces of Over-Enforcement in the United States

Author: John H. Beisner, Geoffrey M. Wyatt, and Jordan M. Schwartz, Skadden Arps | May 26, 2016 | Research

This paper documents compelling examples of over-enforcement abuses, and offers details of the wide-ranging and interrelated ways government enforcement actions impact American businesses. Read More »

National Law Review: House Considers 'Commonsense' False Claims Act Reforms

May 13, 2016 | News and Blog

Attorneys from the Polsinelli, PC law firm write in the National Law Review about last month's House Judiciary Subcommittee on the Constitution and Civil Justice's hearing on the False Claims Act. Read More »

In the News Today - May 10, 2016

May 10, 2016 | News and Blog

Federal Agency Doubles False Claims Act Penalty Amount: The Railroad Retirement Board last week was the first federal agency to publish its interim final rule adjusting False Claims Act penalties for inflation. Read More »

In the News Today - May 5, 2016

May 05, 2016 | News and Blog

House FCA Reform Proposals Stem from ILR Report: Chelsea M. Rutherford from McDermott, Will & Emery writes of last week's House Judiciary Subcommittee on the Constitution and Civil Justice's hearing on the False Claims Act. Read More »

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