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Originally enacted during the Civil War to fight profiteering by suppliers to the Union Army, the False Claims Act has evolved into a sweeping statute covering nearly every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 $3.7 billion in FY 2017.

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


Suggested Resources


All Results for False Claims Act (FCA)

  1. In the News Today - November 13, 2017

    November 13, 2017 | News

    White House, HUD Secretary Contest DoJ FCA Enforcement; Defense Verdict in Medical Implant Trial Could Spell Trouble for MDL Cases against Cook Medical... Read More

  2. DoJ Suffers Major Defeat in Qui Tam Intervention

    November 13, 2017 | News

    U.S. Magistrate Judge Theresa Carroll Buchanan of the Eastern District of Virginia struck a DoJ expert witness and ordered the Department to pay legal fees to Maryland-based nursing facilities company HCR ManorCare Inc. ... Read More

  3. In the News Today - October 16, 2017

    October 16, 2017 | News and Blog

    Spike in IL lawsuits vs employers over fingerprints, other biometric data may be just the beginning; Carson: Government considering ending use of False Claims Act against FHA lenders... Read More

  4. DOJ Drops "Closely Watched" False Claims Act Suit

    October 16, 2017 | News and Blog

    After a California judge pushed back against the case, the Department of Justice dismissed a "closely watched" False Claims Act lawsuit, in which it alleged that United Healthcare defrauded Medicare Advantage, reports Law360.... Read More

  5. Plaintiffs' Bar 'Salivating' at Fmr. AG Lynch's Rule Doubling False Claims Act Penalties

    February 21, 2017 | News and Blog

    Former U.S. Attorney General Loretta Lynch signed a final rule before leaving office that would "effectively double penalties under the False Claims Act," reports the Washington Free Beacon's Joe Schoffstall.... Read More

  6. Potential FCA Changes as Trump Takes Office

    January 09, 2017 | News and Blog

    False Claims Act (FCA) enforcement under the Trump administration may see notable differences as compared to President Obama's tenure due to changes including the appointment of new U.S. attorneys and new leadership at the DOJ, writes Law360.... Read More

  7. In the News Today - December 15, 2016

    December 15, 2016 | News and Blog

    The U.S. Department of Justice announced yesterday that False Claims Act (FCA) suits recouped $4.7 billion in fiscal year 2016. This value eclipsed the nearly $3.6 billion recouped in fiscal year 2015 and represents the third-biggest annual tally in the FCA's history. ... Read More

  8. Supreme Court Rules Violation of FCA's Secrecy Requirement Does Not Lead to Dismissal of Case

    December 07, 2016 | News and Blog

    In a unanimous ruling yesterday, the U.S. Supreme Court said that violating the federal False Claims Act's (FCA) secrecy requirement does not automatically mean a complaint should be dismissed. ... Read More

  9. In the News Today -- November 2, 2016

    November 02, 2016 | News and Blog

    What do you get when you mix two of the most pro-litigation tools in America today?... Read More

  10. State Farm Urges SCOTUS to Dismiss Claim by "Whistleblower" Who Leaked Suit to Media

    November 02, 2016 | 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