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Originally enacted during the Civil War to fight profiteering by suppliers to the Union Army, the False Claims Act has evolved into a sweeping statute covering nearly every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

  2. 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

  3. A Toxic Stew: Litigation Financier Launches New "Whistleblower" Business

    November 01, 2016 | News and Blog

    What do you get when you mix two of the most pro-litigation tools in America today? The tools in question are Third Party Litigation Finance (TPLF) and the False Claims Act. And one large firm has combined the two - announcing recently that it will begin a practice focused on providing financing for False Claims Act (commonly known as "whistleblower") lawsuits.... Read More

  4. Plaintiffs' Bar Steps Up Profitable False Claims Act Assault on Higher Education

    October 19, 2016 | News and Blog

    The plaintiffs' bar claims to stand for consumers - but they have a funny way of showing it, especially when it comes to those seeking affordable higher education.... Read More

  5. The ILR Research Review - Fall 2016

    September 22, 2016 | Research

    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.... Read More

  6. In the News Today - August 18, 2016

    August 18, 2016 | News and Blog

    The criminal fraud case against Texas plaintiffs' attorney Mikal Watts and six others has now gone to a jury. Watts and the other defendants are facing allegations they signed up fake clients and submitted false claims after the Gulf oil spill.... Read More

  7. In the News Today - August 4, 2016

    August 04, 2016 | News and Blog

    "Has the government lost the upper hand in federal False Claims Act (FCA) investigations of health care companies?" asks Skadden Arps partner Michael K. Loucks.... Read More

  8. 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

  9. 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

  10. 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