About the Law

Over $20 Billion has been recovered since 1986 using what was then a little known law called the False Claims Act. 

The False Claims Act was originally enacted in 1863, largely in response to widespread fraud and profiteering committed by government contractors during the Civil War. The Act allowed a private citizen, commonly known as a relator, to bring a lawsuit on behalf of himself and the United States against anyone who presented a false or fraudulent claim to the government, and to keep a portion of any recovery. For a number of reasons, however, the Act was not widely used over the next century, and was not a very effective deterrent against government contractor fraud.

In an attempt to breathe life into the statute, Congress drastically overhauled the False Claims Act in 1986, passing a number of amendments designed to make it a more effective tool in combating fraud. In particular, Congress provided a number of incentives to encourage those with knowledge of fraud to come forward. These are known as the qui tam provisions because they enhanced the aspect of the law created on an old English legal principle identified by the Latin phrase:  qui tam pro domino rege quam pro si ipso in hac parte sequiter—meaning “Who sues on behalf of the King as well as for himself.” As one court observed, Congress believed that "fraud against the Government was apparently so rampant and difficult to identify that the Government could use all the help it could get from private citizens with knowledge of fraud." U.S. ex rel. LaValley v. First Nat'l Bank, 707 F.Supp. 1351, 1355 (D. Mass. 1988).

The 1986 amendments provide that, with limited exceptions, the relator will receive a guaranteed share of any recovery obtained by the government, ranging from a minimum of 15% to a maximum of 30% of the proceeds. The amendments give the relator the right to prosecute the case even if the government declines to participate, and allow the relator to continue as a party if the government does intervene. The amendments also increased the damages recoverable under the Act, providing that a defendant is liable for three times the damages sustained by the government, plus a mandatory penalty of between $5,000 and $10,000 for each false claim. (These amounts have since been increased to $5,500 and $11,000 to adjust for inflation). The amendments also added a whistleblower-protection provision, allowing an employee who has been fired or otherwise retaliated against for protected conduct to recover damages, including two times back pay.  Congress also wanted to make sure that good private attorneys would take the cases, so it shifted the attorneys’ fees and all litigation costs to defendants who settle or lose.

Congress was also concerned about courts’ misinterpretations and narrowing of the reach of the FCA and its remedies.  Part of the legislative history of the amendments is dedicated to the debunking of erroneous court holdings and misinterpretations.  Nevertheless, since the amendments, courts have continued to hamper recoveries of taxpayer monies by misconstruing or judicially blocking the law.  In part because of the unique nature of the law and in part because of the varied and ever-changing nature of the interpretations and misconstructions of the FCA, practice under the law takes focus and experience that is not required for other areas of law.  Bothwell Bracker & Vann fights hard to protect the law as Congress intended it to be interpreted and to help Courts of Appeal and new Congresses to correct judicial error that creeps into the dynamic of prosecutions under the False Claims Act.  Bothwell Bracker & Vann also promotes the expansion of the federal FCA to the state level.  Currently, there are over twenty state and local FCA statutes, with many more being presented every month. 

With all the various statutes and the many cases filed under seal, it is hard to keep accurate statistics on prosecutions and recoveries under the FCA.  However, the current consensus is that well over $20 billion has been recovered with over $2 billion being paid to whistleblower relators.  Each year, the amounts grow with FY 2006 seeing settlements and verdicts topping $3.2 billion and with six cases being settled for $100 million or more.  There is already $1 billion announced in the first quarter of 2007.  Additional settlements and developments in the law are discussed regularly in Bothwell Bracker & Vann Qui Tam Whistleblower Blawg.