History of the False Claims Act
In 1863 Congress passed a law that created incentives for private individuals to report government fraud in an attempt to curb a rash of fraud against the government. On March 2, 1863 President Lincoln signed the law, called the False Claims Act (“FCA”). Also referred to as the “Informer’s Act” or “Lincoln’s Law,” the original FCA prohibited various acts designed to fraudulently obtain money from the government.
The FCA was initially adopted by Congress with the intention of combating fraud against the United States Army during the Civil War. Although the legislative history of the FCA focused specifically on fraud committed by military contractors, the FCA also applied to fraud committed by all government contractors.
Defendants were subject to both civil and criminal penalties under the original FCA and fined $2000 for each fraudulent claim in addition to a penalty of double the government’s actual damages.
Under the 1863 FCA, private individuals known as “relators” could pursue this remedy through a “qui tam” action, and the informer was entitled to half the total recovery. The justification for allowing qui tam litigation was to encourage citizens to report wrongdoing against the government that would otherwise go unnoticed. In short, the government hoped that economic incentives would promote private enforcement of federal legislation.
Interested in learning more about this fascinating area of the Law and how it could benefit you as a whistleblower? Please check-out our entire free Qui Tam Litigation section of tools, stats and information here. Contact Berg & Androphy here confidentially to discuss your potential case with us.