Happy 35th Anniversary, False Claims Act!

October 27, 2021

Happy 35th Anniversary to the False Claims Act, amended on October 27, 1986, to provide incentives for whistleblowers, among other enhancements.  This law is the single most important U.S. taxpayer tool to recover funds lost due to fraud against the government.

The purpose of the False Claims Act is to:

  • Recover misspent taxpayer money

  • Deter future misspending of taxpayer money

  • Strengthen companies’ compliance programs

  • Provide financial incentives to individuals to blow the whistle

  • Protect whistleblowers from retaliation

How did the 1986 amendments enhance the False Claims Act?

The amendments made it easier for private citizens (“relators”) to bring qui tam actions on behalf of the government and increased the relator’s share of the government’s recovery in such cases. Of the $2.2 billion in False Claims Act recoveries in fiscal year 2020, over $1.6 billion arose from whistleblower lawsuits filed under the qui tam provisions of the False Claims Act. The government paid $309 million to the whistleblowers who exposed the government contracting fraud and health care fraud. The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 672 qui tam suits filed this past year – an average of nearly 13 new cases every week.

How well does the False Claims Act work?

According to Taxpayers Against Fraud, in fiscal year 2020, government agencies lost $206.4 billion to fraud in the form of improper payments.  In a report from the same, the return on investment for fighting healthcare fraud alone through False Claims Act enforcement is 20:1 (and healthcare spending significantly outpaces other government program spending).  Despite that excellent cost-benefit ratio, qui tam cases make up less than 1% of total civil cases filed in the U.S. each year.

© 2021 by Tycko & Zavareei LLP
National Law Review, Volume XI, Number 300