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History of the False Claim Act[index]

The FCA was passed in 1863, during the Civil War. Congress was concerned that government was being cheated by merchants suppling goods to the Union soldiers so it made it a crime to present a false claim to the government. At that time, the claims at issue were those for payment for goods that were never delivered, or that did not meet the specifications required. The statute called for both civil (fines) and criminal punishment - jail time. This was understandable, given that the tainted food and defective equipment being suppled to the soldiers was probably as dangerous as the enemy.

The qui tam provision was included to make the law self-enforcing. Any citizen who knew of a false claim could file an action in the name of the Federal Government, and, in the original 1863 law, collect 50% of the proceeds. In theory, at least, this was a powerful deterrent for false claims because there would be so many people in the distribution chain who could blow the whistle.

In 1943, the United States Supreme Court decided that the FCA allowed a person to bring a FCA lawsuit even if the government already knew about the fraud. Congress did not like this, feeling that it would undermine the government's ability to prosecute such claims. The FCA was substantially amended in 1943 to prohibit qui tam actions unless the plaintiff could provide new information to the government. Congress also reduced the plaintiff's cut of the award from 50% to 25%.

The requirement that the plaintiff provide new information increased the odds against collecting as a qui tam plaintiff. Worse, if the government choose to intervene in the plaintiff's lawsuit, the plaintiff was barred from collecting any part of the award. Since it was possible for the government to intervene after the plaintiff (or her attorney) had spent thousands of dollars and years on a FCA lawsuit, these amendments effectively ended qui tam FCA litigation.

In 1986, amid horror stories of $200 hammers and $2000 toilet seats, Congress again amended the FCA. Unlike the 1943 amendments, these were intended to revitalize FCA litigation. The penalties were raised to a minimum of $5000 and a maximum of $10,000 per claim, plus three times the amount of the government's damages, plus the costs of bringing the litigation. The qui tam plaintiff was also allowed to recover at least part of the her award even in cases in which the government intervened.

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