Fraudulent reporting or underhanded business strategy may seem lucrative on paper—until you get caught. When a business engages in unethical or illegal acts to make a quick buck, it is up to watchful people and, as the United States government as drafted, ironclad protections to encourage whistleblowers to do the right thing.
This is not a new concept either. The False Claims Act is one of the older provisions enacted by the U.S. government and has since undergone many changes over more than a century to continue to provide these protections, penalties and benefits.
Also known as the “Lincoln Law”, the federal government initiated this act in 1863 to curb defense contractors that defrauded the Union army during the Civil War. It stipulated that any person knowingly submitting false claims to the government was liable to pay double the government’s damages plus a $2,000 fine.
Since 1986, the government has amended the FCA three times. Nowadays the fine is treble damages (triple the amount) and tacks on a ranging fine of $5,000 to $10,000.
Modern day FCA
The act still does work in recovering defrauded funds. Through the 2019 fiscal year, the federal government obtained more than $3 billion in settlements. The act encourages whistleblowers and private citizens to act on behalf of the government through a qui tam suit. By filing a suit under the FCA, a private citizen can receive a portion of the money obtained. Combine this with standard federal and state whistleblower protections, and citizens can keep companies honest when dealing with the government and avoid the stress of corporate repercussions.