Amendments to the False Claims Act

The False Claims Act, also known as Lincoln’s Law, has undergone some major amendments over the years. This is an important time for the act, considering that some of the most significant amendments in decades were just passed a few months ago.

As we blogged previously, the False Claims Act celebrated its birthday on March 2nd. In honor of unofficial False Claims Act week, here are the most important amendments to the FCA over the years.

In 1943, the act was amended, and its power seriously limited.  Congress decided that the act was being abused, and decided to defang the FCA. The relator’s share of the proceeds was reduced, and the relator’s right to bring a qui tam suit was eliminated if the government had prior knowledge of the fraud–even if the government had known about the fraud but made no attempt at self-help in order to correct the problem! All of this basically rendered the FCA useless.

After 1943, qui tam suits came to a screeching halt. The False Claims Act was basically a castrato until 1986, when amendments were passed to strengthen the act in part due to President Reagan’s consternation over the amount of government money being lost to waste. This was during the time that the $900 toilet seat and the $500 dollar hammer entered the American consciousness. The 1986 amendments greatly strengthend the FCA and made it the fraud-fighting tool it is today.  Among the amendments were an increase in the relator’s share, granting of treble damages, and whistleblower protections for employees. Iowa Senator Chuck Grassley helped make the 1986 amendments possible, and he continues to be a champion in the fight against fraud.

In 2009, the most significant changes to the FCA since the 1986 amendments were implemented through the Fraud Enforcement and Recovery Act of 2009 (FERA). FERA expands the scope of the FCA, and, among other things, increases protections for qui tam relators beyond employees to include contractors and agents. FERA also redefines a “claim” for FCA purposes to include “any request or demand, whether under a contract or otherwise for money or property and whether or not the United States has title to the money or property” that is 1) presented directly to the United States, or 2) “to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a government program or interest’ and the government provides or reimburses any portion of the requested funds.”

Based on the legislative history following 1986, Congress seems to have come to its senses regarding the FCA. Hopefully legislators will continue to amend the FCA only in ways that further strengthen it.

For additional information about this whistleblower law and any amendments since this post was written, please contact one of our Philadelphia False Claims Act lawyers.