In 1986, Congress passed legislation to strengthen a Civil War Era statute known as the False Claims Act (FCA), 31 U.S.C. §3729 et seq. Congress recognized that the Government alone, with its limited resources, was outmatched in the fight against rampant fraud. This law put into play a powerful public-private partnership for uncovering fraud against the federal government and obtaining the maximum recovery for the U.S. Treasury.

The FCA has become a powerful tool for uncovering fraud and abuse of government programs. One reason for this is the FCA's qui tam provisions, which provide a mechanism for private citizens and their attorneys to blow the whistle on private parties who defraud government programs. The FCA compensates the private whistleblower if his or her efforts are successful in helping the government recover fraudulently obtained government funds.

The key provisions of the 1986 FCA:

• Entitles successful whistleblowers to at least 15% and up to 30% of the funds they help the government recover from the defendant;
• Provides that the defendant pay for the successful whistleblowers reasonable expenses and attorney's fees;
• Protects whistleblowers from employer retaliation;
• Allows whistleblowers and the lawyers to remain as parties in the suits even after the Government joins;
• Makes defendants liable for acting in "deliberate ignorance" or "reckless disregard" of the truth and eliminated the need to prove specific intent.

A False Claims Act violation occurs when a person or entity deceives the Federal Government to improperly obtain money from the Government or improperly be relieved from paying money to the Government. 31 U.S.C. §3729(a) lists the specific misconduct the Act covers. The FCA prohibits, among other things:

• Knowingly presenting (or causing to be presented) to the Federal Government a false or fraudulent claim for payment;
• Knowingly using (or causing to be used) a false record or statement to get a claim paid by the Federal Government;
• Conspiring with another to get a false or fraudulent claim paid by the Federal Government; and
• Knowingly using (or causing to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Federal Government.

Persons who violate the False Claims Act are required to pay back the Federal Government three times the actual damages suffered, in addition to mandatory civil penalties of $5,500 to $11,000 for each false claim. 31 U.S.C. §3729(a).

Since 1986, many states have also enacted qui tam statutes modeled after the FCA. These include Arkansas, California, Delaware, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, New Mexico, Tennessee, Texas, Utah, Virginia and the District of Columbia. Certain of these statutes limit the reward the relator or whistleblower may receive (ex. Arkansas caps a reward at 10% or $100,000) and some address fraud in connection with the state Medicaid programs only (ex. Arkansas, Louisiana and New Mexico). Only the Utah statute does not contain a qui tam provision or reward for reporting fraud.

View the Chronology of a Typical Qui Tam Case