The False Claims Act is a federal law that makes entities and individuals who present false claims to the federal government in order to receive payment liable. The act includes some qui tam provisions that allow whistleblowers to file civil lawsuits on the government’s behalf against entities and individuals who have violated the act by presenting false claims for payment. If the government is able to recover money because of a qui tam lawsuit that is filed by a whistleblower, the whistleblower is entitled to receive a percentage of the recovery as an award. The federal government has the False Claims Act in place so that fraud committed against the federal government can be prosecuted. In addition, many cities and states have their own lawsuits allowing similar whistleblower actions.

Why the False Claims Act exists

In 1863, President Abraham Lincoln enacted the False Claims Act in response to defense contract fraud. At the time, private companies contracted with the Union to supply Union soldiers with the equipment that they needed to fight the Confederacy. Some of these companies were opportunistic. Many Union soldiers ended up being sent non-working rifles and donkeys instead of the horses and guns that were promised by the companies. The first False Claims Act was passed in order to encourage and reward whistleblowers who came forward with evidence of the private companies’ committing fraud.