Why Was the False Claims Amendments Act of 1986 Enacted?

By Lane L. Vines

The Original “Lincoln Law”

The False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, was originally enacted in 1863 during the administration of President Abraham Lincoln and has often been referred to as the “Lincoln Law.” The law was motivated by the unscrupulous acts of government contractors during the American Civil War who provided deficient goods and services to the Union Army.

As enacted, the FCA provided for both criminal and civil liability and allowed any person to bring suit in the name of the United States to recover civil penalties and forfeitures. These so-called qui tam” provisions thus enlisted members of the public, known as relators, to actively pursue recoveries for fraud on behalf of the Government. Relators may then share in a portion of those recoveries. The original FCA remained relatively unchanged for decades.

The 1943 Amendments

In 1943, amid criticism that qui tam actions were providing recoveries to undeserving relators and impeding federal law enforcement, Congress amended the FCA to effectively curtail the ability of relators to prosecute claims and reduce a relator’s share in the event of a successful suit. While the 1943 Amendments may have been intended to reform the FCA, fraud against the Government skyrocketed during the next several decades. Worse yet, most of the wrongdoing went unpunished. According to a 1981 report by the Government Accountability Office, “[f]or those who are caught committing fraud, the chances of being prosecuted and eventually going to jail are slim…. The sad truth is that crime against the Government often does pay.”

The 1986 Amendments

Faced with rampant fraud and a lack of government resources to combat it, Congress eventually recognized that a more robust FCA was needed. In 1986, Congress passed Public Law 99-562 (100 Stat. 3153), known as the False Claims Amendments Act of 1986. This legislation, sponsored by long-time whistleblower advocate Senator Charles Grassley of Iowa and Representative Howard Berman of California, among others, made numerous changes to strengthen and enhance enforcement of the FCA. The Amendments focused on not only increasing penalties but also empowering relators through added protections against retaliation and greater incentives.

Among other things, the 1986 Amendments:created an explicit cause of action for reverse false claims (e., false statements made to reduce an obligation to pay the United States), 31 U.S.C. § 3729(a)(1)(G);

  • created an explicit cause of action for retaliation against whistleblowers, 31 U.S.C. § 3730(h);
  • increased sanctions from a penalty of not more than $2,000 and double damages to a penalty of not less than $5,000 nor more than $10,000 and treble damages, 31 U.S.C. § 3729(a);
  • increased the maximum award available to qui tam relators from 25% to 30%, 31 U.S.C. 3730(d)(2);
  • added an express definition of the knowledge required for a violation, declaring that a specific intent was unnecessary, 31 U.S.C. 3729(b);
  • provided a specific preponderance-of-the-evidence burden of proof standard, 31 U.S.C. 3731(d);
  • added a declaration that states may act as qui tam relators, 31 U.S.C. 3732(b);
  • added a revised jurisdictional bar for qui tam suits based on matters of public knowledge, 31 U.S.C. 3730(e);
  • expanded the applicable statute of limitations, 31 U.S.C. 3731(b); and
  • created an authorization for government use of civil investigative demands, 31 U.S.C. 3733.

The 1986 Amendments have clearly succeeded in many respects. While FCA claims reportedly recovered about $40 million a year prior to 1986, the Government has since recovered more than $44 billion in FCA settlements and judgments. Moreover, whistleblowers have initiated 80% of these cases.

Indeed, as Senator Grassley, one of the chief architects of the 1986 Amendments, has aptly noted, “[t]he False Claims Act is the government’s premier tool to recover government money lost to fraud and abuse.”

If you have discovered evidence of fraud committed against the government, you may be entitled to a substantial reward and the legal protections afforded to whistleblowers under state and federal laws. The attorneys at Berger Montague are nationally recognized for their work in Whistleblower/Qui Tam actions. For more information or to schedule your confidential consultation, contact us online or call us at 888-647-9292.

By | 2018-03-26T14:20:40+00:00 December 13th, 2017|False Claims Act Information|