Simpson Law Firm, LLC

The False Claims Act is the federal government's primary tool for combating the
massive fraud and abuse committed by contractors against American taxpayers.
The statute was originally adopted in 1863 as a result of widespread fraud by
contractors for the Union Army in the Civil War. In 1986, Congress drastically
overhauled the statute in an attempt to induce employees to come forward with
information about how companies are defrauding the federal government.

The False Claims Act allows a private citizen -- commonly referred to as a
"whistleblower" or "relator" -- to file a lawsuit on behalf of the federal
government against any person or company committing fraud against the
government. The lawsuit is initially filed "under seal," without notifying the
defendant. A copy of the lawsuit is served on the government, which may either
take over the prosecution itself or allow the relator and his or her counsel to
prosecute the case. If successful, the relator is entitled to receive a share of the
proceeds -- from 15-25% if the government intervenes, and from 25-30% if the
government does not intervene.

Significantly, the 1986 amendments also added an anti-retaliation provision,
which protects whistleblowers from being fired or otherwise retaliated against for investigating and reporting possible fraud. An employer who violates this
provision may be liable for two times back pay, plus interest, and may be
required to reinstate the employee.

Since the 1986 amendments were passed, the False Claims Act has become an
increasingly effective tool for combating government fraud. Since 1986, the
government has recovered over $30 billion through the False Claims Act, of
which over $3.4 billion has been paid to relators. The single largest category of
False Claims Act cases involves healthcare fraud (primarily Medicare and
Medicaid fraud), followed by defense fraud. However, wherever taxpayer funds
are involved, it is likely that fraud exists. As Benjamin Franklin once said,
"There is no kind of dishonesty into which otherwise good men more easily and
frequently fall than that of defrauding the government."

Of course, it is not only the federal government that is subjected to fraud and
abuse -- state and local governments are also victims. Recognizing the success
of the federal statute in rooting out fraud and abuse against the federal
government, a growing number of states and municipalities have adopted their own versions of the False Claims Act, in order to combat fraud against state and local governments and agencies.