Does the False Claims Act really matter? As a False Claims Act lawyer who
represents whistleblowers, I have seen the Act work firsthand. But on
December 4th, the
Department of Justice released figures that prove the point. According to the Justice Department,
during the fiscal year that ended on September 30, 2012, the Justice Depart,meant
recovered $4.9 billion dollars thanks to the FCA, more than 1.7 billion
higher than in any prior year. Of the $4.9 billion in recoveries, the
Justice Department credits $3.3 billion of that amount to qui tam cases
filed by whistleblowers, who are known as “relators” under
the False Claims Act.
Big as last year’s recoveries were, we need to remember two things.
First, the False Claims Act is not a “new” source of money
for the Government. The point of the Act is just to get back the money
that is stolen from U.S. taxpayers every year as the result of unscrupulous
contractors who are willing to breach their contracts with the United
States. Under the law, the fraudster is supposed to pay back double or
triple what it stole, but that extra amount does little more than cover
the expense of these cases to the Government. The Government certainly
is not getting a windfall because of cases brought under the FCA. Even
worse, the GSA estimates that the amount being recovered is just the tip
of an enormous iceberg of fraud that is rapidly depleting the federal coffers.
Second, the False Claims Act works because it gives whistleblowers an incentive
to come forward. When Congress gutted the whistleblower laws back in World
War II, it got a predictable result: virtually no FCA cases were filed.
Whistleblowers were afraid to risk their jobs to warn an often unreceptive
government about fraud. But when Congress strengthened the statute in
the 1980’s and again in the 2000’s, many more cases were filed.
As the DOJ puts it: “The 1986 amendments strengthened the act and
increased incentives for whistleblowers to file lawsuits on behalf of
the government, leading to more investigations and greater recoveries.”
Today, the Justice Department acknowledges that: “Most false claims
actions are filed under the act’s whistleblower, or qui tam, provisions,
which allow private citizens to file suits alleging false claims on behalf
of the government.” Thanks to the laws passed in 2009 and 2010,
fiscal year 2012 saw a big upswing in the number of cases filed under
the False Claims Act. A total of 647 qui tam suits were filed in that one year.
According to the statistics released by the DOJ, $3 billion of the recoveries
came in health care fraud cases. Another $1.4 billion was related to housing
and mortgage fraud.
Attorney General Eric Holder said that the recoveries showed the government’s
“ongoing commitment to recover losses, to prevent fraud, to bring
abuses to light, and to hold accountable those who violate the law and
exploit some of the government’s most critical programs.”
The Justice Department has every right to be proud of these recoveries,
and as taxpayers we owe the Justice Department – as well as the
whistleblowers who sacrificed careers and years to guide them –
a huge debt of gratitude.