Published On: Fri, Jul 6th, 2018

Opinion: Why the False Claims Act is a Double-Edged Blade

Have you ever been rewarded for calling out cheaters in class? Well, that’s pretty much the core essence of the current False Claims Act. The FCA is a federal law that has long been the government’s defense against unscrupulous businesses who seek to transact with the government in order to gain profit at the expense of government funds.

Photo/donkeyhotey donkeyhotey.wordpress.com

This law goes all the way back to the Civil War, when it was intended to help protect the government against dishonest businessmen who supplied the Union army with substandard goods. A few examples of this were spoons and forks in the place of rifles, overpriced toilets, sand instead of potatoes, and a whole lot more.

The law was meant to empower the citizens to expose these conmen. Sadly, the law was ineffective at its purpose for the same reason that nobody really calls out cheating classmates in class — you don’t really get anything out of it other than the ire of the classmate you just called out.

But all that changed in 1986 when amendments were made to the “Lincoln Law”. These amendments were brought about by the numerous and highly-publicized reports of abuses in the defense contracting business. The new amendment brought more emphasis on the role of the whistleblower as well as the addition of the qui tam provision, which rewarded whistleblower a percentage of the funds awarded by the court in a successful FCA case.

Image/mohamed_hassan via pixabay

For once, you actually got cash everytime you called out a cheating classmate. And this had the same effect as you would expect it to have. The FCA, with its new qui tam provision, drastically boosted the law’s effectiveness. For 1986 to 2015, the federal government has recovered over $48 billion from FCA cases.

This law is not a simple one by any means. It varies from state to state. While you may know how to report Medicare fraud in Florida, the processes that you’ve familiarized yourself with may not be applicable in other states.

But this success brought with it a new problem — greed. Not from the unscrupulous companies, but rather from the whistleblowers themselves.

Now, I’m not trying to malign the importance of whistleblowers in the FCA. But the problem here is that majority of FCA claims are meritless, and the FCA has, in a way, been devolved into a new way to harass companies. While defendants are presumed innocent until proven otherwise, the fact remains that lawyer’s fees are expensive and court hearings are stressful to attend. Business owners — the legitimate ones — should be left to tend to their company. This disruption in the form of an FCA claim is more than enough to upset the normal flow of any business.

Not only that, but courts can easily become congested if there is a large influx of FCA claims. The problem is that the court has limited resources and it would be a Herculean task to monitor each of these claims closely.

I truly think that courts should encourage both defendants and plaintiffs to put more effort into determining the validity of a claim even before it goes to trial. There should be an active effort into weeding out bad false claims in order to decongest the courts, as well as to avoid the unnecessary disruption of business and financial flow.

By doing so, we are able to free up valuable resources so that we can put them to use for more important cases.

Author: Dharmedra

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