Enacted in 1863 during the Civil War, it is known as “Lincoln’s Law”, recognizing President Lincoln who was instrumental in enacting the law to address the gross abuse of dishonest wartime contractors defrauding the Union Army by selling the government shoddy, improper, or overpriced goods during the Civil War.
To punish the fraudulent contractors, harsh penalties within the FCA stipulated that any person who knowingly submitted false claims to the government was liable for double the cost of the government’s damages, plus a $2,000 penalty for each false claim. The government knew it needed whistleblowers in order to expose the fraud so the FCA incorporated the Old English court’s law of the qui tam, stemming from a Latin phrase meaning “he who sues on our King’s behalf as well as his own”. This provision authorized individuals who knew of the fraud to be able to sue on behalf of the government and receive a portion of the recovered penalties and damages as a reward.
While the FCA has been around for over 150 years, the whistleblower provisions were infrequently used until the 1980s when U.S. military spending increased and shocking abuses by government contractors resurfaced; i.e., invoices for $640 toilet seats, $437 tape measures and $74,000 ladders! Once again, the government needed to stop the rampant fraud and required the help of individuals to expose the wrongdoers. As a result, in 1986, Senator Charles Grassley (Iowa – R) wrote amendments to the FCA to stiffen the penalties and make it even more appealing to whistleblowers. For defendants, fines were increased to $10,000 for each false claim along with treble damages (a fine of three times the cost of damages). For whistleblowers, rewards of up to 30% of the government’s recovery were added, along with considerable protections from retaliation.
These significant changes restored the power behind the FCA as a key weapon in fighting fraud and continues today. Fines for each false claim increase regularly, a majority of states (including Florida) have adopted False Claims Acts themselves to address state and local fraud, and whistleblower protections continue to be strengthened.