History Of The False Claims Act: From Lincoln To Today
The False Claims Act (FCA) is one of the oldest and most effective anti-fraud laws in the United States — and also one of the few that actively enlists private citizens in the fight against fraud. Its history is a fascinating story of war, corruption, reform, and the evolving relationship between government and private enterprise.
Understanding the FCA’s history gives whistleblowers valuable perspective on why this law exists, how it has been strengthened over time, and why it continues to play a central role in safeguarding taxpayer money today. Our appreciation goes out to the Law Offices of Darth M. Newman for their thoughtful input throughout.
A Civil War Origins Story: 1863
The FCA was born out of necessity during the Civil War. At the time, the federal government faced rampant fraud by military suppliers — contractors were delivering defective rifles, sickly horses, and spoiled food to the Union Army, all while billing the government at inflated prices.
Recognizing the scale of the problem, President Abraham Lincoln and Congress enacted the False Claims Act in 1863. It was nicknamed the “Lincoln Law,” and it empowered private citizens to sue fraudsters on behalf of the U.S. government and receive a share of the recovery.
The qui tam provision created a legal partnership between whistleblowers and the government, recognizing that insiders are often the only people with access to the information needed to uncover fraud.
Post-War Decline And Weakening Of The Law
After the Civil War, enforcement of the FCA became less common. Then, in 1943, Congress significantly weakened the law in response to concerns that relators were exploiting wartime fraud for personal gain. Among the changes:
- Whistleblower rewards were drastically limited.
- Cases were barred if the government already had knowledge of the fraud, even if it took no action.
These amendments discouraged whistleblowers from coming forward and made qui tam actions far less effective for the next several decades.
The FCA’s Revival: 1986 Amendments
The law remained largely dormant until the 1980s, when a new wave of defense contracting fraud during the Reagan Administration — including the infamous “$600 toilet seat” scandal — made headlines.
In response, Congress passed the False Claims Amendments Act of 1986, revitalizing the statute. Key changes included:
- Increased whistleblower rewards (15–30% of the recovery)
- Restored the ability to file qui tam suits, even if the government had knowledge of the fraud (unless publicly disclosed)
- Added strong anti-retaliation protections
- Allowed treble damages and civil penalties to maximize deterrence
These amendments transformed the FCA into the powerful modern law it is today and led to a surge in whistleblower activity.
Modern Enforcement And Billion-Dollar Recoveries
Since 1986, whistleblowers have played a pivotal role in recovering over $78 billion in taxpayer funds, according to the U.S. Department of Justice. FCA cases have exposed fraud in:
- Medicare and Medicaid billing
- Defense and logistics contracts
- Pharmaceutical marketing and kickbacks
- Research grants and education funding
- COVID-19 relief programs (PPP, EIDL, etc.)
Each year, the majority of FCA recoveries come from whistleblower-initiated lawsuits. In 2023 alone, whistleblowers helped recover billions for the government — proof of the law’s continuing relevance.
Ongoing Evolution And Challenges
While the FCA remains strong, it has faced legal and political challenges. Recent Supreme Court decisions have clarified key terms like “scienter” (knowledge of falsity), while others have considered the scope of public disclosure or materiality.
The law continues to evolve as new industries — including telehealth, AI, and fintech — intersect with federal funds and present new opportunities for fraud.
This adaptability is part of the FCA’s strength. It’s a living law, shaped by over 160 years of practice, grounded in the simple principle that those who defraud the public treasury should be held accountable — and that ordinary citizens can help make that happen.
The False Claims Act has grown from a Civil War-era remedy into a cornerstone of federal anti-fraud enforcement. For whistleblowers, it represents a historic and powerful opportunity to expose wrongdoing, protect the public interest, and be rewarded for doing the right thing.
At our firm, we are proud to represent modern-day relators — individuals who carry forward the FCA’s legacy of integrity and accountability. If you’ve witnessed fraud against the government, your whistleblower lawyer is here to help you understand your rights, build your case, and make your voice heard.