If a person is in the business of committing fraud, one of the most lucrative targets is the United
States government. For hundreds of years, individuals and corporations have been successful in
defrauding the most powerful government in the world. With hundreds of transactions and partnerships
being made every day, it is difficult for the government to keep a watchful eye on every sale or
purchase it directs. Benjamin Franklin knew this all too well when he said, "There is no kind of
dishonesty into which otherwise good people more easily and frequently fall than that of defrauding
In 1863, at the height of the Civil War, deceptive military contractors were
defrauding the Union Army out of hundreds of thousands of dollars by supplying troops with defective
products and faulty war equipment. Illegal price gouging was a common practice. In response,
Abraham Lincoln enacted the Federal Civil False Claims Act. A provision of the act was known as qui
tam. An abbreviation from the Latin "qui tam pro domino rege quam pro sic ipso in hoc parte
sequitur," which means "who as well for the king as for himself sues in this matter," qui tam laws
have existed for centuries, dating as far back as 13th century England. Qui tam actions allow a
private citizen to file a lawsuit on behalf of the U.S. government in an effort to recover losses
caused by fraud against the government. The law is an incentive for civilians who know of
individuals or companies making false claims for profit to come forward with information. In reward,
the "whistleblower" (also known as the relator) shares in any federal revenue recovered. Since
1863, qui tam law has changed significantly. When first enacted, the law was rarely taken advantage
of because of tough restrictions and rulings that made qui tam almost impossible to enforce.
Whistleblowers also had to cover all the costs of filing a lawsuit and the government could take over
the suit at any time. In 1943, Congress revised the law, forbidding relators to share in any
recovered revenue if the government was already aware of the fraud before the lawsuit was filed. The
amount a whistleblower was entitled to also decreased from 50 percent to a maximum of 25 percent.
More discouraging, if the government took over the lawsuit, claimants could only receive 10 percent
of the amount recovered. During the 1980s, government fraud was at a peak. As the United
States entered an intense arms race with the former Soviet Union, defense contracts were signed at an
all-time high. Unfortunately, many of these contracts involved fraudulent deals that cost the US
millions of dollars. As a result, in 1986, Congress amended the False Claims Act in order to make it
easier for whistleblowers to file claims against fraudulent corporations and individuals. The
whistleblower's share of recovery was increased to a maximum of 30 percent and the government's prior
knowledge of fraud now did not necessarily bar a whistleblower from collecting lost revenue. If the
government took over the lawsuit, the relator would also "continue as a party to the action."
Amendments required the defendant to pay for the relator's attorney fees and protected the
whistleblower from retaliatory actions by his or her employer. As a result, qui tam lawsuits
increased dramatically. To date, the government has collected over $6 billion in lost revenue,
nearly $1 billion of which has been rewarded to relators. There are several examples of how
companies and individuals defraud the government. The following are covered under the False Claims
- Mischarging or overcharging for goods or services.
- Improper price data and the
request for payment for services never provided.
- Holding government property for fraudulent
- Avoiding payment of a debt to the government because of illegal reasons.
- Knowingly providing the government with defective or dangerous products that were falsely
- Falsely certifying information for the entitlement of benefits.
- Having any
false claim paid by the government.
As a rule, anyone who defrauds the government out
of revenue can be held accountable under the False Claims Act. Common defendants include government
contractors and subcontractors, state and local government agencies or officials who swindle funds,
private universities and members of the healthcare industry. Whistleblowers often include employees
of the defrauding company, including former workers, competitors of government contractors and public
interest groups. The False Claims Act was enacted to encourage private citizens to assist the
government in the fight against fraud. Often the whistleblower faces an uphill battle as large,
powerful corporations or individuals are usually named as defendants. An experienced attorney in qui
tam claims may help you gain a percentage of stolen government funds.