Whistleblower lawsuits brought under the FCA (False Claims Act) have resulted in the recovery of over $3 billion for taxpayers in 2019, according to the Department of Justice.

This federal law prevents retaliation against people who are willing to come forward and take legal action on behalf of the government against individual and corporate fraudsters. Whistleblowers — technically known as “relators” — have assisted the U.S. government in recovering well over $62 billion since 1986.

History and Background of Whistleblowing

Although whistleblower lawsuits have been in the news frequently in recent years, courageous people of conscience have been exposing wrongdoing against their governments and their fellow citizens for centuries. The legal term is qui tam, short for a Latin phrase meaning “[They] who sue in this matter for the king as well as themselves.”

In order to encourage whistleblowers, governments have historically offered rewards to those who come forward; in ancient Rome, part of a convicted wrongdoer’s forfeited property was offered to the person who initiated the prosecution. Modern qui tam statutes can be traced back to the mid-7th Century, according to law professor J. Randy Beck, when the Anglo-Saxon King Wihtred of Kent decreed that anyone caught working on Sunday would be fined, and half of his profits would be given over to the relator. 

In the U.S., the first whistleblower lawsuit was filed in 1777 by two seamen of the Continental Navy after their commander illegally tortured British prisoners; the first whistleblower protections were enacted the following year.

The FCA Today

The modern False Claims Act was signed into law by President Abraham Lincoln in 1863 after federal contractors sold defective armaments, old and diseased horses and tainted provisions to the Union Army during the Civil War. In 1986, Congress strengthened the law as numerous reports of price gouging by defense contractors came to light. Under the FCA, if a qui tam lawsuit is successful, the relator is awarded between 15 and 25 percent of any recovery.

Today, according to the Department of Justice, health care fraud is the most common cause of action in FCA lawsuits, accounting for approximately 86 percent of all qui tam actions. Many of these have targeted drug companies that attempt to defraud federal health programs such as Medicaid and offer illegal incentives to encourage physicians to prescribe their products. In 2019 alone, seven pharmaceutical companies paid more than $624 million to settle claims that they had illegally covered patient co-pays for their own products through third parties.

Other health care companies have paid hefty fines for misrepresenting products and providing false and misleading information to the Medicare program.

Outside of health care fraud, the FCA is still being used against defense contractors, such as Northrop Grumman Systems Corporation, which paid $27 million over claims that it had billed the U.S. Air Force for work that was never done.

Foreign companies that do business with the U.S. government have also been held to account; last year, five South Korean companies paid $162 million to resolve allegations of anti-competitive practices in supplying fuel to U.S. military bases in that country.

Other FCA settlements last year involved software developers, food and energy companies and even an elite university.

This article is not legal advice. It is presented
for informational purposes only.