December

The False Claims Act (FCA) is a powerful statute—revered by many for its tremendous success in returning taxpayer dollars to the public fisc—but feared by many businesses for its procedural and punitive consequences. There is no doubt that the FCA has had an enormous impact—it is responsible for returning nearly $50 billion to taxpayers since 1986 alone. From the perspective of businesses, however, the FCA is an intimidating hydra, with numerous liability pitfalls and seemingly limitless damages.

Whistleblowers or relators are indispensable in the government’s fight against fraud. Whistleblowers have helped recover $24 billion since 2010 and would contribute much more if they were dealing with more experienced, supportive, and fearless prosecutors, and not sidetracked by court opinions setting illogical and draconian standards. Most qui tam complaints are hundreds of pages in length and require detailed factual information and documentation without the benefit of formal discovery or a grand jury investigative process.

As times change, so do the tactics of people who wish to make a living by committing fraud. As criminals change their tactics, law enforcement must quickly adapt their methods in order to counter and prosecute the criminal’s evolving scams. The ever-growing health care industry offers plenty of opportunities for criminals to make money by gaming the system. And once again, the government has changed its tactics to keep up with the evolving efforts of criminals who bilk money from the system.

“No one can know that I’m the whistleblower, or I’ll get fired. I’ll be blackballed in my industry—I’ll never get another job!” These words will sound familiar to any lawyer representing whistleblowers who expose fraud under the False Claims Act (FCA) or other rewards statutes. Such clients often fear blowback from employers and opprobrium from their peers. The inevitable question arises: “Can’t you hide my identity?”

Also known as the “Lincoln Law” or the qui tam statute, the False Claims Act (FCA) stems back to 1863.3 Enacted by Congress as a way to uncover corrupt suppliers of goods to the Union Army, the FCA initially “provided that any person who knowingly submitted false claims to the government was liable for double the government’s damages plus a penalty of $2,000 for each false claim.”

“It is as much the duty of government to render prompt justice against itself, in favor of citizens, as it is to administer the same between private individuals.” —Abraham Lincoln, First Annual Message, 1861

Much has been written about the impact of the Fraud Enforcement Recovery Act’s (FERA) amendments to the False Claims Act (FCA), particularly in connection with the expansion of authority for issuing civil investigative demands (CID). Since the enactment of FERA in 2009, practitioners operating in the fraud arena, whether civil or criminal, have likely noticed a significant increase in the use of CIDs.

The False Claims Act (FCA) was originally enacted during the Civil War to help the government identify and prosecute war profiteers who had sold defective weapons, munitions, and supplies to the Union Army. Indeed, it was originally also known as the “Lincoln Law.”

The False Claims Act (FCA) is a powerful statute—revered by many for its tremendous success in returning taxpayer dollars to the public fisc—but feared by many businesses for its procedural and punitive consequences. There is no doubt that the FCA has had an enormous impact—it is responsible for returning nearly $50 billion to taxpayers since 1986 alone. From the perspective of businesses, however, the FCA is an intimidating hydra, with numerous liability pitfalls and seemingly limitless damages.

Jonathan Marcus became general counsel of the U.S. Commodity Futures Trading Commission (CFTC) in 2013, after serving as the CFTC’s deputy general counsel for litigation. Before joining the CFTC, Marcus was counsel at Covington & Burling LLP, where he was a member of the Supreme Court and Appellate Litigation Practice.