Through the Looking Glass: The Beginning of the False Claims Act
The False Claims Act (“FCA”), despite its recent blockbuster achievements and notoriety, comes from humble beginnings. Also know as the Lincoln Law, the first incarnation of the statute was enacted during the Civil War to combat the fraud perpetrated by companies that sold supplies to the Union Army.
Specifically, war profiteers were found to be shipping boxes of sawdust instead of guns, and swindling the Union Army into purchasing the same cavalry horses several times. ”You can sell anything to the government at almost any price you’ve got the guts to ask,” boasted Jim Fisk, a profiteer who made millions unloading moldy blankets to the military.
The behavior was so egregious that in 1958, the Supreme Court addressed the birth of the FCA in United States v. McNinch, 356 U.S. 595, 599 (1958) stating “The False Claims Act was originally adopted following a series of sensational congressional investigations into the sale of provisions and munitions to the War Department. Testimony before the Congress painted a sordid picture of how the United States had been billed for nonexistent or worthless goods, charged exorbitant prices for goods delivered, and generally robbed in purchasing the necessities of war.”
While the False Claims Act itself was revolutionary for its time, President Lincoln strongly advocated for the inclusion of “qui tam” provisions that vested power in private citizens to sue, on the government’s behalf, companies and individuals that were defrauding the government. Short for the Latin phrase, “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” “Qui tam” roughly means “he who brings an action for the king as well as for himself.” Congress passed the statute on March 2, 1863.
Although, currently at what may be considered the height of its popularity, the use of the False Claims Act has ebbed and flowed with the passage of time and various amendments and remains a tremendously successful weapon in the public arsenal against fraud.
Sources: J. Randy Beck, The False Claims Act and the English Eradication of Qui Tam Legislation, 78 N.C. L. REV. 539, 541 (2000)
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