While the tradition of the qui tam provisions of the False
Claims Act dates back to medieval English monarchs, the False
Claims Act was enacted during the Civil War. Known as the "Abe
Lincoln Law," it confirms that cheating the government is not a
20th century development, but a venerable tradition.
Among those
who evaded False Claims Act liability during the Civil War, but
whose misdeeds are part of the False Claims Act's legislative
history, was "Commodore" Cornelius Vanderbilt, the patriarch of
what was one of the wealthiest families in America during the 19th
century. Vanderbilt's fortune began modestly with a Staten Island
ferry he operated as a young man. Despite his personal knowledge
of vessels and their seaworthiness, he nonetheless sold the Union
Navy ships with rotting hulls--at exorbitant prices--but vouching
for their quality.
In the first 80 years of the False Claims Act, qui tam
plaintiffs or "relators," as they are commonly termed, could bring
"parasitic cases." These were "copycat" civil actions, brought by
relators, but based upon criminal or other federal actions,
already publicly filed in the courts or publicized in newspapers,
that originally disclosed the wrongdoing. Over-reacting to
negative publicity regarding a few such cases, Congress passed the
1943 Amendments to the False Claims Act and prohibited actions based
upon facts already known to the Government. Subsequent court
decisions thereafter largely rendered the False Claims Act's qui
tam provisions ineffective.
Today’s False Claims Act was the result of Congressional action in
1986. Under President Reagan and amidst press reports and
Congressional hearings about over-priced military coffee pots,
screwdrivers, and toilet seats, the False Claims Act was
rejuvenated.
The 1986 Amendments strengthened the False Claims Act by relaxing
the "intent" element necessary to prove a False Claims Act
violation, establishing the applicable standard of proof as
preponderance of the evidence, expanding and clarifying the
relator’s role in a qui tam action, increasing the damages and
penalty provisions, and adding employee whistleblower protections
against retaliation. The 1986 Amendments also increased the
"bounty" to citizens who successfully initiate and pursue an False
Claims Act case, raising the maximum percentage recovery to 25-30%
of the Government's recovery. As revised, the False Claims Act
contains several unique procedural aspects, including the
possibility of dual representation by both the Department of
Justice and private counsel, filing of the qui tam complaint under
seal, prohibiting jurisdiction by the federal courts
over qui tam cases where was a "public disclosure" and the relator
is not an "original source," and giving priority to the first case
filed.
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