I Am America (And So Can You!): Incentives, Consequences, and Reforms of the False Claims Act

Abstract

This paper looks at the history and background of the False Claims Act (31 U.S.C. §§ 3729-33) as it is used to combat government waste and public fraud, while exploring the inherent incentives the statute gives to whistleblowers in bringing these actions to the Department of Justice. Some of the topics discussed throughout the paper include how this statute, which is designed to encourage whistleblowers to call out fraud upon the government, creates some incentives that seem counter-intuitive to the entire purpose of the statute. The most important incentive within the False Claims Act (FCA) is the monetary compensation awarded to plaintiffs (called in these actions) for offering substantial help to the government in prosecuting its case. This monetary compensation is made up of a percentage of the overall amount recouped by the government against an entity that has made a false claim for payment from the government. While monetary compensation is a powerful tool for encouraging true whistleblowers to risk their professional livelihoods in coming forward, this incentive also encourages other potential relators to file lawsuits seeking rewards, but who actually offer little help, if any at all, to the government's case. These unhelpful relators tend to waste time, money, and valuable docket space in trying to reap a quick, though unwarranted, reward.This paper discusses how the wasteful FCA litigation may possibly be curtailed by comparing the FCA with state statutes that are based on FCA language, but differ in several aspects. These state FCA statutes may offer insight and practical guidance in subtle ways the federal statute may be tailored to curtail wasteful litigation while still encouraging true whistleblowers to file suit.