The False Claims Act has been fighting fraud involving the government for 30 years. We can look back to the 18th Century to put things in perspective. “There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government of its revenues,” Benjamin Franklin said in a 1767 letter to the London Chronicle, tapping into a problem that would ultimately give rise to the government’s best fraud-busting tool: The False Claims Act.
The federal False Claims Act (FCA) was born in 1863 during the Civil War to combat widespread fraud committed by contractors who provided the government with ill horses and mules, spoiled rations, faulty rifles and ammunition, and other deficient goods and services. But “Lincoln’s Law,” as it was widely known then, didn’t have the muscle it needed to effectively prevent fraud or correct it once it happened.
However, it wasn’t until Oct. 27, 1986, when President Ronald Reagan signed into law a series of amendments to the original law, that the powerful False Claims Act as we know it today was born.
By its 30th birthday this past October, the retooled False Claims Act had helped the U.S. government recover $50 billion in false claims billed to taxpayer-funded agencies and programs, not counting the criminal penalties collected. Much of the law’s success in that time could be attributed to better whistleblower protections and incentives.
However, as the False Claims Act evolved into a better anti-fraud weapon, with even more provisions signed into law by President Barack Obama, it fell under repeated attacks from corporate interests attempting to weaken the badly needed law. According to whistleblower advocates, now is the time to help the Act reach its full potential.
Writing for The Hill, Patrick Burns and R. Scott Oswald say the False Claims Act should be further strengthened by closing the information gap between the law and would-be whistleblowers. As part of the Deficit Reduction Act of 2005, President George W. Bush signed into law Section 6032, a measure requiring major recipients of Medicaid funds to educate employees about the False Claims Act and other whistleblower laws.
Since that rule took effect, False Claims Act cases involving Medicaid fraud roughly doubled to about $2 billion annually. Taxpayers Against Fraud (TAF) advocates for applying the same rule to all recipients of government money, not just Medicaid. Burns and Oswald note in their editorial:
Indeed, ‘How to Blow the Whistle on Fraud’ posters should be standard at the workplaces of all government contractors.
The False Claims Act also needs to be cleaned up as it pertains to the Internal Revenue Service and tax fraud, TAF explains. The group says that the agency has not only been “lackadaisical in pursuing its own whistleblower program,” but has been “putting up arbitrary legal hurdles at every turn,” according to Senator Chuck Grassley.
The tax code also offers whistleblowers no protection from retaliation, which is a vital part of any whistleblower program. Without sufficient protections, would-be IRS whistleblowers will not speak out for fear of retribution from their employer.
Burns and Oswald propose that the False Claims Act “tax bar” be removed. That would open the Act’s anti-retaliation protections to tax whistleblowers and allow qui tam lawsuits to enhance the IRS’s ungainly fraud-fighting efforts. Our firm fully supports the FCA and commend those working to make the law even more effective.
Sources: The Hill, Taxpayers Against Fraud
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