At a time when the U.S. government is undertaking widespread bailouts of banks, insurers, automobile manufacturers and other traditionally private businesses, Congress has enacted legislation that threatens to turn many run-of-the-mill commercial disputes involving those businesses into federal lawsuits. Recent amendments to the False Claims Act (FCA, or the act)1 that relax the required nexus between fraud and the payment of government funds could give the plaintiffs’ bar a new tool with which to prop open federal courthouse doors to a raft of new cases.
First enacted in 1863 to combat widespread fraud among government contractors during the Civil War, the FCA has long provided the government with a powerful, some say coercive, tool with which to combat federal program fraud. One of the FCA’s most distinct features is that it allows private citizens, known as “qui tam plaintiffs,” “relators,” or, simply, “whistleblowers,” to file lawsuits on behalf of the United States asserting violations of the FCA. The act encourages whistle-blowing by offering the whistleblower a percentage of the ultimate recovery.
