the false claims act: a consumer's tool to combat fraud

Loyola Consumer Law Review

Volume 12 | Issue 2 Article 3

2000

The False Claims Act: A Consumer's Tool toCombat Fraud Against the GovernmentThomas GrandePartner, Davis Levin Livingston Grande, Honolulu, HA

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Recommended CitationThomas Grande The False Claims Act: A Consumer's Tool to Combat Fraud Against the Government, 12 Loy. Consumer L. Rev. 129(2000).Available at: http://lawecommons.luc.edu/lclr/vol12/iss2/3

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The False Claims Act: A Consumer'sTool to Combat Fraud Against theGovernment

Thomas Grande

"The sad truth is that crime against the Govern-ment often does pay. 1

Consumers have many tools available to effectuatepositive changes in public policy. Most of these toolsinvolve indirect means such as public education, legisla-tive lobbying, lawsuits challenging inappropriate publicand private action. There are some state and federalstatutes that allow the consumer to assume the role ofprivate attorney general to enforce statutory violations.Most statutes that authorize a private right of enforce-ment, such as the Clean Water Act2 and the Clayton Act,3

have a significant limitation, however. These types ofstatutes create private causes of action only for personswho have standing to bring them, mostly those who aredirectly aggrieved or harmed in some way by the privateor public wrongdoing.

Unlike almost all other federal fraud statutes orcommon law causes of action,4 the False Claims Act, withits unique qui tam provisions, allows individuals to fileand prosecute a lawsuit in the name of the United States.The False Claims Act offers a tremendous opportunity forconsumers to effectuate significant public policy changeby authorizing suits even if the plaintiff has suffered nodirect harm.

The False Claims Act empowers individuals andorganizations with knowledge of private fraud againstthe government. Its express intent is to encourage qui tamsuits by giving consumers the tools and incentive to

Loyola Consumer Law ReviewVolume 12, Number 2 2000

represent the government in actions against individualsand organizations who falsely bill for services not ren-dered or goods not delivered.

Although the roots of the False Claims Act extendbeyond its Civil War origins, in the past thirteen years ithas become one of the most valuable tools available toprivate citizens in combating fraud against the govern-ment. Its future use is certain to generate significantprivate policy changes in the manner in which organiza-tions seek payment of government funds. It will likewisegenerate significant public policy changes in the waythose organizations are subject to liability for falselybilling the government and falsely obtaining governmentmoneys.

FALSE CLAIMS ACT ORIGINATED IN CIVIL WAR

The False Claims Act5 was originally known as the"Informer's Act" or the "Lincoln Law." It was enactedduring the height of the Civil War at the urging of Presi-dent Abraham Lincoln when dramatically increasedgovernment spending on military procurement led towidespread fraud by private contractors.6 The mostglaring examples of fraud included the following: saw-dust sold as munitions and transported to Union sol-diers; supplies such as horses and mules sold to units ofthe Union cavalry and then resold to other units; andunseaworthy ships freshly painted and delivered to theNavy as newly built.7

By 1863, the fraud and profiteering in militarysupplies for the Union Army severely imperiled theUnion war effort. In Lincoln's words, "[Wiorse thantraitors in arms are the men who pretend loyalty to theflag, feast and fatten on the misfortunes of the Nationwhile patriotic blood is crimsoning the plains of theSouth and their countrymen are moldering in the dust."8

Unfortunately, in the 1860s, there were no federal lawenforcement agencies (such as a centralized Department

Loyola Consumer Law Review Volume 12, Number 2 2000

of Justice or Federal Bureau of Investigation) to spear-head the enforcement effort. This situation left the UnitedStates - and the Union Army - with neither the tools northe institutional mechanism to combat the fraud that thePresident viewed as threatening the very existence of theUnited States.9 In response to President Lincoln's con-cerns, Congress enacted the False Claims Act of 1863,which the President immediately signed into law.10

One of the most important parts of the FalseClaims Act of 1863 allowed private qui tam informers toinitiate fraud actions against government suppliers andcontractors on behalf of the United States. Qui tam is theabbreviation of the Latin phrase "qui tam pro domino regequam pro si ipso in hac parte sequitur," which means, "whosues on behalf of the King as well as for himself.""

Qui tam statutes are well-established in Englishjurisprudence 12 and were long considered a legitimateprivate means of enforcing public law. At the time of theFalse Claims Act's passage in 1863, numerous other quitam statutes had been codified by the federal and stategovernments. In fact, ten of the first fourteen statutesenacted by the first United States Congress relied on quitam actions to aid the police enforcement role of govern-ment agencies. 3

Under the 1863 Act, persons found liable offraudulently billing the government were fined anamount equal to twice the damages caused by the falseclaim and were required to remit a $2,000 civil penaltyfor each false claim submitted to the United States. 4 Theindividual who filed suit on behalf of the government,the "relator," received 50% of all monies recovered aswell as reimbursement of costs of suit from the defen-dant.'s

CONGRESS ADJUSTED ACT FOR MODERN CON-DITIONS

After the Civil War, the False Claims Act fell into


disuse. During the 1930s and 1940s, following enactmentof the New Deal and the military build-up prior to WorldWar II, expansion of the government's economic roleprovided new opportunities for private contractors toprofit through fraud.16 However, because of what wasperceived to be an abuse of the system by relators whohad no direct knowledge of the fraud, yet were able torecover monies under the Act after a public disclosure ofa government criminal investigation, amendments weremade in 1943 which restricted the statute. The 1943amendments prohibited a qui tam recovery where therewas any prior government knowledge of the false billing.The 1943 amendments also gave the government discre-tion to award nothing to the qui tam relator and reducedthe maximum amount the relator could obtain to 25%. 11The effects of these changes limited the availability of quitam as a means of eliminating government fraud andreducee the incentives for private individuals to file quitam actions. Although these changes effectively restrictedthe False Claims Act's availability to private litigants,there were a few cases brought under the 1943 amend-ments.18

After passage of the 1943 amendments, anotherperiod of relative disuse followed. However, the numberof filings of False Claims Act complaints increased dra-matically after 1986, when Congress liberalized some ofits provisions making it easier to bring lawsuits under theAct and increasing the incentives for relators to pursueFalse Claims Act lawsuits.

RAMPANT DEFENSE INDUSTRY FRAUD PROMPTSFURTHER CONGRESSIONAL ACTION

The 1986 amendments to the False Claims Actwere prompted in large measure by increasing congres-sional concern over rampant fraud, particularly in thedefense industry.19 Just as the Civil War and pre-WorldWar II military build-ups presented defense contractors


with increased opportunities to profit from false billings,the dramatic increase in military spending after 1980again created the climate for government contractors tosteal from the government. °

During this time period, Congress was increas-ingly confronted with reports of fraud and fraudulentbillings that permeated virtually every governmentprogram.21 For example, in 1985 the Department ofDefense Inspector General reported that nine of the topten defense contractors were under investigation formultiple fraud offenses, including four of the largestwhich were later convicted of criminal offenses againstthe government.22 Public money lost to fraud rangedfrom hundreds of millions of dollars to $50 billion peryear.23

In considering amendments to the False ClaimsAct, Congress recognized that "the most serious problemplaguing effective enforcement [of federal anti-fraudlaws] is a lack of resources on the part of Federal enforce-ment agencies." 24 Congressional leaders thus acknowl-edged that in many instances the government's enforce-ment team was overmatched by the legal teams retainedby major contractors. Faced with this untenable situation,Congress took action by strengthening private enforce-ment tools to supplement inadequate government actionand specifically sought to increase the number of qui tamfilings to achieve this goal:

The Committee believes that the amend-ments in S. 1562 which allow and encour-age assistance from the private citizenrycan make a significant impact on bolsteringthe Government's fraud enforcement ef-fort.25


1986 AMENDMENTS TO THE FALSE CLAIMS ACTSTRENGTHEN THE STATUTE

The 1986 amendments were passed with bi-parti-san sponsorship and support.26 Although the Depart-ment of Justice supported strengthening the False ClaimsAct, it opposed any changes to the qui tam provisions ofthe False Claims Act.27 President Ronald Reagan - likehis Republican counterpart one hundred and twentyyears earlier - approved the amendments and apparentlyrecognized the need for liberalizing the qui tam provi-sions to combat fraud committed against the govern-ment.

The 1986 amendments strengthened the FalseClaims Act in several different areas. Taken as a whole,the changes were designed to accomplish three purposes.First, the amendments sought to encourage the bringingof qui tam actions and promote qui tam filings by increas-ing the incentives available to relators and by affordingrelators greater protection under the Act. Second, theamendments sought to forge a "partnership" between thegovernment and the relator by increasing the role of therelator in prosecuting false claims actions.28 Third, theamendments modified certain procedural requirementsby clarifying the knowledge required for liability and theappropriate standard of proof, broadening service ofprocess and venue under the statute, and including atolling provision for the statute of limitations.

Congress expressly recognized the need to "en-courage more private enforcement suits" in its passage ofthe 1986 amendments. 29 In order to accomplish this goal,it eliminated the significant bar passed in 1943 that pre-cluded a private cause of action where the governmenthad any prior knowledge of the fraud. This provisionwas perhaps the most far reaching change under the 1986amendments because it specifically allowed qui tamactions to be pursued even if a qui tam complaint fol-lowed public disclosure of false billings from a criminal,


civil or administrative hearing, or other public sources.However, such cases could only be brought where therelator was an "original source" of the allegations andhad direct and independent knowledge of the fraudulentactivity.

30

Increased financial incentives also encouragedrelators to file qui tam cases. The 1986 Amendmentsestablished a minimum award of 15% (but not more than25%) if the government intervened in the case. If thegovernment failed to intervene, the minimum award wasincreased to 25% (but not more than 30%).31 In addition,the civil penalties for relator awards were increased.First, the penalty for each false claim was raised from$2,000 per claim to $5,000 to $10,000 per claim. Second,treble, rather than double, damages were imposed for theactual loss suffered by the government.32

Also encouraging qui tam filings was the inclusionof an anti-retaliation cause of action for employees whofiled complaints against their employers (or formeremployers). Recognizing that these "whistleblowers"were often subjected to retaliation or dismissal for report-ing suspected fraud,33 Congress included a new provi-sion in the Act that protected these employees fromretaliation for reporting fraudulent claims or takingactions in pursuit of a qui tam complaint by allowingthem an independent cause of action under the statute.34

The second major thrust of the 1986 Amendments,which was to encourage a new partnership, resulted in astrengthening of the relator's role in the litigation. As theAct was originally enacted, after filing the complaint, thegovernment had the option of intervening and prosecut-ing the case in place of the relator. The 1986 Amendmentschanged the relator's post-intervention role by allowingthe relator to remain in the litigation even if the govern-ment intervened in the case.3 Participation by the relatorafter government intervention was also seen as a "checkthat the Government does not neglect evidence, causeunduly delay [sic], or drop the false claims case without


legitimate reason. ' 36 Although the government couldseek to limit the relator's role after its intervention,37 withboth the Department of Justice and the relator litigatingthe case, there would be effectively two law firms repre-senting the government's interest.

The last objective of the 1986 Amendments - toliberalize the Act's application - was accomplished byseveral procedural changes. Before 1986, some courts hadinterpreted the False Claims Act requirement that a falseclaim be "knowingly" presented to the government.38 Byrequiring a specific intent to defraud, the 1986 amend-ments clarified this standard to allow recovery where theperson defrauding the government acted in deliberateignorance of the truth or acted in reckless disregard of thetruth.39

The standard required under most sections of theAct is that the defendant knows the information is false;or acts in deliberate ignorance or reckless disregard of thetruth or falsity.40 Congress clearly intended to imposeliability for conduct that was more than merely negligentbut less than intentional.41 The Senate Committee notedthat it sought to:

strike a balance which is 'designed to assurethe skeptical both that mere negligence couldnot be punished by an overzealous agencyand that artful defense counsel could not urgethat the statute actually require some form ofintent as an essential ingredient of proof.'42

Although this standard is sometimes incorrectly referredto as an "intent" standard, 3 the Act makes clear that "nospecific intent to defraud is required."" Rather, intentimplies some type of voluntary or reckless act taken inviolation of a duty.4s

Liability under the False Claims Act is premisedon knowledge, not intent. Liability is a question of sci-enter, or knowledge, which the Defendant possessesabout false claims. However, the statute imposes a spe-


cific duty to inquire about false claims. Congress madeclear that liability standard included those who have:

actual knowledge that the claim is false,fictitious, or fraudulent, or acts in grossnegligence of the duty to make such inquiryas would be reasonable and prudent toconduct under the circumstances to ascer-tain the true and accurate basis of theclaim.46

Accordingly, Congress specifically wanted toinclude the situation where "an individual 'buried hishead in the sand' and failed to make simple inquirieswhich would alert him that false claims are being submit-ted."47 Because of the duty to make an affirmative inquiryimposed under the law, although Congress referred to theliability for "who know or have reason to know" that aclaim is false,48 liability under the False Claims Act ismore accurately imposes liability for those "who know orcould have reason to know" that a claim is false.

Congress also clarified that in order to prevail on aFalse Claims Act claim, the fraud must be proven by apreponderance of the evidence.49 Courts had previouslyimposed varying standards of proof by "clear and con-vincing evidence" or even the functional equivalent of astandard similar to "beyond a reasonable doubt." 0

Congress also liberalized venue for False ClaimsAct cases. As originally enacted (and unchanged by the1943 amendments), the Act allowed a defendant to besued within a district where "the person doing or com-mitting such act shall be found wheresoever such act mayhave been done or committed."5' In response to govern-ment concerns that cases would have to be filed in sepa-rate districts against multiple defendants, the venueprovisions were broadened to allow an action "in thejudicial district where any defendant can be found, re-sides, transacts business, or in which any act alleged as a


violation is alleged to have occurred." 2 In other words,even if one of the defendants committed only one act in adistrict, venue was proper. The 1986 Amendments alsoprovided for international service of process, 3 nationalservice of trial, and hearing subpoenas.-4 Finally, theAmendments extended the statute of limitations from"six years from the doing or committing of the act," 5 toinclude a tolling provision which would extend liabilityto as long as ten years. 6

As outlined above, the standard for liability underthe Act makes it clear that it is not a fraud statute towhich common law fraud principles apply. Instead, it is afalse claim or false statement statute57 that, as shownbelow, has procedural standards that place the relatorand his or her attorney in the position of private govern-ment prosecutor, a unique position in American jurispru-dence.

PROCEDURE REMAINS UNALTERED UNDER THEFALSE CLAIMS ACT

Since 1986, the Act's primary provisions andprocedure remain unchanged despite being amended. Arelator who has information about the submission of falseor fraudulent claims to the government still files a com-plaint under seal and serves a copy of the complaint onthe United States Attorney.5 8 As noted above, the relatoris in a unique position in American jurisprudence sincethe relator represents his or her own interest, as well asthe government's interest:

Actions by private persons. -(1) A personmay bring a civil action for a violation ofsection 3729 for the person and for theUnited States Government. The action shallbe brought in the name of the Govern-ment.5 9


Thus, unlike any other civil action, the relator andrelator's attorney are pursuing two interests - that of theperson filing the complaint and that of the United States.In addition, a separate retaliation claim or common lawor statutory wrongful discharge claims may be joinedwith the action. Thus, the interests of the relator and theUnited States, as articulated by the United States Su-preme Court, are not always harmonious:

That a qui tam suit is brought by a privateparty "on behalf of the UnitedStates"... does not alter the fact that arelator's interests and the Government's donot necessarily coincide. Moreover, as thestatute specifies, qui tam actions are broughtboth "for the person and for the UnitedStates Government." 60

Several types of false claims submitted for pay-ment to the government are actionable under the Act.The most common are "mischarge" cases in which thegovernment has been overcharged for a service notrendered, or charged more than it should have been.Other types of false claims include the submission offalse statements in contract negotiations, the submissionof false statements to create eligibility for federal pro-grams and supplying substandard services or products.61

In short, almost any action that involves a payment ordemand for payment of government funds may imposeliability under the Act.62

The complaint, which must be accompanied by awritten disclosure of evidence and information possessedby the relator, is then evaluated by government attorneyswho decide whether or not to intervene in the case.63

Although the statute requires the government to make itsdecision to intervene within sixty days, the governmentoften seeks extensions and may typically take two orthree years to decide.


If the government chooses to intervene, the U.S.Attorney's Office will either attempt to settle the actionor ask that the complaint be sealed. If the complaint isunsealed, it will be served on the defendant and thegovernment will have primary responsibility for pros-ecuting the action.64 The relator may still participate inthe lawsuit, unless the government seeks to limit therelator's involvement by court order.65

If the government declines to intervene, the relatormay continue the action on his or her own, while con-tinuing to inform the government of the course of thelitigation. The government may also retain its right tointervene at a later stage in the case. Regardless ofwhether the government decides to intervene, the courtmust approve any settlement that is fair and reason-able.66

THE CONSUMER ACTS AS ADVOCATE AND PRI-VATE ATTORNEY GENERAL IN QUI TAM ACTION

The qui tam statute uniquely places the relator inthe position of private attorney general. As such, therelator and his counsel are only able to determine thebreadth and scope of the investigation based upon theinformation they present. In other words, after the case isfiled, the government attorneys effectively take overinvestigation of the case based upon information pro-vided by the relator. While the relator and his or herattorney may focus government efforts in the govern-ment investigation, the degree of involvement remainsdependent upon the type of information brought by therelator and the credibility (and potentially the resources)the relator and his or her attorney can bring to the inves-tigation. It is therefore necessary that any relator and hiscounsel thoroughly and competently investigate the caseand present a complete factual basis of the laws that arealleged to have been breached, and the damages result-ing therefrom.


The relator's first step in the litigation process is tosupply the government with factual information aboutfraudulent billings and fraudulent statements presentedby a private contractor. The relator often acts as an inter-ested third party by providing direct information thatforms the basis of the government's investigation.

A variety of individuals are potential relatorsbecause the False Claims Act contains virtually no restric-tions on who may be a relator. Often relators are employ-ees or former employees who have direct knowledge offraudulent activity and have complained directly orindirectly to their company. When the relator and his orher attorney present a comprehensive and well-foundedfactual presentation, the government has a stronger basisand a stronger inclination to intervene in the case.

It is extremely important that an attorney investi-gating a qui tam action have sufficient information onwhich to build a strong factual case. The attorney mustproperly inform the government to fulfill his obligationsunder the False Claims Act statute and thoroughly evalu-ate and complete a presentation of all facts that form thebasis of the claim.

The filing of the complaint begins an investigationby the U.S. Attorney's office into both civil and criminalaspects of the complaint, if the facts warrant it. Thismeans that two attorneys and two investigators may besimultaneously investigating the case or working inconcert to investigate the case. After filing, the relator'sattorney must bolster the government's case as much aspossible by providing whatever information is requiredof the government and by ensuring the complete andthorough presentation of the factual bases of the relatorwhich form the cause of action.

DEPARTMENT OF JUSTICE COMPILES STATISTICSUNDER THE FALSE CLAIMS ACT

Between 1986 and 1997, more than $640 billion


was lost to fraud by Federal contractors.17 The Depart-ment of Justice estimates that as much as $100 billion, orten percent of our total annual health care costs, may belost each year to fraud and abuse. Medicare - whichserves almost forty million Americans at an annual costof over $180 billion - is annually defrauded by contrac-tors of almost $27 billion.68

Since its liberalization in 1986, the False ClaimsAct has served as a valuable tool in combating fraudagainst the government. As can be expected from theintent of the 1986 amendments, the Act's initial applica-tion focused on the defense industry from 1986 through1990. Approximately 75% of the qui tam cases filed in thatperiod were against defense contractors. 69 With thereduction in defense spending over the past decade,other recipients of government funding have been thesubject of qui tam actions in recent years, particularly thehealth care industry.

Increasingly, qui tam cases are a major factor indeterring and preventing health care fraud. Health fraudcases brought under the False Claims Act have increasedat a dramatic rate. Between 1992 and 1996, the number ofgovernment cases brought against health care providersincreased from 199 to 333. During this same time period,private qui tam cases increased tenfold, rising from 17 to178.70 Cases involving health care fraud have risen from12% of all cases filed in 1987 to 61% of all cases filed in1998.71

From 1986 through the end of fiscal year 1998,over 2,400 qui tam suits were filed, with the number ofcases increasing steadily each year from 33 cases filed infiscal year 1987 to 417 cases filed in fiscal year 1998.During this same time period, the Department of Justiceintervened in only 337 of the cases and declined to inter-vene in 1229, with the remainder still under investiga-tion' $625 million was recovered in qui tam cases in 1997and $331 million was recovered in qui tam cases in 1998.1In the largest recovery in a civil qui tam case, SmithKline


Beecham Clinical Laboratories agreed to pay back $325million to the Treasury for false billings submitted toMedicare through its clinical labs.74

Government intervention remains the key tosuccessful resolution of qui tam action. As October 1998,cases filed by qui tam relators generated $2.085 billion inmoneys recovered and paid into the United States Trea-sury.75 Over 98.%, or $2.027 billion came from caseswhere there was government intervention. Non-interven-tion cases have generated only $58 million of the recover-ies paid to the United States.76

CONSUMERS ARE INJURED BY FALSE CLAIMS

Because the health care industry produces themajority of current qui tam cases, inadequacies within thehealth care system are the most common source of injuryto consumers. There is a common misconception thatfalse billings do not affect the quality or delivery ofhealth care services. In other words, the only damage thatresults from the false billings is money being improperlytaken from the government. In fact, nothing could befurther from the truth. All consumers pay the price forfraud against the government, particularly health carefraud: patients pay more in premiums, copayments andcontributions for health insurance and medical services;businesses are compelled to pay increasing amounts toprovide health care to their employees; and taxpayerspay more to cover health care expenditures in publichealth plans, such as Medicare and Medicaid. The costsof increased health care are coming directly out of theconsumers' pockets - the American public is in effectsubsidizing that part of the health care industry thatfraudulently bills for services.

Americans pay about $ 1 trillion in health carecosts per year. According to the Department of Justice,10% of what Americans spend on health care is fraudu-lently billed in services not rendered, overcharges, dupli-


cate charges and other health fraud schemes. The result isthat $100 billion per year is fraudulently billed.77

How much health care can be delivered for $100billion?

* $100 billion would give every man, womanand child in the United States and Canada acomplete health examination and physical.* $100 billion would pay for 20 million days inan intensive care unit at a hospital.* $100 billion would pay for 40 million CT scans.How do higher health costs translate into lower

patient care? Plainly, if there is not enough money to payfor appropriate patient care, the quality the health servicedelivered will go down. If there is not enough money topay for the service in the future, the services will not beprovided, particularly to those who can not afford pri-vate insurance. Inflated and false billings also serve todirectly diminish the quality of health care that is deliv-ered. Patients are paying more than necessary to receiveadequate health services.

Qui tam cases involve all health care providers:hospitals, physicians, medical equipment suppliers,clinics, ambulance companies, clinical laboratories, uni-versities, billing services, therapists, home health careproviders and nursing homes. The lawsuits are generallybrought by employees, doctors, nurses, researchers,subcontractors, and even competitors.

Health care fraud hurts everyone. It should bereported, thoroughly investigated and soundly elimi-nated. The future of our health care system, particularlyour Medicare system, depends on ordinary citizensstepping forward to get rid of the fraud in health delivery.

CONCLUSION

The False Claims Act has made a dramatic differ-ence in not only recovery of monies for fraud alreadycommitted, but also in deterring fraud by the threat of qui

144 Loyola Consumer Law Review Volume 12, Number 2 2000

tam lawsuits. In a study commissioned by the TaxpayersAgainst Fraud, former Senate Budget Committee chiefeconomist William Stringer estimated that $35 billion offraud has been deterred since 1986 by the threat of theselawsuits.7 8 . This same study projected a deterrence ofover $100 billion over the next ten years.

The future of the statute, however, remains uncer-tain. The health care industry in particular has pushedfor a series of amendments that would severely weakenthe False Claims Act provisions.7 9 Whether or not theFalse Claims Act can withstand this frontal assault mayhold the key to its continued viability as one of the fewavenues for consumers to directly eliminate fraud andwaste.

Thomas Grande is a partner in Davis Levin Livingston Grande inHonolulu, Hawaii where he represents qui tam relators and consum-ers in class and group actions in state and federal courts. He wascounsel for the relator in the largest Medicare fraud settlement inHawaii and is co-editor of the American Bar Association's Survey ofState Class Action Law. Mr. Grande is a past officer and Board memberof the Consumer Lawyers of Hawaii and is the recipient of theOutstanding Delivery of Legal Services Award for pro bono activityon behalf of low-income individuals. He can be contacted [email protected].

Endnotes

1. S. REP. No. 99-345, at 3 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,5268 (quoting GAO Report to Congress, "Fraud in GovernmentPrograms: How Extensive Is It? How Can It BeControlled?"(1981)(emphasis in original)).

2. 42 U.S.C. § 7604(a) (1995).

3. 15 U.S.C. § 4 (1997).

4. There are at least four federal qui tam statutes in addition to theFalse Claims Act. See HELMER, LUGBILL AND NEFF, FALSE CLAIMS Acr:WHISTLEBLOWER LMGATION § 5-2, at 66, n. 11 (1994).

5. 31 U.S.C. § 3729 (1983).


6. See U.S. ex rel. Newsham v. Lockheed Missiles and Space Co., 722F.Supp. 607, 609 (N.D. Cal. 1989).

7. See 132 Cong. Rec. 22339-40 (1986)(Remarks of Rep Berman andRep. Bedell).

8. 89 Cong. Rec. 10847 (1943).

9. SEE HELMER, supra note 4 § 3-3, at 27 (1994).

10. See 12 Stat. 696 (1863).

11. BLACK'S LAW DICTIONARY 1251 (61h ed.) (1990).

12. See generally, The History and Development of Qui Tam, 1972WASH.U.L.Q. 81.

13. See U.S. ex rel. Newsham v. Lockheed Missiles and Space Co., 722F.Supp. 607, 609 (N.D. Cal. 1989).

14. See 12 Stat. 696, 698 §3 (1863).

15. See 12 Stat. 696, 698 §6 (1863).

16. SEE BOESE, CiviL FALSE CLAIMs AND Qui TAM ACnONs, at 1-12 (1999Supplement).

17. See generally 31 U.S.C. §§ 232, 233, 235 (1976).

18. See BOESE, supra note 16 at 1-14.

19. SEE HELMER, supra note 4 § 3-6(b), at 38 (1994).

20. See id. at 33.

21. SEE S. REP. No. 99-345, at 2 (1986), reprinted in 1986 U.S.C.C.A.N.5266,5267.

22. SEE S. REP. No. 99-345, at 2 (1986), reprinted in 1986 U.S.C.C.A.N.5266, 5267 citing Testimony of Department of Defense InspectorGeneral Joseph Sherick, Hearings on Federal Securities Laws andDefense Contracting before the Subcommittee on Oversight andInvestigations of the Committee on Energy and Commerce, House of


Representatives. 991 Congress, 1st session (1985).

23. SEE S. REP. No. 99-345, at 3 (1986), reprinted in 1986 U.S.C.C.A.N.5266, 5268.

24. S. REP. No. 99-345, at 7 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,5267.

25. S. REP. No. 99-345, at 8 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,5267.

26. In the Senate, the False Claims Reform Act, S. 1562, was spon-sored by Senators Charles E. Grassley (R. Iowa), Dennis DeConcini(D. Arizona) and Carl Levin (D. Michigan).

27. SEE S. REP. No. 99-345, at 36 (1986), reprinted in 1986 U.S.C.C.A.N.5266, 5301 (Letter from Acting Assistant Attorney General PhilBrady).

28. See 132 Cong. Rec. 20535 (1986) (Remarks of Senator CharlesGrassley).

29. S. REP. No. 99-345, at 23-24 (1986), reprinted in 1986 U.S.C.C.A.N.5266,5288-89.

30. See 31 U.S.C. § 3730(e)(1) (as amended, Oct. 27, 1986).

31. See 31 U.S.C. § 3730(d)(1)-(2).

32. See 31 U.S.C. § 3729(a)

33. SEE S. REP. No. 99-345, at 26 (1986), reprinted in 1986 U.S.C.C.A.N.5266.

34. See 31 U.S.C. § 3730(h).

35. See 31 U.S.C. § 3730(c)(1).

36. S. REP. No. 99-345, at 26 91986), reprinted in 1986 U.S.C.C.A.N.5266,5291.

37. See 31 U.S.C. § 3730(c)(2)

38. Compare United States v. Hughes, 585 F.2d 284, 286-88 (7 1 Cir.


1978) (no specific intent to defraud required to satisfy knowingviolation) with United States v. Mead, 426 F.2d 118, 122-23 (91 Cir.1970) (specific intent to defraud required to show knowing violation)and United States v. Ekelman & Associates, Inc., 532 F.2d 545, 548 (6 h

Cir. 1976) (actual knowledge of falsity of claims required).

39. See 31 U.S.C. § 3729(b).


41. See S. REP. No. 99-345, at 21 (1986), reprinted in 1986 U.S.C.C.A.N.5266, 5286.

42. S. REP. No. 99-345, at 21 (1986), reprinted in 1986 U.S.C.C.A.N.5266, 5286 (quoting Department of Justice).

43. See Wang v. FMC Corporation, 975 F.2d 1412, 1421 (911 Cir. 1992)and BOESE, CIViL FALSE CLAIMS AND Qui TAM AcrIONS Chapter 2.D. at 2-92 (1999) and Supplement.

44.31 U.S.C. § 3729(b).

45. See BLACK'S LAW DICTIONARY 810 (61h ed. 1990).

46. S. REP. No. 99-345, at 20 (1986), reprinted in 1986 U.S.C.C.A.N.5266,5285.

47. S. REP. No. 99-345, at 20-21 (1986), reprinted in 1986 U.S.C.C.A.N.5266,5285-86.

48. S. REP. No. 99-345, at 21 (1986), reprinted in 1986 U.S.C.C.A.N.5266,5286.

49. See 31 U.S.C. § 3731(c).

50. H. REP. No. 99-660, at 25 (1986).

51. 12 Stat. 696, 698 §4 (1863).

52. H. REP. No., 99-660 at 33 (1986).

53. See 31 U.S.C. § 3732(a).

54. See 31 U.S.C. § 3731(a).

55. 12. Stat. 696, 698 §7 (1863).


56. See 31 U.S.C. § 3731(b).

57. See BoESE, supra note 16 at 2-5.

58. See 31 U.S.C. § 3730(b)(1).

59. 31 U.S.C. § 3730(b)(bold in original).

60. Hughes Aircraft Co. v. United States ex.rel. Schumer, 520 U.S. 939,949 n.5, 117 S.Ct. 1871, 1876 n.5, 138 L.Ed. 2d 135, 145 n.5 (1997).

61. See 31 U.S.C. § 3730(a)(1)-(7)(1994).


63. See 31 U.S.C. § 3730(b)(2).

64. See 31 U.S.C. § 3730(c).

65. See 31 U.S.C. § 3730(c)(2).

66. See 31 U.S.C. § 3730(c)(3).

67. See Taxpayers Against Fraud: Whistleblowers Recover $1.8 billionfor Treasury Under Revitalized "Lincoln Law" <http: / /www.taf.org/taf/docs/recover.html> [hereinafter Taxpayers AgainstFraud].

68. See id.

69. See Phillips, False Claims Act in Practice, 14 L.A. LAW 30, 31 (1991)

70. See BOESE, supra note 1 at 1-29 citing Johnson, A Gold Mine in FalseClaims, 39 AM. MED. NEWS 40, p. 1 (October 28, 1996).

71. See Statistics from Taxpayers against Fraud, source: U.S. Depart-ment of Justice [hereinafter DOJ Statistics].

72. See id.

73. See id.

74. See Taxpayers Against Fraud, supra note 67.


75. See DOJ Statistics, supra note 71.

76. See id.

77. See Taxpayers Against Fraud, supra note 67.

78. See id.

79. See generally Taxpayers Against Fraud: Anti-FCA Bill Introducedin Congress - Health Care Industry Seeks Exemptions for MedicareFraud. <http://www.taf.org/taf/docs/congress.html>.

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