The False Claims Act

Lincoln's Law and Whistleblower Rights 

Too few Americans—even American lawyers—are aware of our valuable federal False Claims Act. It originated in the Civil War, when President Abraham Lincoln and congressmen grew angry about the fraud perpetrated upon the Union army and navy (thus, the Lincoln Law). "Commodore" Vanderbilt, a predecessor to modern-day crooked corporate CEOs, was fraudulently selling junk ships to the Union navy. Other contractors were selling lame horses, cardboard boots, and even shells filled with sawdust. Lincoln had no FBI, CIA or inspector general offices, so they decided to engage American citizens. The first False Claims Act was born, with whistleblowing citizens getting 50% of the recovery when they successfully turned in a cheater.

Unfortunately, over the next hundred years, through corporate lobbying and the rulings of corporate-friendly judges, the effectiveness of the False Claims Act was seriously eroded. But in 1986, amid frequent stories of military contracting abuse, a bipartisan effort led by Republican Senator Grassley of Iowa and Democratic Congressman Berman of California, brought serious improvements to the Act.

Despite many efforts by the large corporations to erode its power, our current federal False Claims Act provides a recovery against a cheating corporation for up to three times the amount stolen, plus false claims act penalties of $10,957 to $21,916 per false claim submitted. Whistleblowers who suffer retaliation by any employer (including an employer who was not the fraudster) may receive damages compensation of double back pay, future economic loss, attorneys fees and costs.

A majority of the states now also have their own false claims acts that usually mirror the provisions of the federal act. These state false claims acts were vigorously opposed by the corporations. Brian Wojtalewicz led a team of "citizen lobbyists" in the successful effort to gain passage of the Minnesota False Claims Act in 2009.