Fraud and abuse continue to be a barrier to effective government. According to the Cato Institute’s 2009 report, fraud or improper payments in government amount to $100 billion per year. But since 1986, the Federal False Claims Act (FFCA) has given Americans incentives to help protect the government from fraud. Unfortunately, an alarmingly small amount, $25 billion over 26 years, has been recovered under the FFCA.
The dramatic discrepancy is due to limitations to the act itself.
The FFCA holds individuals or companies liable who deliberately submit false claims, or cause a false submission, for payment of government funds. The penalty is three times the governments damages, in addition to civil penalties of $5,500 to $11,000 per false claim. It imposes liability on any person or company defrauding the federal government.
Above all, the law includes a qui tam provision that allows people who are not associated with the government to file suit on their behalf. This whistle-blower provision enables individuals unveiling fraud to receive 15 to 25 percent of the amount recovered due to related costs and risks.