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false claims act of 1986

false claims act of 1986Are you trying to get your facts straight about the False Claims Act of 1986? Keep reading to get the information you need to know.

The False Claims Act of 1986 is an amendment to the original False Claims Act, which dates back to Civil War days when suppliers to the Union Army were defrauding the US government. The law was created to entice people to bring the criminals to the attention of the government so the prosecution could take place.

In the original writing, the act allowed the person reporting the fraud to receive 50% of the amount recovered. It also permitted anyone to bring a case forward, under what is known as the qui tam provision. Qui tam comes from a Latin term and roughly means to bring a suit on behalf of the king, as well as himself. Any private citizen aware of a fraud could bring a suit. If the fraud was proven, the defendant was required to pay double the amount of the fraud, plus a fine of $2,000 per claim.

Many old laws become obsolete, even though they remain on the books. In Gainesville, Georgia, for example, it is illegal to eat fried chicken in any way other than with your hands. Yes, you read that right! While the original False Claims Act wasn’t so silly, it did become just as ignored and irrelevant. As years went by, the Act remained in effect, but it was mostly ignored.

The first amendment to the law came in 1945, which set up huge barriers for people who wanted to bring a suit, because it eliminated nearly any reward they would receive. This change removed all incentive and ability for a private citizen to bring a whistleblowing suit. The amendment also disallowed anyone from filing qui tam suits if the government had a tip at all about the reported situation, even if it was not under investigation.

The False Claims Act was virtually dead in the water after this change.

How Was the False Claims Act Changed in 1986?

In 1986, it came to light that many defense contractors were bilking the federal government out of millions of dollars through fraudulent billing. It became public knowledge that the government was paying tens of thousands of dollars for mundane items such as light bulbs, hammers, and toilet seats.

Congress responded by revamping the old False Claims Act, once known as the Lincoln Laws, in 1986, bringing the law into current relevancy and increasing protection against retaliation for the people who reported the fraud. Because of these amendments, a resurgence of the law’s use took place.

When Congress amended the False Claims Act in 1986, the main changes involved increasing the penalties against those who commit fraud against the government, as well as raising the amount of the rewards the person reporting the acts could receive. This new award reinstated the incentive for people to report known fraud.

The 1986 amendment also increased the amount of the penalties assessed to those guilty of fraudulent charges. The punishment was increased to three times the amount of the money illegally taken. Also, damages increased to a minimum of $5,000 and a maximum of $10.000 per each separate claim. The reward for the whistleblowers now provides them from 15% to 30% of the recovered money. The defendant also pays the fees for the whistleblower’s attorney, at their regular rate.

The other significant change in the 1986 amendment was that the offenders could be held liable for acting in “reckless disregard” of the truth or in “deliberate ignorance.” This change brought the power of the False Claims Act back into play.

Is the False Claims Act Amendment of 1986 Relevant Today?

Absolutely. In fact, the False Claims Act, with the amendments of 1986, is the single most useful tool the federal government has in the fight against fraud. While further modifications to the act came in 2009 and 2010, these amendments expanded the definitions of liability and also increased the ability of the government to investigate claims.

The government has recovered over $48 billion since the 1986 amendments to the False Claims Act. More than half of that amount has come through whistleblowers’ actions. There has been more than $5.3 billion paid out in rewards to people who have brought qui tam suits to the US District Court.

You need to have a lawyer who understands the complexities of the False Claims Act and its subsequent amendments and protections to present a substantial and qualified case to court. If you are aware of fraud in your workplace or elsewhere, the time to step forward is now.

To learn more about the False Claims Act of 1986, get in touch with our experienced legal team at Bothwell Law Group online.

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