Qui Tam

October 27, 2008 Marks the Anniversary of the Rebirth of the Federal False Claims Act

By Zachary A. Kitts

    It was 22 years ago today that President Reagan signed into law the 1986 Amendments to the Federal False Claims Act.  For all intents and purposes, the 1986 amendments breathed new life into what had otherwise become a stale and lifeless statute.  The main changes, of course, include the following: 

• The establishment of defendant liability for "deliberate ignorance" and "reckless disregard" of the truth;
• Restoration of the "preponderance of the evidence" standard for all elements of the claim including damages;
• Imposition of treble damages and civil fines of $5,000 to $10,000 per false claim;
• Increased rewards for qui tam plaintiffs of between 15-30 percent of the funds recovered from the defendant if the Government chooses not to intervene;
• Defendant payment of the successful plaintiff's expenses and attorney's fees;  
• Employment protection for whistleblowers including reinstatement with seniority status, special damages, and double back pay.
  

    With the benefit of hindsight, we can see the importance of this event.  More than $25 billion dollars has been recovered in the 22 years since the FCA was amended.  That is not the only benefit, of course, but the $25 billion has been the easiest to quantify.  What we cannot quantify is the deterrent effect of FCA enforcement. 

    Additionally, the amended FCA served to inspire states to pass their own False Claims Acts, starting with California in 1987.  Our own Virginia Fraud Against Taxpayers Act was passed in 2002 and became law in 2003. 

    
Zachary Kitts 
Cook & Kitts, PLLC 

      

Full post as published by Virginia Qui Tam Law on October 28, 2008 (boomark / email).