False Claims Act

Congress passed the False Claims Act on March 2, 1863, after contractors sold the Union Army lame horses, rotten food, and faulty weapons. It makes anyone who knowingly submits a false claim for federal money liable for three times the government's losses plus a penalty for each false claim. Its most distinctive feature is the qui tam provision, which lets a private citizen, often an employee of the company, sue on behalf of the government and receive 15 to 30 percent of what is recovered.

The law was weakened in 1943 and revived by amendments signed in 1986, which raised rewards and protected whistleblowers from retaliation. Since then it has become the government's main tool against fraud, especially in health care, where Medicare and Medicaid billing cases produce most recoveries, and in defense contracting. The Justice Department can take over a whistleblower's case or let the whistleblower pursue it alone, and most money is recovered in cases the department joins.

In fiscal year 2025 the Justice Department recovered a record of more than 6.8 billion dollars under the law, about 5.7 billion of it from health care cases, and whistleblowers filed a record 1,297 lawsuits. The department has also used the law against companies accused of failing to meet cybersecurity requirements and, since 2025, against federal contractors and grant recipients over diversity programs, an expansion critics call a misuse. A federal judge in Florida ruled in 2024 that the whistleblower provision is unconstitutional, a question now before the appeals courts.