Lincoln’s Law and Whistleblower Claims

Taxpayers every day lose money because of fraud against their government. Current examples include government contracting fraud in Iraq, procurement fraud regarding the efforts of the Federal Emergency Management Agency and Hurricane Katrina and numerous false claim schemes under both the Medicare and Medicaid programs. Those who are bent of fraud are usually clever and devious. This is the very reason why President Abraham Lincoln enacted the False Claims Act during the American Civil War in 1863.

During the Civil War, as today, there were greedy contractors bent on defrauding the government at taxpayer’s expense. At President Lincoln’s request, the False Claims Act was enacted into law and was specifically directed at an effort to “root out fraud against the government. . .[a]nd to encourage individuals who are aware of fraud being perpetrated against the government to bring information forward.” Thus, “Lincoln’s law,” the False Claims Act, has literally been on the books for over 140 years.

The False Claims Act as sponsored by President Lincoln was designed to help the government stop procurement fraud during the Civil War. Congress intended that the False Claims Act would encourage private citizens to file cases in the name of the United States to recover damages when false and fraudulent claims were submitted to the government. These lawsuits, oftentimes called Whistleblower or Qui Tam cases, provide a way for private citizens to share in the recovery of damages recovered. The term “Qui Tam” described the procedure well and derives from a Latin phrase which means “Who pursues the action on our Lord the King’s behalf as well as his own.”

While Lincoln’s law worked reasonably well after its passage in 1863, over one hundred years later in 1986 Congress acted to strengthen the False Claims Act. Specifically, when the False Claims Act was amended in 1986, Congress increased the damages and penalties that can be recovered in such actions, and added protection against retaliation for whistleblowers. Quite literally, the 1986 amendments to the law created statutory enhanced incentives for private citizens to “blow the whistle” against fraudulent conduct. Congress did this by increasing the penalties that could be imposed against those committing fraud against the government to a minimum of $5,000.00 and a maximum of $10,000.00 for each false claim for payment plus three times the government’s actual damages. Additionally, the law as amended provides that if the government were successful in pursuing a Qui Tam case brought by an individual on its behalf, that the whistleblower “relator” could obtain a recovery of between fifteen (15%) and twenty-five (25%) percent of the amount recovered plus reasonable expenses and attorney’s fees. If the government does not intervene in a whistleblower case filed by the “Relator,” (the individual relating the information to the government), and the private citizen or Qui Tam plaintiff nonetheless proceeds with private counsel on behalf of the government, the whistleblower/relator may recover up to thirty (30%) percent of the damages recovered, plus fees and expenses.

Finch McCranie, LLP is honored to practice in this area and is willing to assist in the very necessary effort to root out fraud against our government. Our firm’s ability to represent whistleblowers is enhanced because most of our firm partners are former federal prosecutors. Thus, our attorneys have experience in prosecuting fraud cases on a federal level, including high profile cases. Since leaving the federal government, our attorneys have also represented clients in a White Collar business context as well. All of our Qui Tam or Whistleblower clients benefit from this experience as often times it is necessary to protect a “whistleblower” from retaliation by their employer or from any personal liability they may have by virtue of their company or employer putting them in a position where they may have unwittingly participated in a scheme to defraud the government.

Because of our firm’s unique experience, our clients can help prevent fraud against our government and can also share in the reward for doing so because damages are available for each false claim submitted. The incentives and tools available to the whistleblower claimant are great not only because three times the amount of actual damages may be recovered in the “Qui Tam” case but also a five to ten thousand dollar penalty per each false claim for payment, plus reasonable attorney’s fees and expenses. Thus, “Lincoln’s Law” is alive and well today, 140 years after its passage, and is still helping to serve the salutary government interest of rooting out fraud by financially punishing those who would perpetrate schemes to defraud their government.