The 'new' false claims act

The False Claims Act is a Civil War era law primarily enforced by private bounty hunter lawsuits against defense contractors, hospitals, medical service providers, research organizations, universities and anyone who contracts with or seek reimbursement from the federal government. The FCA potentially implicates any organization presenting a false or fraudulent claim for payment to the federal government or using a false statement or record to conceal, avoid, or decrease an obligation to the federal government. Private lawsuits on behalf of the government are called qui tam actions, and these lawsuits have mushroomed following 1986 amendments intended to encourage more private enforcement of the FCA, with recoveries to date exceeding $1.45 billion. Unfortunately, the new FCA contains significant incentives for employees to cover or suppress evidence of misbillings or fraud to increase their rewards, which has troubling implications for internal compliance an audit programs by companies doing business with the federal government, as well as for the role of accountants, auditors, and others who perform audit and compliance function for both private industry and the government.