Why Do False Claims Laws Matter?

The United States government and the 50 states are the world’s largest purchasers of goods and services — by far— collectively spending billions of dollars every year. That also makes our state and federal governments the world’s largest targets for fraud. The varieties of fraud committed against our government seem limited only by the imagination of the people and companies willing to commit them. And government, acting alone, is simply no match for the sheer amount of fraud being committed against it. This is the context in which false claims laws are passed and why they are so important.

The basic premise behind false claims laws is straightforward: government prosecutors and investigators have limited resources, and fraud against the government is both massive and often difficult to detect; private citizens are often better positioned than government investigators to spot much of that fraud; they can be induced to inform on and pursue corrupt contractors if promised a share of the recovery; and the resulting public-private partnership should catch and deter much more fraud than the government could ever uncover, thwart or punish on its own. Congress first adopted this approach in 1863, to prevent and punish frauds by corrupt profiteers scamming the Union Army. In the 150 years since then, it has proved so successful that 29 states and the District of Columbia have copied it, passing their own false claims statutes. And this approach works. In just the past 5 years, whistleblowers acting under federal and state false claims acts have recovered more than 13 billion taxpayer dollars.