During the American Civil War, unscrupulous contractors defrauded the Union government by supplying decrepit horses and mules, faulty rifles and ammunition, and rancid rations and provisions. Congress responded by passing the False Claims Act on March 2, 1863, and President Abraham Lincoln signed it into law. The statute imposed civil liability on people and companies that knowingly defrauded federal programs and created a qui tam mechanism allowing private citizens to sue on the government’s behalf.
The law’s unusual enforcement model offered whistleblowers, known as relators, 15% to 30% of recovered damages and protection against retaliation. It was strengthened on October 27, 1986, after reports of extensive fraud among military contractors during the Reagan-era defense buildup, and later became a major tool against health-care and pharmaceutical companies. From 1987 through 2019, the government recovered more than $62 billion under the Act, including $44.7 billion from whistleblower-initiated cases; in fiscal 2019 alone, the Department of Justice recovered over $3 billion. Supreme Court decisions in 2016 and 2023 reinforced the statute’s materiality and knowledge standards.
