The Chamber of Commerce has commenced a well-financed and aggressive lobbying campaign to undermine America’s most effective whistleblower law, the False Claims Act. To justify its anti-whistleblower campaign the Chamber published a report entitled, “Fixing the False Claims Act: the Case For Compliance-Focused Reforms.” The purpose of this blog series is to combat the Chamber’s misinformation, and explain why the False Claims Act must be protected.
Fact Number 17:
The Chamber’s report alleges that the FCA “incentivize[s] the filing of frivolous lawsuits” and “generates unnecessary litigation costs for government and businesses.” The report also implies that the over-filing of FCA claims is a problem as “litigation under the FCA has steadily increased.”
These claims are completely unsupported.
First, the University of Chicago’s Booth School of Economics’ study debunked any allegation that the FCA increases the filing of frivolous litigation: “[T]here is no evidence that having stronger monetary incentives to blow the whistle leads to more frivolous suits.”
Second, the False Claims Act (FCA) has a provision that requires federal courts to sanction relators who file frivolous lawsuits. Since 1986, of the nearly 10,000 cases filed, only eleven cases of sanctions have been awarded. Six of those cases were against pro se filers who cited to the FCA as part of their absurd cases. The FCA’s sanctioning authority permitted the courts to stop the abusive filings, whereas laws also abused by these filers did not permit sanctions.
The other five cases were also not whistleblower cases but frivolously argued issues such as copyright infringement or breach of private contracts previously rejected in other, similar courts.
Third, over-filing of qui tam lawsuits is not a problem. In 2013, a total of only 753 False Claims Act (FCA) cases were filed. This is an absolutely minuscule number compared to the total number of civil lawsuits (284,606), or even employment discrimination lawsuits (33,309) filed during the same time period. The real problem is not that FCA cases are flooding the federal courts, but that not enough insiders with knowledge about fraud against federal programs are filing claims.
Finally, as reflected in the Congressional testimony of the U.S. Department of Justice, the qui tam suits do not cause the government “unnecessary litigation costs,” but instead save the government (and therefore the taxpayer) significant amounts of money by providing the DOJ with high-quality information necessary to investigate complex and secretive fraud.
“The University of Chicago’s Booth School of Economics’ study debunked any allegation that the FCA increases the filing of frivolous litigation.”
Whistleblowers and their supporters are strongly urged to read this blog series and share it with friends. In addition, an Action Alert has been issued by the National Whistleblower Center so members of the public inform their representatives that the False Claims Act should not be “reformed” as proposed by the Chamber.