Minneapolis employment law attorney Clayton Halunen discusses the false claims act.
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The False Claims Act was created back in the 1800s during the Civil War period. In fact, President Lincoln was the president who signed off on it, enacted it into law. It was put in place to reward people who reported fraud against the government – at that time, the military. People, vendors, were selling bad horses, bad rifles, bad ammunition to the government in the war, and it was taking money out of the coffers, and so the taxpayers were effectively paying out this money in these schemes for fraud. So this act was put in place to reward people to come forward, sort of like a bounty.
And so if people come forward with information to the government saying, “I happen to have information that this vendor is selling the government bad ammunition and I can help you prove it,” that person, then, would be entitled to a reward. And that’s the encouragement to come forward. Otherwise, people generally were not coming forward. Why would they get involved in a claim and potential litigation unless there’s some benefit to them? So it was based upon these reward provisions, and it worked, because people started coming forward and the government started collecting money from these wrongdoers, these companies, these people who were making false claims and charging the government for things that the government didn’t get.