It's really very simple! When you order ten pounds of ground pepper to be delivered in a container from a supplier, the total combined weight of the container and pepper should be greater than ten pounds. The container weighs something. The total weight should not be ten pounds.
The False Claims Act was passed to stop this kind of activity perpetrated against the Union Army during the Civil War and to provide a way for the government to recover money from those suppliers that had profited from similar schemes to shortchange the government. The False Claims Act is often referred to as the "Lincoln Law" because President Abraham Lincoln strongly supported its passage.
The law contained a "qui tam" provision that allowed private citizens to sue, on the government's behalf, companies and individuals that were defrauding the government. "Qui tam" is short for a Latin phrase, "qui tam pro domino rege quam pro se ipso in hac parte sequitur," which roughly means "he who brings an action for the king as well as for himself." The statute was passed on March 2, 1863.
This "qui tam" provision allows knowledgeable insiders that work for suppliers that are engaged in providing inferior or shorted products to the government and then billing the government falsely, to participate in the financial recovery on a percentage basis.
There are also protections built into the statute so those brave individuals that step forward and identify these situations will not be fired for their reporting activities. These are commonly referred to as "whistleblower protections".
Some government sectors that have been victimized by fraud include Public works projects and federal government construction; Research programs; Customs; Environmental programs; Loan guarantees; Underpayment of royalties on government-leased land; Agricultural subsidies and other agricultural programs; Municipal bonds ("yield-burning").
The reward for a whistleblower can be substantial. Fifteen to thirty percent of the recovery is called for if the whistleblower's suit is successful. Whistleblowers awards since 1986 have reached almost $1 Billion.
