The False Claims Act and Corporate Criminal Liability: Qui Tam Actions, Corporate Integrity Agreements and the Overlap of Criminal and Civil Law

56 Pages Posted: 28 Aug 2012

See all articles by Sharon G. Finegan

Sharon G. Finegan

South Texas College of Law Houston

Date Written: March 1, 2007

Abstract

The Federal False Claims Act serves an important function in detecting and deterring fraud upon the government of the United States. By enlisting the public as private prosecutors in such actions, the statute *678 ensures heightened enforcement and obtains compensation for losses sustained by the federal government as a result of fraudulent activity. The monetary incentives provided by the statute encourage reporting of wrongful activity and provide compensation for the sacrifices typically sustained by whistleblowers. Thus, the qui tam provisions of the FCA bring to light wrongful conduct that might never be discovered or addressed without the ability of private citizens to benefit financially from filing suit.

The FCA, however, is also rife with problems that stem from the overlap of criminal and civil law generated by the statute. Traditional distinctions between criminal and civil law are blurred by the provisions of the FCA, which allow for private individuals to enforce public laws without having suffered injury from the wrongful conduct. By encouraging private parties to maintain punitive actions on behalf of the public good, the FCA blurs the line between criminal and civil law. Further, in the context of actions brought against corporate defendants, the penalties available in FCA civil suits are identical to those available in criminal prosecutions. Thus, the ability of individuals to enforce the provisions of the FCA through qui tam suits results in a near-complete overlap between criminal and civil law.

Yet, despite this overlap, the FCA fails to safeguard the rights of corporate defendants in FCA actions. By failing to provide procedural safeguards available in criminal actions and furnishing no incentive to private plaintiffs to exercise discretion in filing suit, the FCA places far too much power in the hands of individuals. Simple changes to the statute would address these concerns and ensure fair and just application of the FCA. By returning the burden of proof to the clear and convincing standard in place prior to the 1986 amendments to the FCA and requiring greater government oversight of qui tam actions, Congress would ensure that the statute adequately roots out fraud upon the federal government, while providing protection against the unfairness currently embodied within the statute's terms.

Suggested Citation

Finegan, Sharon G., The False Claims Act and Corporate Criminal Liability: Qui Tam Actions, Corporate Integrity Agreements and the Overlap of Criminal and Civil Law (March 1, 2007). Penn State Law Review, Vol. 111, No. 3, p. 625, 2007, Available at SSRN: https://ssrn.com/abstract=1817911

Sharon G. Finegan (Contact Author)

South Texas College of Law Houston ( email )

1303 San Jacinto Street
Houston, TX 77002
United States

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