The U.S. Chamber of Commerce’s Institute for Legal Reform recently released a report on the False Claims Act (FCA)—the primary whistleblower legislation utilized by the federal government. Unfortunately, its analysis presents a fundamentally defective approach to addressing fraud in business.
In short, the Chamber’s report concludes the following: there is a lot of fraud in American commerce, particularly the kind of fraud (much of it in healthcare) that costs American taxpayers billions and billions of dollars annually (in excess of $70 billion according to the Government Accountability Office). In fact, fraud is such a big problem that Congress needs to amend the FCA and reduce protections and rewards available for those who risk their careers to report that fraud.
The reality is that the FCA is an example of how the government works at its best and most efficient. In fact, another recent study by the Taxpayers Against Fraud Education Fund concludes that the government actually recovers $20 for every $1 it invests in fraud investigations pursuant to the FCA.
And there is a reason for it. It is because it may be the one area where government appropriately harnesses the private sector profit motive. It is the one area where government outsources ordinary people, driven by their own morality, conscience, and, yes, desire for money, to help do government’s work and provide a public good in the process. In fact, some...