The False Claims Act (FCA) allows a private individual with knowledge of past or present fraud on the federal government to bring a lawsuit against the defrauder. The statute allows for compensation to private whistleblowers—known as “relators”—when they bring a successful claim against a defendant on the government’s behalf.
If used properly, the FCA can be an important tool for uncovering fraud and abuse against taxpayer-funded programs. If abused, however, the law can destroy businesses and create perverse incentives that harm the market, innovation, and broader public policy.
In United States ex rel. Harman v. Trinity Industries, relator Josh Harman happens to be a competitor of Trinity Industries, which designs guardrails to protect vehicles when they crash on highways. In 2000, Trinity designed a guardrail safety device known as the “ET-Plus,” which was approved by the Federal Highway Administration (FHWA). In 2005, Trinity modified the ET-Plus without fully informing the FHWA of the changes it had made. Harman alleges that by not informing the FHWA of the design change, Trinity defrauded the government and should be held liable for damages under the FCA.