In recent years, the False Claims Act (FCA) — a Civil War–era law enabling citizens to expose fraud against the federal government — has been twisted into a profit-driven enterprise. The Prosperity for US Foundation warns that a troubling new pattern is taking root: whistleblowers, prosecutors, and even venture capitalists are treating FCA cases not as truth-seeking missions, but as “financial instruments.”
Whistleblowing should be about integrity, not industry,” said Bob Carlstrom, the foundation’s executive director. “We are witnessing the rise of a cabal of professional whistleblowers, prosecutors, and even venture capitalists who treat whistleblower cases like financial instruments. They destroy reputations, livelihoods, and entire businesses, not to protect the public, but to enrich themselves.
Originally enacted in 1863, the FCA was intended to deter fraud against the Union government during the Civil War. Over time, amendments bolstered protections and rewards for whistleblowers, incentivizing citizens to come forward. For decades, the Act served an honorable and necessary function: rooting out corruption and protecting taxpayer funds.
But today, the incentives for truth-tellers are being exploited by well-organized, profit-oriented actors. According to the Prosperity for US Foundation, some groups have turned FCA litigation into a business model — enlisting cases, leveraging sealed filings to stifle defense, and pursuing opportunities without any real connection to wrongdoing. In extreme cases, entities backed by venture capital have filed dozens of cases to extract settlements, colliding commerce with litigation in ways the Act never intended.
What was once a tool for protecting the public has too often become a vehicle for personal gain. The danger is twofold:
- Due Process Undermined – Sealed complaints and aggressive litigation tactics can leave defendants with limited ability to defend themselves — not because they’re guilty, but because the system stacks the deck against them.
- Commerce Chilled – Businesses, including small contractors, may be targeted before a shred of substance emerges, incentivizing plea deals rather than fair adjudication.
The reliance on financial incentives over substantive review erodes public trust in both justice and government.
DOJ Filings
The U.S. Department of Justice (DOJ) dismissed a series of FCA cases in 2019 that were brought by the National HealthCare Analysis Group (NHCA), an investment-backed entity . The DOJ said this group filed multiple lawsuits through shell companies and “cloned complaints,” reported Reuters, and that thee group allegedly built lists of potential informants from public data and contacted them under the guise of research without disclosing that the information could be used in litigation.
A Dark Daily report detailed one whistleblower case resulting in more than $100 million in settlements, including $241 million from Quest Diagnostics. The report said the whistleblower had no personal connection to the alleged fraud but advanced the case through public campaigns and legal partnerships.
The FCA still matters, but only if it remains a tool of genuine accountability, not a litigation business. Needed reforms include:
Carlstrom notes that “these issues escalated under the Biden Administration” but points out that efforts during the Trump years to curb DOJ abuse offer a roadmap for reform.
The False Claims Act can still serve its original mission — but only if we reclaim it from profiteers and restore it as a shield for taxpayers, not a weapon for opportunists.
This is why the Trump Administration, Calstrom says, is “focusing more intently at rolling back the weaponization of the Department of Justice” after FCA abuses escalated under the Biden Administration.