Little-known Statute May Breathe New Life into False Claims Act Cases Against Financial InstitutionsAndrew W. Schilling
The False Claims Act (FCA) is a powerful tool that allows both the government and whistleblowers to seek damages for claims of civil fraud on the United States. In the past two years, the government has aggressively used the FCA to target financial institutions for claims of reckless lending and improper servicing. However, as the events leading to the financial crisis have approached, and in some cases exceeded, the FCA’s statute of limitations, financial institutions have increasingly responded to such claims by arguing that the government did not assert them in a timely manner. A recent Fourth Circuit decision interpreting an obscure act, first enacted during World War II, threatens to make it significantly more difficult for financial institutions to assert a statute of limitations defense to FCA claims.