Cisco Systems is being forced to pay $8.6 million to settle a False Claims Act whistleblower lawsuit alleging that it sold video surveillance technology that it knew had a significant security flaw to federal, state and local government agencies. The money will be paid to the federal government as well as 15 states and the District of Columbia.

The False Claims Act allows so-called “qui tam” lawsuits that are brought by whistleblowers on behalf of the government against businesses that sell it faulty or defective equipment, or that otherwise defraud it in some other manner. As an incentive, whistleblowers can be awarded a percentage of the proceeds collected by the government in the lawsuit, plus costs and attorneys’ fees. In the Cisco case, the whistleblower was awarded 20% of the award of $8.6 million.

If software or technology companies knowingly sell faulty software or hardware to the government they can run afoul of the False Claims Act and potentially be subject to suits filed by whistleblowers.

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