Supreme Court looks at whether Medicare and Medicaid were overbilled under fraud law

Bottles of prescription pills go through an automated packaging machine in a pharmacy plant. The Supreme Court on Tuesday hears a case that considers whether pharmacies knowingly overcharged Medicare and Medicaid under the False Claims Act. (Stan Honda/AFP via Getty Images)

The U.S. Supreme Court will hear arguments on Tuesday in a case that could undermine one of the government's most powerful tools for fighting fraud in government contracts and programs.

The False Claims Act dates back to the Civil War, when it was enacted to combat rampant fraud by private contractors who were overbilling or simply not delivering goods to the troops. But the law over time was weakened by congressional amendments.