The Many Uses of the False Claims Act: Beyond Medicare Fraud and Military Contracts

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As a False Claims Act law firm, we are always interested to find out what people know about the law, a fundamental issue given the large role private citizens play in bring False Claims Act (“FCA” or “the Act”) lawsuits.  One of the things we’ve learned is that even the people who are familiar with the law are surprised to learn the wide variety of contexts in which it can apply.  Likewise, its many state counterparts are versatile tools for the fight against fraud.

Overview of the False Claims Act

The Legal Information Institute (“LII”) at Cornell University Law School explains that the FCA is a “[f]ederal statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government.”  Although not emphasized in the LII article, false claims only violate the Act if made knowingly, with deliberate ignorance, or willful disregard of the claim’s falsity (see The False Claims Act: A Primer published by the Department of Justice (“DOJ”)).

As the LII explains, either the DOJ or private citizens can bring claims to enforce the law.  Suits filed by individuals are called “qui tam lawsuits” and the person bringing suit is called the “realtor” (or, colloquially, “whistleblower claims” and “whistleblower”).  The government can elect to intervene in qui tam actions, essentially taking over the prosecution, or allow the realtor to continue alone.  If the government recovers money via a judgment or settlement, the realtor is entitled to 15-25% if the government intervened or up to 30% if the government did not as compensation for her efforts.  Whistleblowers are also protected from retaliation.

Many states have their own versions of the FCA covering similar frauds, although the details of the laws can vary by state.

A Law Covering Many Forms of Fraud on the Government

According to the DOJ, in fiscal year 2014 the government recovered $5.69 billion in government fraud settlements and judgments.  Of this money, $3.1 billion came from financial institutions and involved federally insured mortgages/loans and $2.3 billion involved fraud on federal health care programs (e.g., Medicare, Medicaid, Tricare).  These figures only include federal recoveries, although many cases also or solely involved fraud on state governments and/or private institutions.  Although not specifically referenced in the DOJ report, another common topic in FCA litigation is military contract fraud.

While there are certainly some common culprits, FCA claims arise in many different industries, not surprising given the large amount of money the government spends each year!  A few examples of cases resolved this year involving the FCA and/or state equivalents that demonstrate this breadth include:

  • On September 14, 2015, a Tennessee judge ordered a former employee to pay $5.4 million to a school district and its insurer. The suit, filed pursuant to the Tennessee FCA, accused the employee of embezzlement and included claims she diverted grant money intended for Alcoa City Schools to a personal account and forged a supervisor’s signature to cause the district to pay for personal charges on multiple credit cards (The Daily Times).
  • Earlier in September, Parsons Government Services Inc. agreed to pay $3.8 million to settle a federal case alleging it knowingly sought and received reimbursement for ineligible employee relocation costs pursuant to a contract relating to a waste processing plant at the Savannah River Site, a nuclear facility (DOJ Press Release).
  • In June 2015, a federal judge ordered Trinity Industries, Inc., a guardrail manufacturer, pay in excess of $663 million for failing to tell the Federal Highway Administration about changes to its product. The guardrail systems were allegedly faulty and have been blamed for numerous deaths (WPRI 12), also see our own blog entry discussing injury and wrongful death claims involving allegedly faulty guardrails).
  • During March 2015, Fireman’s Fund Insurance Company agreed to pay $44 million to resolve claims filed pursuant to the (federal) FCA alleging it knowingly issued policies under a federal crop reinsurance programs despite the policies being ineligible for the program. The California-based company allegedly forged signatures, backdated policies, signed documents after deadlines had passed, and whited-out dates/signatures (DOJ Press Release).

A False Claims Act Law Firm: Partnering with Whistleblowers, Fighting Fraud

Embezzlement from schools, employment-related billing frauds, hiding problems impacting highway supply contracts, and insurance fraud, in addition to fraud involving health care, mortgage services, and military supply contracts – varied allegations of government fraud all falling under the False Claims Act and its state law counterparts.  As a lawyer specializing in False Claims Act cases, Attorney Brod is ready to use the FCA to fight frauds that steal money from our government, money that comes from every taxpayer and is needed to fulfil the many obligations the government has to its people.  If you believe you have witnessed fraud involving money obtained by making false claims to the government, call 800-427-7020.  You can be part of the fight against fraud.

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See Related Blog Posts:

The False Claims Act and the Role of Whistleblowers in Stopping Health Care Fraud

The False Claims Act: From Shoddy Civil War Uniforms to Costly Defense Contracts in 2014

(image by Bruce Bortin)