Anti Kickback Statute Resolving Challenges of Fraud and Penalties

Government contractors or health care agencies accused of violating the Anti Kickback Statute or anti kickback statute fraud and government contractfraud can be in for some huge fines if a court rules against them. Having sound internal practices and a thorough understanding of the applicable laws can greatly benefit companies alleged violations.

Contractor complaints and defenses against the AntiKickback Statute include being duplicative, unconstitutional or prohibited when used in conjunction with the False Claims Act.

  • The bottom line is that many courts tend to reject these arguments.

 Litigation Approach for Government Contractors : Once a court determines that you have committed fraud for specific contract issues, the unambiguous language of 28 USC 2514 requires the court also to declare that you contract claims are also forfeited. It would seem that the best course of action when dealing with the Anti Kickback Statute is to focus on defeating the fraud issues first.

Courts typically disagree with the view that imposing civil penalties under the Anti-Kickback Statute, separate civil penalties and treble damages under the False Claims Act for the same facts, are either duplicative or prohibited.

  • Approaches to defending anti kickback allegations start early during the investigative stages;
  • Defenses are based upon facts and disproving the government’s legal requirements.
  • No facts are the same in any one case.
  • Consult with a defense attorney early in your case.

Rationale for Steep Penalties in Anti Kickback Statute: Given the cost of government investigations, doubling the kickback payment compensates for these greater costs but keeps the award tied to the size of the kickback itself.

  • In allowing for an extra award of up to $10,000, the court is given the discretion to give greater recovery when it is due. The extra award can also provide a sufficient deterrent amount when the kickback amount itself is small.

Constitutional Arguments Against Anti Kickback Statute Allegations Generally Fail: Sometimes, defense attorneys raise the argument that the Anti Kickback Statute violates the  Excessive Fines Clause of the Eighth Amendment to the United States Constitution. However, since Anti-Kickback Act civil penalties have a punitive component, a court may choose not to decide to find out whether an award is “grossly disproportionate to the gravity of the offense.

The bottom line here is that a more likely approach to dealing with the Anti Kickback Statute is to first try to deal with the government’s allegation of fraud because once that determination is made, the courts will have no choice but to apply the statute to penalties.

Civil Penalties

The United States may, in a civil action, recover a civil penalty from any person who knowingly engages in conduct prohibited by the statute.

The amounts of such civil penalty shall be –

(A) twice the amount of each kickback involved in the violation; and

(B) not more than $10,000 for each occurrence of prohibited conduct.

(2) The United States may, in a civil action, recover a civil penalty from any person whose employee, subcontractor or subcontractor employee violates a section of the statute by providing, accepting, or charging a kickback. The amount of such civil penalty shall be the amount of that kickback.

Keep in mind that in 1986, the Anti Kickback Statute was amended:

  • To enhance the government’s ability to prevent and prosecute kickback practices.
  • These practices have become a pervasive problem in Federal procurement.
  • This form of commercial bribery has a tremendous impact.
  • Kickbacks directly inflate contract costs paid by the taxpayer.
  • Kickbacks destroy competition, and they foster corruption.

For more help litigation allegations of government contract fraud or Anti Kickback Statute penalties, call one of our lawyers at 1-866-601-5518. 

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