Depending on the facts of your case, Federal False Claims Act penalties and damages under 31 USC 3729 and 31 USC 3730 (FCA) can be significant. In some situations, the penalty for violating the federal false claims act can total three times the amount of the claim, plus fines of $5,500-$11,000 per claim.
According to the DOJ, the Justice Department’s fiscal year 2013 efforts recovered more than $3 billion for the fourth year in a row.
If you are a federal government contractor facing allegations of the FCA violations or defending a claim from a Qui Tam lawsuit, knowing the essential nuances can help you to better prepare to defend any allegations.
What is the Federal False Claims Act?
This rule is common in government contracting. The Federal False Claims Statute establishes liability when any of your employees or your business improperly receives from or avoids payment to, the government (tax fraud is excepted).
Under 31 USC 3729 and 31 USC 3730, the False Claims Act Statute prohibits:
- Knowingly presenting, or causing to be presented a false claim for payment or approval;
- Knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim;
- Conspiring to commit any violation of the Federal False Claims statute;
- Falsely certifying the type or amount of property to be used by the Government;
- Certifying receipt of property on a document without completely knowing that the information is accurate;
- Knowingly buying Government property from an unauthorized officer of the Government, and;
- Knowingly making, using, or causing to be made or used a false record to avoid, or decrease an obligation to pay or transmit property to the Government.
Assessment of Federal False Claims Act Penalty
When assessing Federal False Claims Act penalty, the most commonly used of the above provisions are the first and second: prohibiting the presentation of false claims to the government and making false records in order to get your claim paid. Prime contractors must also be aware that submitting government invoices which certify that subcontractors have been paid, when in reality they were not, could lead to a violation of the False Claims Act.
One situation that invokes Federal False Claims Act penalties includes failure to test a product as required by the rigorous government specifications or selling defective products. Under each of the above elements of 31 USC 3729, the facts of each case drive the outcome.
When companies act in concert, there could be an argument for a conspiracy charge. Likewise, when companies receive products from third parties, saying that you were unaware of any defects may not always be an FCA defense.
As a potential defendant to a Federal False Claims case or Qui Tam lawsuit, liability and exposure can be substantial. Understanding the process and how the government proceeds against you is an important step.
Federal False Claims Act Penalties and Damages Under 31 USC 3729 and 31 USC 3730
After listing the seven types of conduct that result in Federal False Claims Act penalties and liability, the Act provides that one who is liable must pay a civil penalty of between $5,000 and $10,000 for each false claim (those amounts are adjusted from time to time; the current costs are $5,500 to $11,000) and reduce the number of the government’s damages Under 31 USC 3729 and 31 USC 3730.
Where a person who has violated the False Claims Act reports the violation to the government under certain conditions, the Federal False Claims Act provision states that the individual shall be liable for not less than double the damages.
Taking a Proactive Stance Can Minimize Litigation in FCA Cases: As a prime contractor or an individual subject to the Act, you want to make sure that you have the requisite internal policies in place to lower any risks associated with the ramifications of the Federal False Claims Act and WhistleBlower statute.
Also, when you receive claims from your subcontractors you also want to make sure that they are certified and that you have done your due diligence to ensure that such claims are validated and legitimate.
Although you are the prime contractor, you can still be hauled into court and assessed a penalty for violating Federal False Claims Act under 31 USC 3729 and 31 USC 3730.
What Can You Do to Minimize FCA Penalties? As a government contractor, when you are performing a federal project you always want to keep the Contracting Officer Representative (COR) and the Contracting Officer aware of changes, however slight, as soon as you know about them. Keeping emails and documentation is critical to minimizing Federal False Claims damages.
If the government is well aware of the facts and that it would be extra work ahead of time, then it would be a strong defense to your case that the claim is not “false.”
For more information about the penalty for violating Federal False Claims Act, 31 USC 3729 and 31 USC 3730, or for help with a pending case, contact our Federal False Claims Act attorneys or our government contracts attorneys at 1-866-601-5518. FREE INITIAL CONSULTATION.