The False Claims Act (FCA) is governed under (31 USC 3729) avoids fraudulent activity against the federal government. As a federal contractor, you must make sure that you have the requisite policies and training programs in place.
Contractor policies should focus on preventing fraud, waste and abuse. At all cost, you must train your staff to prevent making false statements and false information to Government officials.
- This reduces the likelihood of adverse impact on you or your company’s future.
The False Claims Statute also provides for liability when you intentional receive overpayments or submit invoices with the intent of receiving payment from the United States Government.
What Does the False Claims Act Prohibit?
- Any person from 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 Act;
- 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 true;
- 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.
Under 31 USC 3729 Prime contractors are not the only businesses that stand to be held liable for submitting false information under the statute. Subcontractors are also on the hook under Qui Tam regulations. The biggest problem in the FCA actions arises when you try to perform services or sell products of a flawed nature, or not in compliance with the contract terms and conditions. Also, improperly submitted invoices can create a problem under the False Claims lawsuits.
What is the False Claims Act when it applies to people who tell on you? Under the statute, the Department of Justice gets involved and can even pay rewards to employees or other contractors that blow the whistle on you.
31 USC 3729 Damages and False Claims Act Treble Damages & Penalties: The liability that imposes damages and penalties under 31 USC 3729 can be brutal to include treble damages. You can be liable for a civil false claims act penalty of between $5,000 and $10,000 for each incident (those amounts are adjusted from time to time; the current amounts are $5,500 to $11,000) and treble damages in certain cases. As a government contractor, if you are found in violation of the FCA, you will be liable for not less than double damages.
Actual Knowledge Under the False Claims Act 31 USC 3729?
What is the Statutory knowledge requirement? Contractors do not violate the statute by merely submitting a false claim to the government; to violate the law, you must have submitted, or caused the submission of, the false claim (or made a false statement or record) with knowledge of the falsity.
Under 31 USC 3729, knowledge of false information is defined as being (1) actual knowledge, (2) deliberate ignorance of the truth or falsity of the information, or (3) reckless disregard of the truth or falsity of the information.
Things You Can Do To Overcome False Claims Act Allegations
- Train You People and Document
- Develop Disclosure Policies
- Implement Contract Ethics Policies
- Act promptly when there is evidence of false claims violations
- Ensure that you have access to counsel
- Conduct frequent internal investigations for compliance
Prevention tips: Other things you can do to prevent litigation under the False Claims Act include getting clarification up front about the terms and conditions of the contract. As False Claims Act defense lawyers, we also suggest that you keep accurate and complete records.
Communication between you and Government Contracting personnel is critical to the outcome of your defense in False Claims Act litigation. See information about the False Claims Act Statute of Limitations.
Drafting policies not enough: To reduce the impact of False Claims Act litigation under 31 USC 3729, you should not only implement effective internal policies and controls. You should also train your staff on those policies. Many Government Contractors have no problem drafting policies. However, when they are sued in a Qui Tam case, they lack a credible defense if they do not train their staff members.
Continuous monitoring: Government contractors should also ensure a process for monitoring compliance with invoicing regulations and correct continuing problems that can lead to civil and criminal penalties. Such monitoring should intend to prevent fraud waste and abuse.
What are the False Claims Act Fraud Indicators in Defective Pricing?
- Falsifications or alterations of supporting data – this is considered as false information;
- Failure to update cost or pricing data when recent activity indicates price decreases;
- Failure to completely disclose data known to responsible contractor personnel;
- Distortion of overhead accounts or baseline information by transferring charges or accounts that have a material impact on government contracts;
- Protracted delay in release of facts to the government to prevent possible price reductions;
- Repeated denials by responsible contractor employees of the existence of historical records that are later found;
- Submitting false documents and false statements;
- Failing to show internal documents on vendor discounts