Tips for Federal False Claims Act Elements and Defenses Establishing and proving Federal False Claims Act elements and defenses in government investigations and litigation can make the difference in winning or being an open target for prison time or hefty civil fines. The False Claims Act, 31 USC 3729, is the government’s favorite legal tool to prosecute and impose civil and criminal penalties on government contractors, their employees, or individuals.

Tip: It is quite obvious that this tool is primarily used to combat government contract fraud. The FCA elements seem pretty straightforward. However, a prudent FCA defense attorney will realize that there is more to simply looking at the basic False Claims Act elements .

Under the federal False Claims Act a citizen may be held criminally or civilly liable for various aspects of conduct in federal government contracting, many of the cases brought by the Department of Justice (DOJ), SBA OIG – office of inspector general, and other federal law enforcement agencies involve allegations that defendant(s) knowingly submitted or caused another to submit a false or fraudulent claim for payment to the government. See 31 USC 3729(a)(1)(A).

What is the Federal False Claims Act?

Under the federal False Claims Act, a citizen may file a lawsuit against another if there is sufficient proof shown. The False Claims Act (“FCA“) provides, in pertinent part, that: (a) Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that
person . . . .”

Tip: At the end of the day, federal prosecutors aggressively pursue legal action against government contractors. Having the right False Claims Act defense attorney on your team makes a huge difference. Especially in criminal cases. See information about criminal liability for false statements under 18 USC 1001.

False Claims Act Elements

In addition to making these bare-bones allegations, the federal prosecutor must also show the following Federal False Claims Act elements:
1. A false claim was made
2. The false claim was made with the requisite scienter (or knowledge that it was false) (not just that it was false).
3. The false claim is material to getting payment.
4. The false claim actually caused the government to pay out money.


False Claims Act Defenses

The logical approach to assert False Claims Act defenses is to pick apart one of the above elements. The prosecutor must prove all and not just a few.

No Falsity – What is Falsity? 

Criminal or civil false claims to the government can bring to life liability if they are either factually false or legally false. False representations support legally false claims. In addition, falsity can be supported by a false representation of compliance with a statutory (FAR), regulatory, or applicable contract term. See information about FCA civil investigative demands

Tip: Courts look at the following to see if there is falsity in a False Claims submission to the government.
1. Express false certification claims.
2. Implied false certification claims.
When a government contractor certifies that his subcontractors are paid to date and that certification is false, the government may bring a false claims statute charge against you.
When you submit a claim asking the government for reimbursement but the materials or work did not meet contract specifications or do not meet limitations on subcontracting of SBA regulations, then a false claims charge may be brought against you.

No Scienter – What is Scienter?

Civil or criminal False Claims Act liability does not attach to a case unless the government attorneys can show that the contractor or defendants acted with the required state of mind (to deceive the government). This is otherwise known as “scienter.” The FCA is intended to hold contractors or defendants liable only if they knowingly submitted false to the government. This is yet another false claims defense if you can prove it. See information about false claims retaliation.

No Materiality – What is Materiality?

Materiality under the federal Act requires a showing of “having a natural propensity or tendency to influence, or be capable of influencing, the payment or receipt of property” from the government. If the information or false submission was not important enough that it would probably have influenced the contracting officer’s decision, then there could be a legal defense in the making. See Universal Health Services v. U.S. ex rel. Escobar decision in 2016.

No Causation – What is Causation?

The causation analysis in a federal case is just as important as with any other allegations in a case. There must be some causal connection to complete the government’s case. Courts are split in how causation is analyzed as one of the False Claims Act elements .

Note that the False Claims Act imposes liability even where a company does not directly submit a claim to the government. For example, a company may be liable for causing false claims when it adopts a policy or makes representations about its product’s capabilities that lead another company to submit a claim to the government. This type of legal defense in federal false claims act and qui tam litigation is tricky. Yet, another reason to have a viable FCA defense attorney on board.


What are Examples of False Claims Act Cases Brought by the DOJ?

False Claims Act cases can involve almost any type of fraud that results in financial loss to the federal government. False Claims Act examples cases brought by the Department of Justice can include:

– Medicare and Medicaid Fraud

– Defense Contractor Fraud

– Tax Fraud

– Bank and Mortgage Fraud

– Environmental Protection Agency Fraud

– False Claims in Government Contracts

– Kickback Schemes in Federal Programs

– False Statements to Obtain or Increase Funding from the Government

If You Find Out That You Are Targeted for a Criminal False Claims Act Case What Should You Do?

If you have been targeted for a criminal False Claims Act case involving a government contract, the first step is to seek experienced legal counsel. Federal False Claims Act cases involve complex and nuanced issues of law, and the penalty for violating the federal False Claims Act is severe. Therefore, it is important to hire a contract fraud attorney who understands both the civil (government contracting) and criminal aspects of these cases. Experienced False Claims Act defense lawyers will be able to advise you on how to proceed with your case and provide representation in court if necessary.

False Claims Act cases come in two main types: (1)civil cases brought by whistleblowers to recover funds lost due to fraud or other misconduct; and  (2) criminal prosecutions that target individuals or entities that knowingly submit false claims for payment from federal programs or contracts. Both types of litigation can lead to heavy fines and prison sentences for those convicted, which is why it is important to have experienced legal representation as soon as possible.

Lawyers who specialize in False Claims Act cases will also be able to help you understand the laws surrounding this type of litigation and advise on how to proceed with your case. They will be able to provide legal advice on whether a settlement or a plea bargain (proffer) may be preferable, depending upon the specific circumstances of your case. Finally, they can evaluate any potential defenses you may have and argue your case in court if necessary.

If you are facing criminal False Claims Act violations charges, seeking expert legal counsel should be your first priority.


What level of knowledge is required in a False Claims Act case?

The law requires a showing that you, the contractor, submitted a claim with knowledge of its falsity to the government. The Federal False Claims Act knowledge requirement (in both Qui Tam actions and Internal Investigations) includes:

1. Actual knowledge. This is rarely the case
2. Deliberate ignorance of the truth or falsity of the information.
3. Reckless disregard of the truth or falsity of the information. This is where most cases tend to fall.

The government or Qui Tam Relator only has to show or allege one level of the above knowledge requirements. The majority of United States federal circuit courts of appeal that have considered the issue have held that the civil and criminal False Claims Act requires an objective scienter standard. When a contractor somehow acts with the belief that it was following a statute under its own interpretation, the fact that it was wrong does not rise to the level required in federal cases. This defense helps to create some level of escape for defendants in a government contracts False Claims Act case.

When the company is targeted, most courts require some showing of corporate-wide proof or top-down directive to hold the company liable for false claims knowledge liability. This is a critical area for hiring a government contracts false claims defense lawyer can be beneficial.  See information about hiring defense contractor fraud attorneys.

Get Immediate from a Civil and Criminal False Claims Act Defense Lawyer

For help with developing legal defenses, defending against required Federal False Claims Act elements or responding to a government investigation, call Watson &. Associates, LLC’s government contractor attorneys and criminal False Claims Act defense lawyers for immediate help. Call 1.866.601.5518.