Tips for Federal False Claims Act Elements and Defenses Establishing and proving Federal False Claims Act defenses and elements 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.

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 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 . . . .”

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.

Federal 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.

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

Federal Criminal False Claims Act

The Criminal False Claims Act is a federal law enacted in 1986 that is designed to combat fraud and abuse in government programs and contracts. Its purpose is to deter individuals and organizations from making false claims or statements to the government and to hold those who do accountable. In this article, we’ll explore the Criminal False Claims Act’s essential elements, the penalties for violating it, who can file a lawsuit under it, examples of violations, and defenses against allegations.

To violate the Criminal False Claims Act, an individual or organization must make a false claim with the government, knowingly make a false statement, conspire to commit fraudulent activities, or make a false certification or representation. The false claim or statement must be made with the intent to defraud the government, and the individual or organization must know that the claim or statement is false.

Violating the Criminal False Claims Act can result in severe penalties, including imprisonment, fines, damages, and disqualification from future government contracts. The Act provides for treble damages, which means that the damages are multiplied by three times the actual amount of harm caused. Additionally, individuals and organizations that violate the Act may face negative publicity, harm to their reputation, and loss of business opportunities.

The Criminal False Claims Act allows whistleblowers and qui tam relators to file a lawsuit on behalf of the government. If the government decides not to intervene in the lawsuit, the whistleblower may proceed alone. Whistleblowers who successfully prosecute a case can receive an award ranging from 15% to 30% of the damages recovered. Additionally, the Act protects whistleblowers from retaliation by their employers.

Examples of Criminal False Claims Act violations are prevalent in many industries, including healthcare, defense contracting, financial and banking, and government procurement. Healthcare fraud and abuse may involve billing for services not provided or medically unnecessary procedures, while defense contractor fraud may include overbilling or providing substandard products. Financial and banking fraud may include misrepresenting information on mortgage or loan applications, and government procurement fraud may involve bid rigging or conflicts of interest.

Individuals and organizations accused of violating the Criminal False Claims Act may assert several defenses, including lack of intent or knowledge, truthful and accurate representation, statute of limitations, or government misconduct or entrapment.

What are Examples of False Claims Act Criminal Cases Brought Against Government Contractors?

False Claims Act criminal cases can involve a wide range of activities, including fraud and bribery. Examples of False Claims Act criminal cases brought against government contractors include:

– Billing the federal government for more labor hours than were actually worked

– Submitting false invoices to the government for goods or services that were never received or provided

– Misrepresenting the quality or quantity of services provided to the government

– Bribing federal officers with money, gifts, or other items in exchange for contracting favors

– Failing to disclose known defects or nonconformities with goods and services provided to the government

In these cases, False Claims Act lawyers may represent individuals or entities accused of false claims in criminal and civil litigation. The False Claims Act provides for significant financial penalties for companies and/or individuals found guilty of such crimes, including heavy fines, restitution payments, and even imprisonment. If you believe that you or your company are the subjects of a False Claims Act case or investigation, it is important to seek legal advice from an experienced False Claims Act lawyer who can help defend your rights and provide guidance on how to proceed.

In some cases, allegations of False Claims Act violations can be complex and require careful legal analysis to determine whether the alleged conduct is actually illegal. If you are facing a False Claims Act case, it is important to consult with an experienced false claims act lawyer who can help evaluate your case and provide advice about how best to proceed. A false claims act lawyer may be able to negotiate a settlement or represent you in court if the matter proceeds to litigation. An experienced lawyer can also advise you on the best course of action to take in order to protect your rights and avoid serious penalties.

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 that 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 charges, seeking expert legal counsel should be your first priority.

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 to 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
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 a yet another false claims defense if you can prove it. See information about false claims retaliation.

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.

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 FCA 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.

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.