The Federal False Claims Act, 31 USC 3729 avoids fraudulent activity against the federal government. Investigations or adverse actions can arise for several reasons. The most common is when an employee blows the whistle and alleges wrongdoing and some level of criminal activity. There are ways to prevent these ocurences.
As a federal contractor, you must make sure that you have the requisite policies and training programs in place to avoid penalty for violating false claims act regulations.
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.
- Learn how to rebut false whistleblower accusations.
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 Federal 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 the False Claims Act otherwise known as the Whistleblower Act, 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 Statute 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.
What are False Claims Act penalties? The liability that imposes damages and penalties under the statute can be brutal to include treble damages.
You can be liable for a civil false claims act penalties 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 Federal False Claims Act 31 USC 3729?
What is the False Claims Act 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 the False Claims Act 31 USC 3729, knowledge of the 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 Statute & Whistleblower 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 when looking at what is the penalty for violating the False Claims Act include getting clarification up front about the terms and conditions of the contract. As FCA defense lawyers, we also suggest that you keep accurate and complete records to combat allegations from a whistleblower about misrepresentation to the government.
Communication between you and Government Contracting personnel is critical to the outcome of your defense in False Claims litigation. See information about the False Claims Act Statute of Limitations.
Drafting policies not enough: To reduce the impact of False Claims law litigation, 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 false claims act penalties. Such monitoring should intend to prevent fraud waste and abuse.
What are the False Claims & Fraud Indicators in Defective Pricing?
- Falsifications or alterations of supporting data – this is considered as a false misrepresentation;
- 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 the 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