If you are aware of any wrongdoing in your company, competitor or someone you know has brought this information to your attention, it is imperative that you reach out to an attorney. A knowledgeable attorney would be able to privately assess the facts of your case and discuss your options. Whistleblowers may contact our practice via the online form or by phone to discuss their potential False Claims Act (“FCA”) matter.
The FCA creates liability for conduct involving fraud on the government. (31 U.S.C. §§ 3729-3733.) Among other important provisions, the statute is broken down into several key components. For instance, it identifies seven specific types of prohibited conduct. The two liability provisions most often used in FCA litigation are the false claims provision, which creates liability for knowingly presenting, or causing to be presented, a false or fraudulent claim for payment (31 U.S.C. § 3729(a)(1)(A). The other is the false statement provision, which creates liability for knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim (31 U.S.C. § 3729(a)(1)(B)).
A critical component of the FCA is that it requires a defendant to act “knowingly.” Courts have applied a broad knowledge standard in FCA cases. One example is that the FCA imposes liability on contractors and other third parties. It also gives rise to liability for certain false implied statements. More than most other statutes, the FCA imposes significant damages and penalties, such as (i) mandatory treble damages (which may be reduced to mandatory double damages if the defendant self-discloses fraudulent activity); and (ii) mandatory civil penalties of up to $21,563 per false claim. It also provides the most critical provisions which are its strong whistleblower incentives.
There are certain industries that our attorneys believe will see an increase in FCA litigation. The United States Supreme Court’s ruling in the Escobar case has significant implications for industries that regularly submit claims, directly or indirectly, to federal agencies. These groups include:
- Pharmaceutical and healthcare companies.
- Defense contractors. Companies in the defense industry routinely contract with federal agencies and must adhere to various contractual requirements and regulations. Defense contractors should be aware that they increasingly have become a target for DOJ-led FCA suits. In 2017, the government instituted 19 cases against defense contractors, up from nine in 2016 and seven in 2015 (see DOJ Fraud Statistics — Department of Defense (Dec. 19, 2017)).
- Certain product manufacturers. Product manufacturers supporting the vast federal government bureaucracy could be implicated in implied false certification actions, given the myriad of complex federal contracting rules and specifications involved in federal purchase orders. Given the rate of change in the technology industry, for example, companies providing technology to the government could be subject to more claims over non-conforming technology products and services provided to federal agencies.
- Mortgage brokers. Companies in the mortgage industry continue to be targets of FCA actions, given the government’s aggressive use of the statute to pursue fraud in mortgage lending. These actions are based on the certification requirements on documentation required by the Department of Housing and Urban Development (HUD) for Federal Housing Administration qualified mortgages.