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Federal False Claims Act Defense: Government Contractor Fraud
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Federal False Claims Act Defense: Government Contractor Fraud
The False Claims Act (FCA) is the governments primary weapon against contractor fraud. Originally a Civil War-era statute, the FCA now generates billions in recoveries annually—and increasingly triggers criminal prosecution. If your company does business with the federal government and your facing FCA allegations, the stakes are enormous: treble damages, penalties up to $27,894 per false claim, and potential criminal charges with years in prison.
Understanding the False Claims Act
The FCA (31 USC 3729) imposes liability for:
Presenting false claims for payment to the government
Making false statements material to false claims
Avoiding payment of obligations to the government
Conspiracy to commit any of the above
Qui Tam Whistleblowers
Most FCA cases start with whistleblowers—”relators” who file qui tam lawsuits. Whistleblowers can receive 15-30% of government recoveries. This creates powerful incentives for employees, competitors, and others to report suspected fraud.
The government decides whether to “intervene” (take over) the case. Even if it declines, the whistleblower can proceed independently.
Common FCA Violations
Overbilling – Charging more than entitled
Substandard goods/services – Billing for quality not delivered
False certifications – Certifying compliance when non-compliant
Healthcare fraud – False Medicare/Medicaid billing
Procurement fraud – Bid rigging, false specifications
Grant fraud – Misusing federal grant funds
Penalties
Civil: Treble damages (3x the government’s loss) plus $13,508-$27,894 per false claim
Criminal: False claims can also trigger criminal prosecution under 18 USC 287 (up to 5 years) and 18 USC 1001 (up to 5-8 years)
Debarment: Exclusion from future government contracts
Defense Strategies
No Falsity
Claims must actually be false. Disputes over contract interpretation, judgment calls, or regulatory ambiguity may not constitute falsity.
No Knowledge
FCA requires “knowing” conduct—actual knowledge, deliberate ignorance, or reckless disregard. Innocent mistakes or negligence dont violate the FCA.
Materiality
The false statement must be material to the governments payment decision. Immaterial misstatements dont trigger liability.
Government Knowledge
If the government knew about the alleged falsity and paid anyway, the claims may not be actionable.
Act Now
FCA investigations often proceed under seal for months or years before you know about them. If you’ve received a Civil Investigative Demand (CID) or learned of a qui tam lawsuit, immediate action is essential. Contact FCA defense counsel immediately.
