What Are the Activities Covered by the False Claims Act?
April 10th, 2017 by Mike Bothwell
Activities covered by the False Claims Act include a variety of actions where an individual or organization can take money for themselves that otherwise belongs to the US government. We will provide an overview of the types of activities that typically fall under the False Claims Act.
Activities Specifically Covered by the False Claims Act
The False Claims Act sets out seven specific prohibited activities. Any violation of these activities can result in liability of the wrongdoer. The prohibited activities, as well as examples of each, are below:
● “Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” An example would be a construction contractor submitting an invoice for repairs made to a government building, all while knowing the invoice is incorrect because it lists work that was never actually done.
● “Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” Consider a health care company reimbursed by the US government for each medical test it provides to soldiers during basic training. To show reimbursement costs, the health care company submits a document showing that each test cost $50 when it really only cost $10.
● “Has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property.” This could occur if a shipping company should deliver 100,000 doses of morphine to troops overseas, but only delivers 95,000 doses and keeps 5,000 doses for itself, perhaps to sell on the international black market.
● “Is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true.” This could occur when a defense contractor receives a shipment of raw materials for building a ship. The contractor certifies the receipt showing the delivery of the raw materials is correct without first confirming that it contains all the raw materials detailed in the invoice.
● “Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property.” An example might include a hunting store buying military surplus gear and equipment from an enlisted soldier, but the hunting store knows the soldier stole the items from a military warehouse.
● “Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” An example involves a hospital that receives payments from the US government for treating a certain number of patients throughout the year. But at the end of the year, the hospital submits false documents claiming the cost to treat those patients was more than expected (when it was really less than expected) to avoid submitting a refund check to the government for overpayments received.
● “Conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G).” This means creating an agreement or plan with another to commit one of the above-listed activities prohibited by the False Claims Act.
Penalties for Engaging in Activities Covered by the False Claims Act
The penalties for violating the False Claims Act depend on the number of false claims submitted to the US government. The penalty for each violation ranges between $5,500 and $11,000. This amount changes periodically with inflation. Additionally, the individual or organization that violated the False Claims Act can be liable for up to three times the actual damages suffered by the US government.
The calculation of penalties means many small violations of the False Claims Act can sometimes result in a bigger penalty that a few large violations. This is one reason why activities covered by the False Claims Act violations in the healthcare setting often result in some of the larger penalties imposed on violators.
Wondering What Constitutes a Violation of the False Claims Act?
To learn more about activities covered by the False Claims Act, you should contact the Bothwell Law Group online and set up a time to discuss any questions you may have about the False Claims Act. We are here to help you get the information you need.