Trial Lawyers Prosecuting Qui Tam Cases
Meaning of “Claim” in the False Claims Act
Definition of Claim:
31 U.S.C. § 3729(c): “[A]ny request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient if the United States government provides any portion of the money or property which is requested or demanded, or if the government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded.”
The False Claims Act (“FCA”) initially requires a qui tam whistleblower to establish that a “claim” was made against the Government. This determination is often complex, and requires an analysis of the law in the applicable jurisdiction. Before embarking on a complicated and at times costly lawsuit, the qui tam whistleblower must determine whether a claim exists.
Before the 1986 amendments to the FCA, the definition of “claim” was strictly construed by the Supreme Court to include only those situations in which a demand or request was made for payment of money or property from the United States. For example, before the FCA was amended, the Government did not have a sufficient interest in false claims made by state contractors or other grantees of federal funds distributed to the states for state or local programs. As such, the Government could not sue grantees or contractors who submitted false claims to the state. In response to this limitation, Congress expanded the definition of “claim” to include “requests for funds made to a grantee or recipient of federal funds so long as the United States Government has provided any of the money which is requested by the grantee.” S. Rep. No. 345, 99th Cong., 2d Sess. 22 (July 28, 1986), reprinted in 1986 U.S. Code Cong. & Admin. News 5266, 5287
The 1986 amendments to the FCA expanded the definition of “claim” to include a broader array of transactions. A claim is any request or demand of money from the Government, made directly or made through an intermediary, including a contractor, grantee, or other recipient of federal funds. The legislative history of the 1986 amendments expressly states that the FCA was intended to apply to all fraudulent acts that caused the Government to pay money to individuals it did not intend to benefit. Therefore, a “claim” encompasses any action with the purpose or effect of causing the United States to pay money not lawfully owed, or depriving the United States of money lawfully due. Under this broad definition of “claim,” FCA liability is not restricted to an improper payment or accounting shortfall, but may attach even if the Government does not pay or suffer a loss. This broad application of “claim” supports congressional intent to prevent fraud by attaching liability to the activity presenting a risk of wrongful payment, as opposed to waiting until the Government has wrongfully paid money. Accordingly, in determining whether a false statement is a “claim,” a court must determine if the statement has the purpose and effect, or the attendant risk, of inducing wrongful payment.
Types of “Claims”:
After Congress broadened the definition of “claim” in the 1986 amendments, judicial interpretation of the term also expanded. Under these broad interpretations of “claim,” a number of different theories of FCA liability have developed.
- A direct false claim involves making an intentional false representation that causes the Government to pay more than it would have absent the misrepresentation. For example, a physician will be liable if he submits claims to the Government for surgeries that the physician did not perform. The Government will consider each false submission a “claim” and seek reimbursement for all surgeries that the physician did not perform.
- Express false certification which involves a defendant expressly and specifically certifying compliance with a required contract provision, statute, regulation, or governmental program. For example, a healthcare provider may be liable for submitting a false claim to the Government by certifying compliance with Medicare anti-referral regulations. If the health care provider submits a cost report and falsely certifies compliance with the anti-referral program, FCA liability will attach. The healthcare provider will be liable under the FCA for failing to comply with a contract provision, statute, regulation, or governmental program, regardless of whether the certification caused a loss to the Government.
- Implied certification where a defendant without expressly certifying compliance with a contract provision, statute, regulation, or governmental program. For example, invoices submitted by a government photography contractor were found to be false claims, even though the contractor billed only the amount called for by a fixed-price contract and the claims did not contain any factual misrepresentations. The contract, however, required that the defendant dispose of the waste in accordance with Environmental Protection Agency guidelines. Since the contractor failed to remedy the disposal of waste, the court imposed FCA liability for his implied certification that environmental clean-up was completed. Even though the request for payment was accurate and the contractor provided no certification of compliance, the court implied fraudulent activity through the mere noncompliance with the terms of contract, and the EPA provisions. Also, several recent cases have held that violations of the Anti-Kickback statute (“AKS”) give raise to FCA liability under an implied certification theory.
For more information and case citations, please see “Federal False Claims Act and Qui Tam Litigation,” published by Law Journal Press (2010).
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You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.