July 20, 2023

Recent Trends in the Enforcement of the False Claims Act

The False Claims Act (FCA), a significant United States legislation, has proved to be a vital instrument in combating fraud and safeguarding the public interest.

“Protecting taxpayer dollars by preventing fraud and abuse is a critical priority for the Department of Justice,” asserted Principal Deputy Assistant Attorney General Boynton. His comment highlights the FCA’s indispensable role in ensuring that public funds, both at the state and federal level, are spent judiciously, thus mitigating the risk of deficit due to fraudulent claims.

Enforced diligently, the question remains; How has the False Claims Act been enforced in recent years? Today, we’d like to dive into recent headlines, and explore how the Federal Claims Act plays a continuous role in combating fraud.

Noteworthy Milestones and Landmark Cases

In Fiscal Year 2022, a landmark was achieved when False Claims Act settlements and judgments eclipsed an imposing $2.2 billion. This announcement came from the compliance office of Principal Deputy Assistant Attorney General Brian M. Boynton, who leads the Department of Justice’s (DOJ) Civil Division. This figure signifies the second-highest number of settlements in FCA litigation history, demonstrating an assertive stance against violations.

During this remarkable period, the federal government and whistleblowers engaged in 351 settlements and judgments. This impressive figure underlines the crucial role the False Claims Act, including its qui tam provision, plays in the United States. Notably, the recoveries, including civil penalties, since the substantial strengthening of the federal False Claims Act in 1986, have now surged past $72 billion.

The Evolving Landscape of FCA Liability and Compliance Challenges

The Supreme Court of the United States recently took up two critical FCA cases. The first examined the level of scrutiny applicable when the DOJ seeks to dismiss a qui tam lawsuit, despite a whistleblower’s objection. The second pertained to the scienter standard under the FCA. This decision will have far-reaching implications for FCA liability, especially in cases based on alleged violations in ambiguous areas of law.

Simultaneously, federal circuit courts, including the district court in Washington DC, deliberated over the FCA’s pleading standards under Rule 9(b), the relationship between the anti-kickback statute and the FCA, and the FCA’s materiality standard. These judgments are shaping the interpretation and implementation of the False Claims Act across the country, from North Carolina to California.

A highlight of these discussions was the consolidated cases of U.S. ex rel. Schutte v. SuperValu Inc. and U.S. ex rel. Proctor v. Safeway. The question revolved around the relevance of a defendant’s subjective belief in determining ‘knowledge’. This exploration underscores the complexity of proving a false or fraudulent claim and ensuring compliance in the FCA litigation.

Since 1986, the diligent enforcement of the FCA, both state False Claims Act and its federal counterpart, has led to the recovery of over $70 billion, primarily from healthcare and defense contracting cases. A qui tam action or a qui tam suit is frequently employed in such matters, wherein a qui tam whistleblower, known as a relator, brings a civil action on behalf of the United States government.

A Promise Upheld

Courts continue to grapple with nuanced issues surrounding FCA liability. For example, at what point does a defendant’s actual knowledge, deliberate ignorance, or reckless disregard of the truth or falsity of the information turn a claim into a fraudulent claim? As government contractors and other entities seek legal counsel to avoid penalties, including treble damages, the enforcement of the Act evolves, bringing new challenges. As with most legal practices, these things walk a fine line on a slippery slope. Its up to the experts- and righteous citizens- to uphold the integrity of the law.

Through its meticulous enforcement, the False Claims Act serves as a promise to American taxpayers that their hard-earned money is protected from fraudulent practices. With the vigilant actions of whistleblowers and the relentless efforts of lawyers at Berg & Androphy, this promise is upheld.

Thus, every FCA claim, every TAM action, and every false record identified marks a step toward ensuring fiscal integrity and accountability in the United States, a commitment that today, stands stronger than ever.