Source: https://www.whistleblowerlawyerblog.com/how_the_modern_false_claims_ac/
Timestamp: 2019-04-26 12:34:12+00:00

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Fourth, since the government also can be defrauded when a private entity underpays or avoids paying an obligation to the government, the modern Act contains what is known as a “reverse false claim” provision. It creates liability for any person who “knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government.”31 For example, a company that is obligated to pay royalties to the government under an oil lease can be held liable if it uses false records or statements to pay less than what it owes.
The Act also creates a cause of action for damages for retaliation against employees who assist in the investigation and prosecution of False Claims Act cases.33 This cause of action belongs to the employee alone, and the government does not share any interest in any recovery.
The Act’s “scienter” requirement of “knowingly” presenting false claims, or “knowingly” using false records or statements, is broadly defined as well. A person is liable not only when acting with “actual knowledge,” but also when acting in “deliberate ignorance” or “reckless disregard” of the truth or falsity of the information in question.37 The Act also makes explicit that no “specific intent to defraud” need be shown to impose liability, and thus rejects this traditional “fraud” standard.
The False Claims Act establishes a wholly different process for qui tam actions than the usual process encountered in federal civil litigation. The Act has unique jurisdictional and procedural requirements.
In reality, courts regularly extend the seal for many months (or even years) at the government’s request. The purpose for this arrangement is to permit the government to evaluate and investigate the case and make its decision as to whether to intervene. Thus, a defendant is provided no notice of the filing of a qui tam action against the defendant. It is not uncommon for the defendant to receive no notice for more than a year that it has been sued in a qui tam action, even as the government meets with the relator and relator’s counsel to develop the case against the defendant. Nonetheless, defense counsel may infer the existence of a qui tam action when the client receives subpoenas from the Inspector General’s Office, or when its employees are contacted by government agents for questioning.
Before filing a qui tam action, the relator should provide the government the information on which the allegations are based. This is not only good practice, but is important because of the Act’s “public disclosure” bar that might apply in some cases to deprive the court of jurisdiction. The Act states that, when there is an action “based upon the public disclosure of allegations or transactions” in one of three specified categories of places where disclosures can occur, the court shall lack jurisdiction over the action, unless “the person bringing the action is an original source of the information.”50 While a discussion of the “public disclosure” bar and the “original source” elements of the Act is beyond the scope of this paper, the U.S. Supreme Court was scheduled to hear oral arguments in a decision addressing those issues on December 5, 2006 in Rockwell International Corp. v. United States, No. 05-1272 (S.Ct.).
23 Legislative History at 5269, 4.
24 Testimony of Jay Stephens, Associate Deputy Attorney General, Department of Justice, summarized in Legislative History at 14, 5280.
25 Legislative History at 14, 5279.
26 See section III, infra.
27 31 U.S.C. § 3729(a)(1).
28 31 U.S.C. § 3729(c).
29 31 U.S.C. § 3729(a)(2).
30 31 U.S.C. § 3729(a)(3).
31 31 U.S.C. § 3729(a)(7). The Act also lists three little-used bases of liability in subsections (a)(4), (5), and (6), which are omitted from this discussion, but which can be found in Appendix A.
32 31 U.S.C. § 3729(e).
33 31 U.S.C. § 3730(h).
34 3l U.S.C. § 3729(a).
35 Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 769 N.1 (2000), states that entities may still be liable.
36 Cook County, Illinois v. United States ex rel. Chandler, 538 U.S. 119(2003).
39 31 U.S.C. § 3729(a). For violations of the Act occurring after September 29, 1999, the penalty range has increased to $5,500 to $11,000 per violation. Federal Civil Monetary Penalties Inflation Adjustment Act of 1990, Pub.L. 101-410, 28 U.S.C. § 2461; 28 C.F.R. §85.3(9)(2006).
40 31 U.S.C. § 3730(b)(1).
41 31 U.S.C. § 3730(b)(2).
42 31 U.S.C. § 3730(b)(2).
43 31 U.S.C. § 3730(c)(1).
44 31 U.S.C. § 3730(b)(3).
45 31 U.S.C. § 3730(c)(2)(A).
46 31 U.S.C. § 3730(c)(2)(A).
47 31 U.S.C. § 3730(c to A).

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