Who is potentially liable for “false claims” under the False Claims Act?

The False Claims Act (FCA) broadly imposes liability on “any person” who falls within different groups that may be associated with a false claim. 

The most obvious group includes anyone who “presents” a false claim for payment to the government.  Such a claim can be “express,” “implied,” or a “reverse” false claim (i.e., one that improperly reduces the amount of money owed to the government).

Similarly, anyone who makes or uses a false record or statement material to a claim for payment faces liability under the FCA.  For example, if someone falsely certifies that a loan application is eligible to participate in a federal program, they can be held liable under the FCA even if they do not personally request repayment or forgiveness of the loan.

Next, anyone who “causes” a false claim to be presented or “conspires” to present a false claim can also face liability. Those categories include, for example, a supervisor who directs an employee to submit a false claim.

Anyone who possesses or controls government property and fails to deliver it, or falsely certifies receipt of property used by the government, will also face liability under the FCA. Those categories broadly include anyone who diverts government property from its intended recipient.

Finally, a person who knowingly buys government property from an officer or employee who lacks authority to sell it can also face FCA liability. 

The broad language of the FCA prohibits much more than just submission of expressly false claims.  That breadth can lead to FCA prosecutions that might seem surprising in other contexts.  For example, the Department of Justice has filed or intervened in suits against private equity firms, arguing that the firms “caused” false claims that were submitted by portfolio companies. 

Courts have not fully defined the precise scope of potential FCA liability based on such allegations, but the Department of Justice’s willingness to pursue them should put private equity firms and other investors in highly regulated industries on alert. 

To learn more about the False Claims Act and other whistleblower programs, go to www.mololamken.com and follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” — Benchmark Litigation.  Copyright MoloLamken LLP 2023.