Three Possible New Targets for False Claims Act Litigation

April 30, 2013 — Fraud against the federal government is a billion dollar business. The qui tam provisions of the federal False Claims Act allow insider employees and other private individuals to combat fraud by bringing a lawsuit for the benefit of the government and then retaining a share of any monies received in the legal action. Tipsters generally receive between 15 and 25 percent of the settlement or judgment.

Banking, Technology and Energy Efficiency Rife With False Claims Act Violations

For years the False Claims Act was used primarily to fight fraud among defense contractors. In recent years, the statute also has been employed to collect billions from pharmaceutical companies and health care providers engaged in health care fraud. But now the anti-fraud statute is being relied on to redress corruption in other industries as well, including:

  • Banking and finance
  • Cloud computing and counterfeit electronics
  • Stimulus projects and alternative energy

Banking and Finance

In 2012, two of the largest False Claims Act settlements were with banks. The Bank of America settlement alone was $1 billion to resolve a mortgage fraud suit. Law 360 predicts that many suits will be filed for all sorts of banking practices, including loan servicing, loan origination, and any other misconduct that might be involved in the creation of mortgage-backed securities.

Cloud Computing and Counterfeit Electronics

As the government tries to cut costs by moving agency data storage from file cabinets and hard drives into cloud-storage, government contractors must be sure to comply with necessary government certifications and Federal Information Security Management Act (FISMA) requirements. Should data be lost or compromised in cases where a FISMA violation occurs, government contractors could be liable for treble damages under the False Claims Act.

The government may also pay closer attention to defective parts that allow its computer systems to be hacked. Although the False Claims Act may not have been used yet to attack the problem, the potential is there. Many government contracts require a certificate of compliance that electronic parts satisfy certain quality standards. If parts are counterfeit or defective, government contractors could face liability under the False Claims Act.

Stimulus Projects and Alternative Energy

Because of the time lag between when a False Claims Act suit is filed and when the case is unsealed, it is predicted that many whistleblower suits involving awards under the 2009 financial stimulus bill will soon come to light, even after the $787 billion in stimulus money is gone. One probable target for tipsters will likely be renewable energy projects. Many government contracts have express clauses requiring some degree of energy efficiency. When interpreting other contracts, some courts have found that when a government contractor submits a claim for reimbursement, the claim includes an implied certification that applicable energy regulations have been complied with. If construction contractors try to skimp on energy efficiency or the use of recycled products, they may be liable under the False Claims Act.

False Claims Act Violations Often Reported by Insider Employees

The government often finds out about false claims schemes from tipsters who are employed by the government contractors involved in the scam. These courageous whistleblowers deserve to understand their rights under False Claims Act. The qui tam lawyers with Waters & Kraus offer government informants the aggressive legal representation they need. Email us or call our whistleblower attorneys at 855.784.0268 to learn how we protect the interests of government collaborators.

What are my chances?

That’s the first question everyone asks. The truth is it’s impossible to know. But we can tell you this. Waters Kraus Paul & Siegel has what it takes to fight against big corporate interests and win. That’s why we’ve taken more mesothelioma trials to verdict than any other firm. And that’s why we’ve recovered more than $1.3 billion for clients like you. Do you think you have a case? Contact us now to speak with an attorney.

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