The Catholic University of America

Summary of Federal Laws

Government Contracts

False Claims Act (sometimes called The Whistleblower Law)

Compliance Partners

Faculty

Related Policy

Fraud and Financial Irregularities

31 U.S.C. § 3729 et seq.

Principal Investigators should be aware of this law. When submitting claims to the federal government, all claims must be closely reviewed to assure accuracy. This covers all grants and contracts. The law provides civil penalties of not less than $5,000 nor more than $10,000, plus three times the government's damages, with respect to false claims. Intent to defraud is not necessary for a violation of the law to occur. A false claim may be found if the party submitting the claim had knowledge of the information and acted in deliberate ignorance or reckless disregard of the truth or falsity of the information. This law is sometimes known as the "whistleblower law," as qui tam plaintiffs (informers who may sue on their own behalf as well as for the government or institution) may bring actions under the law alleging the filing of a false claim. The statute was designed to protect the government in business dealings, but is lately being used to air scientific disputes in the university setting. A civil action may not be brought more than six years after the date on which the violation occurred, or more than three years but not more than ten years after the date on which material facts are known or should have been known to a responsible Government official, whichever occurs last. The relator (person bringing the action on behalf of the government) may not bring a false claim action when the claim is based upon public disclosure of allegations or transactions in criminal, civil or administrative hearings, in a congressional, administrative or GAO Report, hearing, audit or investigation, or from the media, unless the relator qualifies as an "original source" of the information.

Amendments made by the Fraud Enforcement and Recovery Act of 2009
The new amendments make changes to liability provisions in the Act and specifically overrule the Supreme Court decision in Allison Engine (below). The law creates a new liability for knowingly concealing or improperly avoiding an obligation to pay money to the government. This includes retention of an overpayment, and may thus apply to overcharges to federal grants and contracts. The false statement must be *material* to payment of the claim. It is no longer necessary that the statement be made *to get* the claim paid. Claims may now be considered *false* not only if they are made to an officer or employee of the US government, but can also be made to a recipient of federal funds if the $ or property provided will be spend or used on the government's behalf or to advance a government program or interest, and if the government, will reimburse the recipient for any portion of the money requested or demanded. See Fraud Enforcement and Recovery Act of 2009 Increases Risk for Higher Education by Holland and Knight.

NACUANote, April 16, 2010

THE FALSE CLAIMS ACT: RECENT AMENDMENTS AND THEIR IMPLICATIONS FOR HIGHER EDUCATION

Case Law Under the False Claims Act

 

August 2013 Settlement Agreement between Justice Department and Emory University for $1.5 Million.
The agreement involved a claim of improper billing for clinical trial services at the Cancer Institute.

 

Leveski v. ITT Educational Services Inc., No. 12-1369, 12-1967, 12-1979, 12-2008 &12-2891 (C.A. 7th Cir.) July 8, 2013
This is a case brought under the False Claims Act against a for profit educational institution ITT alleging violations of the HEA incentive compensation regulations. The case mostly addresses jurisdictional issues. The court below had dismissed for lack of subject matter jurisdiction. The Court of Appeals reversed. The plaintiff in the case had worked at ITT for 10 years, and brought forward evidence that the compensation scheme as stated by the company was a sham. While claiming compensation was based upon a wide range of factors (including appearance, attitude and participation in continuing education classes) her compensation, and that of other employees, was solely based upon the number of students Plaintiff brought into ITT, which violates the Higher Education Act incentive compensation regulations. See also Chronicle article June 17, 2013, In Online Partnerships, Legal Compliance is Key.

 

Cross reference to other whistleblower laws: 10 U.S.C. § 2409, 12 U.S.C. § 1831j, and 41 U.S.C. § 265. These statutes protect employees of financial institutions and government contractors from discriminatory and retaliatory employment actions as a result of reporting violations of the law to federal authorities.

 

updated 3/7/13 CCR

updated mlo 7/29/13 to add Leveski

 

updated 10-1-13 to add Emory settlement