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.

 Case Law Under the False Claims Act:  

Overuled by FERA, see above. Allison Engine Co. v. United States ex rel. Sanders, No. 07-214 (Slip op. US June 9, 2008) 

The Supreme Court clarified the plaintiff’s burden of proof under the False Claims Act (FCA), emphasizing that the FCA was not intended to be “an all-purpose antifraud statute.” 31 U.S.C. § 3729. The FCA imposes civil liability on any person who knowingly uses a “false record or statement to get a false or fraudulent claim paid or approved by the Government,” 31 U.S.C. § 3729(a)(2), and any person who “conspires to defraud the Government by getting a false or fraudulent claim allowed or paid,” 31 U.S.C. § 3729(a)(3).

The Court held that under § 3729(a)(2), the defendant must make the false record or statement “to get” a false or fraudulent claim “paid or approved by the Government.” The Court reasoned that “to get” denotes purpose; therefore a person must have the purpose of getting a false or fraudulent claim “paid or approved by the Government” in order to be liable under subsection (a)(2). Thus, a defendant must intend that the Government itself pay the claim, and not another entity paying with Government funds.

The Court’s interpretation of the language of § 3729(a)(3) is similar to the interpretation of the language of § 3729(a)(2). The plaintiff must show that the conspirators intended “to defraud the Government,” and establish that the conspirators agreed that the false record or statement would have a material effect on the Government’s decision to pay the false or fraudulent claim. This is in accord with the Court’s decision in Tanner v. United States, 483 U.S. 107 (1987), which held that a conspiracy to defraud a federally funded private entity does not constitute a “conspiracy to defraud the United States” under 18 U.S.C. § 371.

The significance of the case for colleges and universities is that the Court rejected an interpretation of the law that would allow "liability to attach for any false claim made to any college or university, so long as the institution has received some federal grants." (slip opn at 5-6) 

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.

links updated 3/11/09 rab

3/14/09 compliance partner added, old text removed
compliance box links updated 6/3/09 rab

updated 6/13/09 to add related policy

updated 7/2/09 to add FERA by mlo