The False Claims Act has been a law in the United States for more than 150 years. But unless you are a lawyer or a health care professional in a compliance role, you may not understand what exactly the federal False Claims Act prohibits. So we’re going to try to answer the basic question: What is a false claim?
The definition of this term can be subject to extensive litigation, so this should be taken as nothing more than an opening primer into the issue. In short, a false claim is a claim or request for government money which is false or fraudulent in some way. Let’s go into this in more specifics as well as provide a few examples of false claims. This is by no means an exhaustive list.
False Claims Act Prohibitions: False Claims, False Statements and More
The statute bars knowingly presenting a false or fraudulent claim for payment or approval. 31 U.S.C. § 3729(a)(1)(A). An example of a claim for payment is the submission of a request for payment to Medicare based on the doctor’s services. If the doctor did not actually perform the services that are being billed to the government, that request for payment under the Medicare reimbursement program is a “false or fraudulent” claim.
These types of false claims typically rely on an express false certification to the government. For example, Medicare requires doctors to attest to the fact that they have not violated the Anti-Kickback Statute as part of the submission of their claim for payment. If they have violated the law, they have made a false claim.
The False Claims Act, according to the recent Supreme Court decision in Escobar, also encompasses the submission of a claim for payment with specific representations about the goods or services provided, if it knowingly fails to disclose noncompliance with a statutory, regulatory or contractual requirement that renders those representations misleading. This is commonly referred to as the implied certification theory of liability. Until the recent Supreme Court decision, there was a circuit split on this issue – which means that the different Courts of Appeals did not agree on whether or when these acts were a false claim.
The False Claims Act also prohibits causing a false or fraudulent claim to be presented. The Supreme Court confronted a case like this in United States v. Bornstein, 423 U.S. 303 (1976). In Bornstein, the subcontractor provided the general contractor with electron tubes that did not meet the contract specifications. The shipments were marked as if they met the required quality specifications.
The law also prohibits false records or statements material to a false or fraudulent claim. A company that violates this section is generally referred to as having made a false statement.
Another important section of the False Claims Act is 31 U.S.C. § 3729(a)(1)(G). This subsection is commonly referred to prohibiting reverse false claims. Generally, the language prohibits making, using, or causing a false record or statement material to an obligation to pay or transmit money to the United States. It also prohibits concealing or improperly avoiding or decreasing an obligation to pay money to the Government.
The standard reverse false claim is a false statement on a customs declaration form to avoid paying an import duty. If a company knowingly declares a smaller value for the goods imported, they can decrease the money owed to the United States. This subsection makes that scenario a false claim.
The United States added to this section as part of the Affordable Care Act. The prohibition on reverse false claims now makes improper acts to avoid paying money to the Government. This means that a company which is overpaid by Medicare because of a mistake without any intent to defraud must return the money pursuant to the law or the retention of the Medicare funds becomes a false claim.
The law further prohibits a conspiracy to commit a violation of the above prohibitions. This section is most powerful in holding a second corporation liable for the claims submitted by the first. In order for a finding of liability under a conspiracy theory, there traditionally must be both a conspiracy and an overt act in furtherance of that conspiracy.
This covers the major false claims. There are a few other prohibitions in the statute, but these have not been commonly seen in our work. Feel free to take a look at them yourself to see their specific use cases.