The False Claims Act – Did You Know?

Did you know that the False Claims Act, see, 31 USC §§ 3729-3733 is a federal law that allows individuals who are not affiliated with the government to file lawsuits against federal contractors who are believed to have committed fraud in submitting claims to our government? This is also commonly referred to as “whistle blowing.”

On a statewide level, Florida has enacted a False Claims Act, see Florida Statutes §§ 68.081-.09, which likewise serves the purpose of deterring persons from knowingly causing or assisting in causing our state government to pay construction claims that are false or fraudulent.

Both Acts provide remedies, damages, including treble damages, and civil penalties when money is obtained from the government by reason of a false or fraudulent claim on a construction project. Examples of such claims may include: (1) providing false information or misrepresentations in a contractor’s bid, (2) providing false information in a contractor’s monthly pay application, (3) engaging in collusive bidding schemes, (4) providing false statements in requests for equitable adjustments, and (5) engaging in kickback schemes [for example, a project manager having a contractor inflate its bid to incorporate a kickback to the project manager, sometimes described as a “consultant fee.”].

There are various requirements to be met in order to successfully prove a claim under the False Claims Act.  The relevant statutes set forth potential jurisdictional and other defenses that may apply to those defending false act claims.  And the statutes allow an offending party ways to reduce its liability. 31 USC § 3729(a)(2); Fla. Stat. § 68.082(3).

As an incentive to deter this type of conduct, the False Claims Act(s) also provides that individuals bringing such claims can recover a percentage of the amount ultimately obtained in such an action, depending upon their involvement in the proceedings. 31 USC § 3730; Fla. Stat. § 68.085.

It has been reported that between 1987 and 2008 our government recovered over $ 20 billion dollars under the False Claims Act. So, be mindful that the False Claims Act is a powerful tool in regulating the construction process on government projects.