A reverse False Claims Act lawsuit alleges a wrongdoer has prevented the collection of money owed to the government. For example, failure to return an overpayment or unused funding to the government.
Other examples include applying for a lease, loan, or permit but intentionally making incorrect statements on the application, underpayment of royalties per the contractual agreement with the government or making false declarations on customs forms or in other agreements.
Whistleblowers with information about a potential reverse false claim should come forward with information and help the U.S. government recover taxpayer’s funds. Whistleblower rewards may be available for those eligible under the False Claims Act and qui tam provisions.
History of the Reverse False Claims
Congress passed amendments to the False Claims Act in 1986. These amendments contained significant reforms to the FCA.
Congress further strengthened reverse false claims cases in 2009 when Congress passed the Fraud Enhancement and Recovery Act (FERA). The Act expanded liability under the False Claims Act. Before this, a relator had to prove that a wrongdoer created a false statement or record. Under the new 2009 amendment, however, a person is now liable for the action and for knowingly concealing and improperly avoiding an obligation to pay or transmit money to the U.S. Government. FERA also broadened and clarified this definition of “obligation” as:
“An established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based relationship or similar relationship, from statute or regulation, or from the retention of any overpayment.”
Whistleblowers with information about a reverse false claim can follow the same procedure as in filing a False Claims Act qui tam lawsuit. Successful relators are entitled to an award of between 15% and 30% of the total recovery paid to the U.S.
Examples of Reverse False Claims Violations
There are many ways a fraudster can bring about reverse false claims. Below are a few common types in which the government has intervened:
Customs Violations – fraudsters may create false customs declarations to avoid paying additional duties, such as anti-dumping and countervailing duties.
Non-Return of Overpayment – fraudsters may decide not toreturn unused funding to the government in hopes of not getting caught.
Not Paying Royalties – fraudsters may decide not topay royalties to the government, such as in cases involving federal mining leases.
False Statements – fraudsters may try to make incorrect statements on loan, permit, or lease applications to deceive the government.
Keep in mind; customs fees are the second highest source of income for the United States, behind only the IRS! Whistleblowers who know of such violations can save taxpayers millions of dollars and help restore confidence in the U.S. economy.
On December 6, the U.S. Supreme Court heard arguments in United States, ex rel. Polansky v. Executive Health Resources, Inc. The case concerns the issue of whether or not the U.S. government can dismiss False Claim Act whistleblowers' qui tam suits after initially declining to intervene in them. According to whistleblower attorneys, the case has tremendous implications ...
On October 31, the Merit Systems Protection Board (MSPB) ruled that the Department of the Army had constructively suspended a contracting officer after she blew the whistle on systemic contracting fraud occurring within the Army Corps of Engineers Huntsville, Alabama Support Center. The ruling reverses an earlier ruling by an administrative ...
A major False Claims Act (FCA) qui tam case is heading to trial that pits a large defense department contractor, OST, Inc., and its sole owner, Vijay Narula, against a lone whistleblower, Andrew Scollick. Scollick blew the whistle to the government alleging that $7 million in construction contracts that were supposed to be awarded ...
Section 3729(a)(1)(G) of the False Claims Act reads:
(a) Liability for Certain Acts.—
(1) In general.—Subject to paragraph (2), any person who—
(G) Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government.
An individual or organization might be liable under the reverse false claims act if they knowingly create, use, or cause a record or statement that they know is false.
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