Understanding the False Claims Conspiracy Provision

An important law to handle whistleblower cases involving multiple defendants is the False Claims Act. Therefore, an experienced whistleblower attorney may encourage someone to try understanding the False Claims conspiracy provision, should it become applicable to their case.

32 U.S.C Section  (a)(1)(C) of the False Claims Act is the provision relating to conspiracy. Anyone who conspires to commit a violation of any of the other provisions of the False Claims Act can be held liable under the False Claims Act.

How is the Conspiracy Provision Used?

Part of understanding the False Claims conspiracy provision is knowing that it is often used with an underlying false claim for which an action can be brought. Pursuing conspiracy allegations can be a useful tool for the government, because anyone who is in on the conspiracy, can be held jointly and severally liable for the entire amount of the false claim.

Because of the potential joint and several liability, alleging conspiracy, obviously of course only when there are facts that support the idea that there is a conspiracy, to defraud the government can be a sensible allegation to make. Of course, if there is no evidence of such conspiracy, lawyers will refrain from alleging it.

Conspiracy does happen in this environment because government contracting and billing obtained for government contracts can be a complicated matter involving many parties. Subcontractors may create false claims or participate in a scheme with a prime contractor, in order to make the fraud occur.

Who is Typically Liable for the False Claim?

The law was amended to make it clear that a party who causes the submission of a false claim to the government, whether they personally presented the false claim to the government or not, would still be liable for that false claim. After this amendment, a subcontractor does not avoid liability by providing a claim to the prime contractor who then may or may not know it is false and sends it to the government.

Subcontractors typically do not present the claim directly to the government, prime contractors do. Under the law, a subcontractor can cause the submission of a false claim without the prime contractor’s knowledge, and that subcontractor can be held liable for causing the submission of a false claim.

Understanding the Role of Subcontracting Claims

Subcontracting and pursuing liability for false claims used to be much more difficult. It was difficult to hold a subcontractor liable when a subcontractor caused a false claim. There is the difficulty that when the subcontractor submits a claim to the prime contractor, the prime contractor passes the claim along to the government, but may not know of any fraud. The Prime did not know of the fraud and the Sub did not submit the claim to the government. It was important therefore to show that someone causing the submission of the false claim could be held liable for it.

In such cases, to hold both parties liable one has to prove that there was some knowledge of the fraud between the two entities, and usually that will also lead to bringing a conspiracy claim. This used to be especially difficult under the old requirement of a knowing presentment to the government. One had to show a direct submission of the claim.

Defining the Presentment Requirement

Presentment requirement means that a false claim is required to be presented to the government. It is not required that the prime contractor know that the claim is false. It is only required that somebody who caused the submission know that it is false and that person, the one who knowingly caused such a submission is liable.

When understanding the False Claims conspiracy provision, it can be critical to focus on the proof of knowledge. Proving knowledge is one of the more problematic areas of False Claims Act law. This gets even more difficult with a conspiracy because it can be difficult enough to be able to demonstrate that the individual party knew that they were submitting false claims.

With respect to individual parties, the knowing requirement is an aspect to prove False Claims Act liability. This can mean a person has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, acts in reckless disregard of the truth or falsity of information. There is no requirement to prove specific intent under the law.  In a conspiracy case, however, there should be a meeting of the minds between one or more parties to violate the False Claims Act.