Proving a False Claim

False Claims Act cases typically do not succeed only by meeting the bare minimum of the statutory requirements. Actual knowledge of the falsity of a claim is not required under the statute to hold a defendant liable, reckless disregard for the truth, for example, can meet this element under the Act. However, in practice, the more the relator can demonstrate a defendant had knowledge, the stronger the case for liability is likely to be.

When reviewing a case, individuals should reach out to an established false claims act attorney. A lawyer can review the priority requirements of the case before you begin your initial hearing for the case.

How is Knowledge Typically Confirmed?

“Knowledge” of falsity is a required element for liability under the False Claims act. Evidence of such knowledge can be provided as any other aspect of the case. It depends what evidence the whistleblower can show to demonstrate the Defendant acted with some level of knowledge as to the falsity of any claim made against the government.

Usually, in a case of major fraud, this knowledge will be obvious. If there is a contract to build equipment for the Department of Defense and the equipment does not pass inspection, yet the defendant bills for it than can show the level of knowledge needed. If management does not fix a problem when confronted by the whistleblower or others at work but rather continues to bill, that also can show knowledge.

What is Knowledge of Falsity?

The Defendant’s knowledge is a requirement to establish liability for submitting false claims. In some cases, their knowledge can create additional liability. Medicare now has a 60-day rule stating that if a provider discovers an overpayment they have to report and refund it within that period of time. So a Defendant becoming aware of overpayments can be an issue. There are some state false claims acts which include liability for “inadvertent” false claims following similar logic.

In terms of liability for a conspiracy to violate the False Claims Act, a meeting of the minds, that is some agreement to submit false claims, for example, to create that kind of liability under the law.

Yes, knowledge of falsity is a required element of the False Claims Act. However, “reckless disregard” can count as such knowledge. It is possible to establish “knowledge” based on the idea that an organization effectively stuck its head in the sand and refused to learn about the falsity of the claims it was presenting.

Liability Under Whistleblower Laws and Regulations

It is difficult to overstate the degree of damage this alteration could have had on the False Claims Act. If it were possible for a subcontractor to simply say they gave it to a contractor, and the contractor could in turn blame the subcontractor and claim that they had no knowledge that the subcontractor was ripping anyone off.

If that logic had not been addressed, then just about all contracting liability under the False Claims Act would have been insulated. The only way to show liability would be where the contractors actually did have a conspiracy, and the conspirators were so careless as to leave evidence behind of their conspiratorial actions and the specific entity who presented the claim to the government was aware of its falsity in a way that could be proven.

There have been conspiracies prosecuted under the False Claims Act where the conspirators were just that careless, but that is uncommon. The fact that there is now a tool by which contractors or subcontractors can be held liable is hugely important for a False Claims Act law.

Material Requirements of a False Claim

To prove a case, the whistleblower must demonstrate not only that the representation about the claim is false, but also that the representation is material, which usually means related to the government’s decision to pay. Simply put the representation has to really matter. The person committing the false claim again has to have the knowledge, or act with reckless disregard of the falsity of that claim. Ultimately, there also has to be government money at stake.

If all of these elements are shown, the conspirators or those who submit a false claim can be liable for civil penalties for each and every false claim that they present, as well as treble damages in amounts to be determined at a jury trial. This is a powerful and important area of the law, an area which amendments to the law allowed the law to improve. This is an area to watch for future litigation.