International Construction Law Review
STATE AND LOCAL FALSE CLAIMS ACTS AND OTHER ANTI-FRAUD ACTS: A SURVEY FOR THE CONSTRUCTION PRACTITIONER
Deborah S Ballati and Richard Robinson
Farella Braun + Martel, San Francisco
1. INTRODUCTION
The Federal False Claims Act (the “Federal Act” or the “False Claims Act”) and its state and municipal counterparts provide potent weapons for governmental entities in their goal of protecting and ensuring the prudent use of public funds. These laws seek to address fraud against government entities, a problem that some commentators insist is widespread and uniquely difficult to identify.1 Because federal, state, and local governments control the expenditure of large sums of money, they are arguably more likely to be victims of fraud and less likely to catch those responsible. This problem can be exacerbated by a perceived or actual lack of resources available to government entities to identify fraud and prosecute perpetrators.2
The various state, federal and local false claims acts attempt to deal with these issues by (1) increasing the consequences of fraud on the government through multiple damages (for example, treble damages), statutory penalties, and debarment (among other things); and (2) empowering private individuals to bring claims on behalf of the government and participate in any recovery. The results can be remarkably lucrative. In 2014, the Department of Justice announced that it recovered nearly US$6 billion from False Claims Act civil filings during the 2014 fiscal year alone.3
1 Sylvia, Claire M, The False Claims Act: Fraud Against the Government (2012), § 1.1–1.9.
2 Not all commentators accept the truth of the many assumptions underlying the Federal False Claims Act and its local counterparts, at least in the construction arena. For example, some have argued that, far from possessing inferior resources, the government’s “ability to investigate and prosecute fraud dwarfs the resources available to even the biggest construction contractors in this country.” Green, Patrick J and Hess, Frank A, Defending A Civil False Claims Act Case – Practical Consideration (2007). Other observers argue that the private enforcement, or “qui tam,” provisions of the Federal False Claims Act encourage frivolous lawsuits that impose irrational and excessive penalties. For example, the US Chamber of Commerce recently called for an overhaul of the Federal Act, citing supposed ineffectiveness and inefficiency in the current regime. Hutt II, Peter B et al, Fixing the False Claims Act: The Case For Compliance-Focused Reforms, US Chamber Institute for Legal Reform (2013).
3 “Justice Department Recovers Nearly US$6 billion from False Claims Act Cases in Fiscal Year 2014, US Department of Justice, 20 November 2014, www.justice.gov/opa/pr/justice-department-recovers-nearly-6-billion-false-claims-fiscal-year-2014.
Pt 3] State and Local False Claims Acts
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