The False Claims Act’s Liability Provisions (Part 2 of 7): False Statements

The False Claims Act has seven liability provisions. Attorneys use some in almost every case while others are rarely used. In a series of posts, each provision will be discussed.

The Act’s second liability provision is 31 U.S.C. § 3730(a)(1)(B), which provides that any person who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim . . . is liable to the United States . . . .”

Simplified Example: A contract between Corporation and the United States requires spare parts to be tested before shipment to the United States. The Corporation does not test the spare parts. Instead, the Corporation creates fictitious paperwork falsely stating that the parts were tested.

A 31 U.S.C. 3729(a)(1)(B) violation occurs when a defendant creates a false document capable of influencing a decision to pay a claim. For example, a Government contractor violated the False Claims Act by issuing Certificates of Conformance and internal testing documents stating that the product complied with all contractual requirements, even though the contractor knew that the testing had not been completed as the contract required. BMY v. United States, 38 Fed. Cl. 109, 126-127 (Fed. Cl. 1997). Liability exists even if these documents were not provided to the Government, but representations of their existence were made to justify claims for payment made on DD-250s. Id. at 112, 126-27.

The elements of a 31 U.S.C. 3729(a)(1)(B) claim are: “1) the Defendants made a statement in order to receive payment from the government; 2) the statement was false, and 3) the Defendants knew it was false.” United States ex rel. Walner v. Northshore Univ. Healthsystem, 660 F. Supp. 2d 891, 896 (N.D. Ill. 2009). However, the False Claims Act requires that in order to be actionable, the false statement must be “material,” which means only that the false statement had “a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. 3729(b)(4).

Unlike Section 3729(a)(1)(A), “presentment” of a claim is not a requirement of a false statement claim and need not be plead. United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 192-93 (5th Cir. 2009) (quoting Allison Engine Co. v. U.S. ex rel. Sanders, 128 S.Ct. 2123, 2129 (2008)).

A person making a claim for payment is subject to False Claims Act liability when the claim was made to the United States or, in many cases, to a contractor, grantee, or other recipient of Government funds.

If you know someone who is making false statements or otherwise cheating the United States, protect yourself and explore potential remedies. You can obtain guidance from experienced legal counsel by contacting us.