WHAT IS THE FALSE CLAIMS ACT? (31 USC 3729 - 3733) 

What is the Civil False Claims Act (FCA)?

The False Claims Act (FCA) is a statute that protects the federal government for false claims made for payment to Medicare or Medicaid.  It is contained in the United States Code section 31 USC 3729-3733.  

A Stark Violation or an AKS violation can Violate the False Claims Act

A claim that is illegal under the AKS or Stark laws may also violate the False Claims Act. The penalties differ and an FCA violation can result in fines up to three times the programs' loss plus $11,000 per claim filed. The “per claim” FCA penalty is huge because every single each instance of billing is subject to the separate $ 11,000 fine. So, each and every item sold or service provided and billed is a claim.

A Violation of the Civil False Claims Act Does Not have to be Intentional

Mental state or intent is a major battleground in FCA cases. No deliberate fraud is required. It is not a criminal statute so the standard of proof is lower than for a crime. The False Claims Act does require that a person acting knowingly. The FCA defines "knowing" as having actual knowledge of the fraud or misstatement. But it does not stop there. It also includes where there is no actual knowledge and no specific intent. A person (or corporation) is in violation of the FAC when the person/entity acted with deliberate ignorance or reckless disregard of the truth or falsity of the information. No deliberate fraud is required! Third party whistleblowers can use the FCA as a profit engine. The statute allows private individuals to file a lawsuit on behalf of the United States. That whistleblower gets a percentage of any recoveries. People who are wrongfully terminated or have a business dispute will often look at the FCA as a tool against their opponents."

What is the Criminal False Claims Act (FCA)?

The criminal False Claims Act criminalizes deliberate fraud committed against the United States based upon false, fictitious, or fraudulent information intended to obtain money from the government.  It has been used to combat fraudulent claims filed under numerous Federal programs, including Medicare and Medicaid.

Does the Criminal FCA Require an Intent to Defraud the Government?

There is major debate as to how consciously fraudulent the claim must be to create criminal liability.

Congress enacted a false claims and statements statute "in the wake of a spate of frauds upon the government." United States v. Bramblett, 348 U.S. 503, 504 (1955). As originally enacted the statute penalized presentment "for payment or approval" of false claims upon or against the Government. . ." (Bramblett, 348 U.S. at 504) as well as false statements made "for the purpose of obtaining, or aiding in obtaining, the approval or payment of such claim." On June 25, 1948, the statute was divided into 18 U.S.C. § 287 and 18 U.S.C. § 1001, respectively. 62 Stat. 749.   This fits under a classic fraud concept and classic fraud requires an intent to deceive except in rare and very specialized circumstances.

Other cases have focused more on the need to protect the government as opposed to the desire to prevent fraud.  They seem the same but the focus is different.  This second level of cases view the statute as designed to "protect the government against those who would cheat or mislead it in the administration of its programs" (United States v. White, 27 F.3d 1531, 1535 (11th Cir. 1994)), and it has been employed to combat fraudulent claims filed under numerous Federal programs, including Medicare and Medicaid. White (Medicare claims by a chiropractor); United States v. Hooshmand, 931 F.2d 725, 733 (11th Cir. 1991)(Medicare claims for tests); see also United States v. Abud-Sanchez, 973 F.2d 835, 836 (10th Cir. 1992)(Medicare and Medicaid claims); United States v. Siddiqi, 959 F.2d 1167, 1171-72 (2d Cir. 1992)(physician submitted Medicare claims for a period when he was out of the country); United States v. Nazon, 940 F.2d 255, 258, 261 (7th Cir. 1991)(Medicaid claims for lab work not done); United States v. Beasley, 550 F.2d 261, 263-64 (5th Cir.), cert. denied, 434 U.S. 863 (1977)(claims for costs of clinics never built).

Specific intent is the knowledge that you are violating the law and choosing to do it. Willfulness should in our opinion, be required for any criminal conviction.

The United Stated Courts of Appeals for the Tenth, Fifth and Second Circuits have held that willfulness is not an essential element of Section 287, while the Ninth, Eighth and Fourth Circuits appear to indicate that willfulness is an essential element of Section 287.

The law as it now stands is this:

Under the federal False Claims Act (FCA), the term "knowingly" encompasses three mental states: actual knowledge, deliberate ignorance, and reckless disregard of the truth or falsity of the information (U.S. Dept. of Transp. ex rel. Arnold v. CMC Engineering, Inc., 947 F.Supp.2d 537 (2013)) (United States ex rel. Schutte v. Super Valu Inc., 598 U.S. 739 (2023)). Importantly, the FCA does not require proof of specific intent to defraud (United States ex rel. Ormsby v. Sutter Health, 444 F.Supp.3d 1010 (2020)), (United States ex rel. Hueseman v. Professional Compounding Centers of America, Inc., 664 F.Supp.3d 722 (2023)) This means that a person can be held liable under the FCA even if they did not specifically intend to defraud the government, as long as they acted with actual knowledge, deliberate ignorance, or reckless disregard regarding the truth or falsity of the claim (U.S. Dept. of Transp. ex rel. Arnold v. CMC Engineering, Inc., 947 F.Supp.2d 537 (2013)), 31 U.S.C.A. § 3729.

If you compare this crime to Stark violations, AKS violations or state laws like California Penal Code section 550's fraud provisions, the FCA is one of easiest crimes for the government to prove and the defense of a civil or criminal FCA case requires a high level of defense lawyer expertise.

The Horowitz firm has three criminal defense specialists as lawyers defending cases.  This level of expertise and title "specialist" are controlled by the State Bar of California Board of Legal Specialization and there are less than 1000 criminal defense lawyer certified specialists in all of California.