Can A False Claim Act Be Filed for Failure to Disclose Information to the Government?

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One question we receive as False Claims Act attorneys is can there be a false claim for the failure to submit information.  There can under limited circumstances.

A False Claims Act provides that “any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” or 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 Government for a civil penalty.  This is pursuant to 31 U.S.C. § 37-29(a)(1)(A)-(B).  “The prima facie case under the False Claims Act requires that (1) the defendant made a claim against the United States, (2) the claim was false or fraudulent and (3) the defendant knew the claim was false or fraudulent.”  United States Ex Rel Raynor v. National Rural Utilities Coop Financial Corporation, 690 F.3d 951, 955 (8^th Cir. 2012).

A failure to disclose creates liability under the False Claims Act only when the defendant has an obligation to disclose the admitted information.  This was a holder in a prior False Claims Act in the Fourth Circuit Court of Appeals in 1997, which held that a defendant University did not submit a false claim for grant funds or omitted certain information on its grant application where the federal agency awarding the grant did not require disclosure of the omitted information in the first place.  See United States Ex Rel Berge Board of Trustee of the University of Alabama, 104 F.3d 1453, 1461 (4^th Cir. 1997).

Therefore, where a Relator alleges that defendant’s failure to disclose or failure to act constitutes a false claim under the False Claims Act, the Relator must point to a clear requirement (including statutory or otherwise) that obligates a defendant to do so.  This holding was found in United States Ex Rel Ketroser v. Mayo Foundation, 729 F.3d 825, 831-32 (8^th Cir. 2013).

Furthermore, whether a statement may after federal funds are received constitutes a false claim under the False Claims Act depends on the purpose of the statement.  Where certifications are submitted as a prerequisite to release funds for subsequent budget period, false statements within those certifications are false claims under the False Claims Act.  See United States Ex Rel Bauchwitz v. Holliman, 671 F.Supp. 2d 674, 679 (ED. PA. 2009).   Accordingly, financial status reports submitted to the government to show how the recipients spent the funds it received are not false claims under the False Claims Act.  In fact, only those actions by the claimant which have the purpose and affect of causing the United States to pay out money it is not obligated to pay, where those actions which intentionally deprived the United States of money it is lawfully due, are properly considered “claims” within the meaning of the False Claims Act.”  See Costner v. URS Consultants, Inc., 153 F.3d 667, 677 (8^th Cir. 1998).

Liability under the False Claims Act will only attach where false statements are made in conjunction with a claim for payment.  For example, the Supreme Court “has cautioned that the False Claims Act was not designed to punish every type of fraud committed upon the government.  In order for a false statement to be actionable under the False Claims Act it must constitute a false or fraudulent claim.  The statute attaches liability, not the underlying fraudulent activity or to the government’s wrongful payment but to the claim for payment.”  See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4^th Cir. 1999).

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We help whistleblowers on a contingency basis, meaning there is no fee charged for our work unless there is a recovery. We also front any and all expenses. No matter where you are located — we will represent you. We will come to you, you will not have to come to us. Attorneys in our firm and attorneys that we work with on Whistleblower, Qui Tam, False Claims Act cases have represented a host of persons making claims, for violations of federal tax law, Medicare law and more. For more information, please contact our team of whitsleblower and qui tam attorneys today, or visit our False Claims Act Litigation Source.

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