The Federal Stimulus Fund Effect on False Claims Act Actions
| Jurisdiction | United States,Federal |
| Citation | Vol. 38 No. 8 Pg. 93 |
| Pages | 93 |
| Publication year | 2009 |
2009, August, Pg. 93. The Federal Stimulus Fund Effect on False Claims Act Actions
August 2009
Vol. 38, No. 8 [Page 93]
Government and Administrative Law articles provide information to attorneys dealing with state and federal administrative agencies, as well as attorneys representing public or private clients in the areas of municipal, county, and school or special district law.
Coordinating Editor
Brad Bailey (303) 670-0413, bdbailey.law@q.com
About the Author
Richard S. Vermeire is a partner in Fennemore Craig, P.C.'s Denver office.
This article provides an overview of recent federal stimulus legislation, including how the legislation affects claims brought under the False Claims Act.
The effectiveness of the massive federal stimulus legislation recently enacted to combat the economic downturn remains unknown. It is clear that the legislation will expand the reach of federal anti-fraud statutes and ensnare many entities and individuals desperate for the benefits of the stimulus legislation but unfamiliar with the pitfalls of accessing such benefits. The stimulus legislation includes the $700 billion Emergency Economic Stabilization Act of 2008 (EESA),(fn1) signed into law by former President George W. Bush on October 3, 2008, and the $782 billion American Recovery and Reinvestment Act of 2009 (ARRA),(fn2) signed into law by President Barack Obama on February 17, 2009.
This article provides an overview of EESA, ARRA, and the Troubled Assets Relief Program (TARP), as well as the overseeing of funds provided under these programs. It also discusses liability under the False Claims Act (FCA).(fn3)
Overview of the Federal Programs
Through TARP, the EESA has provided, under the auspices of the U.S. Department of the Treasury (Treasury), funds to U.S. financial institutions to stabilize the financial markets.(fn4) The participating institutions access these funds by selling preferred stock and warrants to the Treasury through securities purchase agreements (SPA).(fn5)
The $782 billion ARRA, through federal agencies and state governments, provides federal funds to "promote economic recovery, . . . spur[] technological advances in science and health, [and] invest in transportation, environmental protection, and other infrastructure."(fn6) Colorado is scheduled to receive these stimulus funds for a variety of infrastructure projects, including:
* $171 million for energy and energy efficiency programs and weatherization improvements(fn7)
* $403 million for highways and bridges(fn8)
* $102 million for mass transit improvements(fn9)
By funding "shovel-ready" projects, the ARRA seeks to immediately infuse money into the economy through private entities that engage in competitive bidding for work on the projects.(fn11)* $31 million for the Clean Water State Revolving Fund.(fn10)
Entities applying for and receiving this federal funding subject themselves to a variety of laws designed to deter fraud against the United States, including the FCA.(fn12) The FCA, enacted during the Civil War to prevent war profiteering, empowers whistleblowers, known as "qui tam relators" to bring civil actions on behalf of the United States to recover damages for false or fraudulent claims made to federal government programs. Since 1986, more than $20 billion has been recovered under the FCA.(fn13)
Given the publicity and debate surrounding TARP, ARRA, and the stimulus package generally, the ultimate recipients of these federal funds can expect heightened scrutiny and oversight regarding how they conduct themselves when applying for and spending these funds. Sen. Chuck Grassley of Iowa, a primary architect of the 1986 amendments to the FCA, declared that the FCA will play an important role in prosecuting and ultimately deterring abuses by those who access such funds. He asked that the Treasury and the U.S. Department of Justice:
ensure that whistleblowers are treated seriously, their concerns are reviewed in an expeditious manner, and that any legitimate claims of fraud, waste, or abuse are aggressively investigated and prosecuted to the fullest extent of the law, including seeking recovery of all funds lost via the FCA.(fn14)
Liability Under the FCA
The FCA enumerates seven bases for liability, the most common of which are found in 31 U.S.C. § 3729(a)(1) to (3). These are discussed below.
Section 3729(a)(1)
Section 3729(a)(1) provides liability for a person who:
A violation of this section can exist, for example, when a person knowingly presents an inflated invoice for payment to the appropriate federal officer.(fn15)knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval.
The requirement that the claim be presented to the appropriate federal government or military officer soon may be...
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