Avoiding pitfalls of False Claims Act liability.

• Author: Heffes, Ellen M.
• Position: LEGAL

On May 20, President Barack Obama signed the Fraud Enforcement and Recovery Act of 2009 (FERA), which amended the False Claims Act (FCA). FERA's purpose is "to improve enforcement of mortgage fraud, securities and commodities fraud, financial institution fraud and other frauds related to federal assistance and relief programs, [and] for the recovery of funds lost to these frauds."

Notably, FERA eliminated the requirement that a claim be presented directly to the federal government to establish FCA liability. Liability also attaches whether a person intends for the government itself to pay the claim or disburse funds.

In short, FCA now reaches more than those who contract directly with the government. Also, FERA provides increased protection to whistleblowers.

Generally, FERA became effective on May 20; however, the elimination of the direct presentment requirement was made retroactive to June 7, 2008. Other changes apply to cases pending on the date FERA was signed.

Any entity that receives, disburses or oversees federal funds should be aware that FCA now covers "overpayments," as well as false claims for payment. Such entities should consider the following guidelines:

1. Educate employees about liability under FCA so that they understand that any misrepresentation made in connection with transactions involving federal funds can end up as a false claim.

2. Remind employees that FCA includes substantial civil and even...