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Commonsense Steps State and Local Governments Can Take to Fight Fraud and Strengthen False Claims Act Enforcement

Regular readers know that the single most important step a state government can take to limit fraudulent requests for payment is to pass a state false claims act modeled on the federal False Claims Act.  

A state false claims act modeled on the federal FCA not only provides for treble damages, civil penalties, and mandatory attorney’s fees against those making false statements or claims to the government–perhaps most important, the “qui tam” provisions of statutes like the Virginia Fraud Against Taxpayers Act and the federal False Claims Act also deputize motivated individuals to do their bit by coming forward and hiring private counsel to prosecute these claims on behalf of both the individual and the state.    

The second most important step is to make sure that the law is vigorously enforced.  By that I mean the state government can and should take steps to insure that qui tam relators and their private counsel find receptive and capable government lawyers when they do file their cases.  That usually entails creating some type of affirmative civil enforcement unit in the state Attorney General’s office and staffing it the proper way.  

So lets say that a state has done those things, and is now looking around for a way to further the fight against false or fraudulent claims.  What else can be done?  Are there steps that can be taken by the various government agencies to further the work of the state AG and private citizens? 

Indeed there are some very simple–and inexpensive–steps that can be taken.  

One step that costs next to nothing is to require certain language on every invoice or other claim for payment submitted to the government.  Here is an 
example from Virginia’s own Department of General Services.  This form DGS-30-234 (which has been used since October of last year) is required of all construction contractors at the time of each invoice’s submission to the Commonwealth.  Consider this sample from the DGS-30-234:  

    … I further certify that the claim is not the result of, or affected by, any act of collusion with another person engaged in the same line of business or commerce; or any act of fraud punishable under the Virginia Governmental Frauds Act, § 18.2-498.1, et seq. of the Code of Virginia. … I understand that any statements made, and known to be false, shall be a violation of the Virginia Governmental Frauds Act, punishable as a Class 6 Felony. In addition, I understand that any claim submitted in violation of the Virginia Fraud Against Taxpayers Act, § 8.01-216.1, et seq. of the Code of Virginia shall be subject to the civil penalties provided therein.

So how does this help fight fraud?  The gravamen of a Virginia Fraud Against Taxpayers Act case is the knowing submission of a false claim to the government — such language ensures that no one can later claim ignorance of what the law requires if they sign this form every single time they submit an invoice. 

The federal government realized long ago the efficacy of this method.  For that reason, as a prerequisite to reimbursement, every health care cost report contains the following language:  

Misrepresentation or falsification of any information contained in this cost report may be punishable by criminal, civil and administrative action, fine and/or imprisonment under federal law. Furthermore, if services identified in this report were provided or procured through the payment directly or indirectly of a kickback or where otherwise illegal, criminal, civil and administrative action, fines and/or imprisonment may result. 
It is a well-established common law rule that where the government has conditioned payment of a claim upon a claimant’s certification of compliance with a statute or regulation, a claimant submits a false or fraudulent claim when he or she falsely certifies compliance with that statute or regulation.

It is important not to think of these cases as “false certification” cases, however.  Indeed, the word “certification” does not appear in the text of the federal FCA or the VFATA.  When the government conditions payment of a claim upon compliance with a statute or regulation, a claim that does not comply with that statute or regulation is not eligible for payment and is therefore false — end of story. 

Earlier this month, an important  Mixx Delicious Digg Facebook Twitter