FERA expands conspiracy liability under the False Claims Act

posted on:
February 8, 2017

Andrew Brashier

The Fraud Enforcement and Recovery Act of 2009 (FERA) was signed into law by President Obama on May 6, 2009. This law not only changed the False Claims Act (FCA), but also retroactively overturned a Supreme Court case. Likewise, Congress crafted FERA’s 31 U.S.C. § 3729(a)(1) amendment to have taken effect on June 7, 2008, the date the Supreme Court decided Allison Engine. By backdating the effective date of the FERA provision, Congresses rendered the unanimous Supreme Court decision worthless.

Before the FERA, a person was liable under the conspiracy provision of the FCA only if that person conspired to defraud the Government by getting a false or fraudulent claim allowed or paid. Looking to the language of the statute, the Supreme Court ruled in Allison Engine that 31 U.S.C. § 3729(a)(3) required proof that the defendant intended the false statement to be material to the Government’s decision to pay or approve the claim. The Court came to that decision due to the phrase “by getting a false or fraudulent claim allowed or paid,” which is how the FCA read prior to FERA.

By removing the phrase “by getting a false or fraudulent claim allowed or paid” from 31 U.S.C. § 3729(a)(3), FERA significantly expanded liability under the conspiracy provision to include conspiracies to violate any provision of § 3729(a). Therefore, FERA greatly bolsters the FCA by allowing conspiracy claims to encompass not only regular false claims, but also reverse false claims.

A reverse false claim occurs when an entity defrauds the government in order to avoid an obligation to pay, as opposed to an entity defrauding the government in order to obtain some sort of payment. The former is known as a reverse false claim because the subject of the fraud flows opposite of the usual direction. After FERA, the court could hold one liable for conspiring to commit either type of fraud.

If you are aware of fraud or a conspiracy to commit fraud against the government, the FCA provides an avenue for you to act. The FCA contains a qui tam provision that permits individuals to not only blow the whistle on fraud but also provides incentives for individuals to step forward and report fraud. These incentives include 15 to 30 percent of the funds recovered by the government, as well as protection against retaliation. The monies recovered through the FCA replenish the tax pool and serves to deter other companies from committing the same fraud.

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Are you aware of fraud being committed against the federal government, or a state government? If so, the FCA can protect and reward you for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier

Kelley Drye
Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111-21 (2009)
553 U.S. 662 (2008)

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