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I recently attended the
Taxpayers Against Fraud Conference in Washington, D.C. During one session of the conference, we
discussed some of the categories of False Claims Act (FCA) lawsuits that
have been filed in recent years. FCA lawsuits are filed by qui tam whistleblowers
who have learned about fraud against the federal government. (Some states
have FCA statutes as well). When you look over the list, you can’t
help but shake your head at the endless ways that people devise to cheat
the Government. In fact, the list is so long that I am going to have to
break it into several blog entries to keep it from being overwhelmingly long.

* Charging the Government for more goods or labor than were actually provided.
This type of fraud can range from a defense contractor who provides nine
helicopter parts to the DOD but submits an invoice for ten, to a doctor
who performed nine tests on a patient but bills Medicare or Medicaid for
ten. Some recent cases have involved durable medical equipment providers
who billed Medicare and Medicaid for wheelchairs that they never provided.
“Recipients” of the wheelchairs were stunned to learn that
they needed wheelchairs, much less that they had received them.

* Demanding that the Government pay for goods or services that do not meet
the specifications of the contract (“non-conforming” goods
and services). Typically this type of fraud has involved situations such
as a contractor that substituted sand for a more expensive ingredient
in the asphalt it used to pave a highway. However, several recent cases
have involved the “Buy American Act.” The regulations governing
the Act are found in the Code of Federal Regulations. For example, the
regulations related to supplies are found at
48 C.F.R. 52.225-1. In the Act, in order to support the U.S. economy, Congress required that
in some types of contracts the contractors have to use American goods
instead of foreign goods. Some contractors have tried to cut corners by
surreptitiously buying cheaper goods from foreign countries. Some of these
contractors even decided before they bid for the contract that they intended
to ignore the law, and these contractors obtained a competitive advantage
over other companies that had bid for the contract with the assumption
that they would have to comply.

* Getting a Government contract or service by pretending you are eligible,
when you really are not. For example, some unscrupulous highway contractors
may pretend they are minority-owned or woman-owned, in order to get a
contract that has been reserved for a firm that fits into one of those
categories. Sometimes people will call me with cases in which someone
has fraudulently applied for Medicaid or food stamps. While those cases
clearly do involve fraud, traditionally the Government has not been interested
in treating those cases as FCA cases because the dollar value is too small.

* Obtaining a contract with the Government by fraud. This type of fraud
would include contractors who do collusive bidding, i.e., rig the bidding
for Government contracts. In these situations, contractors collaborate
together. One contractor agrees to submit a very high bid for a contract,
so that the other contractor can put in a higher bid than it normally
would have and yet still manage to get the contract as the lowest bidder.
The contractors agree they will swap positions on the bidding for the
next Government contract.