As a whistleblower lawyer, I shake my head in disbelief when I hear about
businesses lobbying against the False Claims Act.
Are you kidding? So long as they are honest, businesses ought to be the
first in line to use the False Claims Act to file qui tam lawsuits. Honest
businesspeople are being cheated out of business, even going out of business,
because unscrupulous companies are willing to lie, cheat and steal their
way to better profitability and business share.
The Government only has so much work it can hand out. Each year, only a
certain number of low-income housing units will be built. Only a certain
number of guns or tanks will be purchased. Only a certain number of schoolchildren
or soldiers will be fed. So If your competitor can bid the contract lower
than you can because he is willing to cheat the government once he gets
the contract, then you will miss out on getting the government contracts
that could keep your business afloat.
For example, take the New York
False Claims Act suit against Compass Group USA, Inc. Compass is a company that provides food management services to schools
and school districts throughout New York. According to New York Attorney
General Eric T. Schneiderman, Compass was getting discounts on the food
it was providing, but then concealing those discounts from the schools.
It was charging the schools as if it had paid full price, and pocketing
the difference between the full price and the discounted price that the
food vendor actually was charging Compass. Compass settled the False Claims
Act suit, agreeing to repay $ 18,000,000 to the schools it had defrauded.
Now let’s say you are a competitor of Compass’. You also provide
school lunch programs and you bid for the same contracts Compass does.
You might have watched in disbelief as Compass come in with an exceptionally
low bid and swept that contract away from you. You may have been dumbfounded
as to how Compass continued to report profits when your company was losing money.
Perhaps you wondered – how could they possibly have bid so low? How
can we be so inefficient while they obviously are able to deliver services
far more cheaply than we can? Maybe you even hired consultants to try
to streamline your business, but still – you could not catch up
to Compass in terms of the contracts it got or its profitability.
And now you know the real story. You were not competitive because you were
only expecting to get the money you were paid by the Government. Compass,
on the other hand, got paid by the Government and also profited from the
difference between what it charged the Government for the food, and what
it actually paid to the food vendors.
But let’s say that you find out that a competitor is cheating. In
that case, you have three choices. You can give up because you cannot
be competitive if you play by the rules and they do not. You can decide
you had better cheat on contracts yourself, even though you will be risking
your reputation and a long jail sentence. Or you can try to stop the fraud
by filing a False Claims Act suit to do something about it. If you file
the False Claims Act suit, not only do you have a chance to make the marketplace
a level playing field again, but you also have the opportunity to get
a percentage of all of the money that the Government collects from the lawsuit.
So why would you want to stop the False Claims Act when it is the very
thing that could restore your chance to compete on even footing to earn