On May 20, 2009 the Fraud Enforcement and Recovery Act of 2009 (“FERA”) was signed into law by President Obama. FERA expands the reach of the False Claims Act (“FCA”). The Act overrules the Allison Engine and Bombardier precedent. FERA “clarifies” that the FCA covers claims for money or property irrespective of whether the claim was “presented” to a federal employee or official, whether the federal government actually had custody of the money or property or made payments, whether the submitter specifically intended to defraud the federal government, and whether the claim was submitted to the government directly or indirectly.
The FCA, prior to the enactment of FERA, imposed liability on anyone who:
• Knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;
• Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; or
• Conspires to defraud the Government by getting a false or fraudulent claim allowed or paid.
In Allison Engine (Allison Engine Co. V. United States ex rel. Sanders, 471 F. 3d 610 (US 2008)), the US Supreme Court ruled that a government contractor was not liable under the FCA because it did not intend to present a false claim to the federal government. In this case, a navy subcontractor allegedly used false information to receive payment, but from another contractor, not directly from the government. The subcontractor falsely stated in a certificate of compliance (COC) the work was completed in compliance with Navy specifications and that the invoices were presented for payment to the shipyards. However the invoices submitted by the shipyards (the contractor for building destroyers) submitted to the Navy did not contain the certificates of compliance. (http://www.law.cornell.edu/supct/html/07-214.ZS.html).
Under FERA makes the mere fact of federal funding at some level is sufficient under FCA. The statute also specifically adopts the “natural tendency” test with respect to materiality. The FERA expands what constitutes a so-called “reverse false claim.” It is now unlawful to “improperly avoid” or “decrease” an obligation to pay money to the United States. This “obligation” includes the prohibition of the improper retention of overpayments, once discovered.
The Act “clarifies” that the statute of limitations in cases in which the government intervenes relates back to the relator’s filing date, and eases the government’s ability to issue civil investigative demands. The law takes effect on the date of enactment, except that– subparagraph (B) of section 3729(a)(1) of title 31, United States Code, as added by subsection (a)(1), shall take effect as if enacted on June 7, 2008, and apply to all claims under the False Claims Act (31 U.S.C. 3729 et seq.) that are pending on or after the date.
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