Law360, an on-line publication, has reported that two Pennsylvania Democrats, Rep. Brendon Newman (D – Washington) and Rep. Anthony DeLuca (D – Allegheny), are preparing to introduce legislation that may bring the False Claims Act (FCA) to the Commonwealth. Twenty-nine (29) states currently have their own version of the FCA, which has been used with much vigor by the federal government since 2007 to root out government fraud. While the version that is slated for introduction in Pennsylvania is focused on “medicaid fraud,” don’t be fooled. Medicaid fraud was also the focus of the federal government’s push for a stronger FCA back in 2007 and the impact has been felt far beyond medicaid.
The federal government has used allegations of fraud against contractors in all sorts of cases where federal money is being sought, or has been paid.
Here’s how it works:
If you are a contractor for the federal government, you must make certifications of all kinds. When you wish to obtain payment for work performed, you must certify that you are entitled to it. If you have a claim against the government for additional money, generally speaking, you have to certify that you’re owed what you are claiming. If, at some point along the way, the government suspects that you’re not actually entitled to money claimed, or received, it can pursue an action against you, both civilly and criminally, and the penalties can be severe. Monetary penalties can far exceed the value of your contract and incarceration is certainly possible.
The intention of the FCA is not to punish someone who has made an honest mistake. However, the federal government has gotten very aggressive in its pursuit of “potential” fraud. That means that federal government contractors have had to be increasingly careful when asking government agencies for money. If Pennsylvania does pass its own version of the FCA, those that do business with the Commonwealth will have to be equally vigilant. Once the bill is introduced, we will report back to you with its content.
Edward T. DeLisle is a Partner in the Construction and Federal Contracting Groups of Cohen Seglias Pallas Greenhall & Furman PC. He concentrates his practice in the areas of construction law, construction litigation and small business procurement and litigation. In addition, he is a frequent contributor to the Federal Construction Contracting Blog.