Evaluate Your Possible Exposure to False Claims Act Liability, Whistleblower Lawsuits, Penalties and Treble Damages on Government Contracts and Public Works Contracts Under California Law
Federal, State, and local public agencies have a powerful club to beat back or recover for fraudulent or exaggerated contractor and subcontractor claims against them, in the form of State and Federal False Claims laws.
Those laws allow government agencies to recovery statutory penalties, treble damages, and attorney's fees from persons who file or cause the filing of False Claims. Sometimes a False Claims suit may be filed as a counter suit to a contractor's suit on its claims.
Such suits may be brought either by contracting government agency, such as the State or a City, County, or by private "Whisleblowers" seeking to recover a cut of the damages assessed against the Government Contractor.
A few examples of just some of the possible False Claims that can be brought against Government Contractors include:
- Billing or receiving payment for work that was not performed per the terms of the contract, plans and specifications
- Billing for defective work
- Making exaggerated claims for which you have no backup or support
- Billing for excessive quantities of work or material provided
- Billing on a contract that was obtained through false representations or promises in your bid, or by collusion or bid rigging.
- Falsely claiming to be an SBE, DBE, LBE, or DVBE contractor or subcontractor
- Overstatement of overhead, labor or material costs in a claim
- Double billing
- Prevailing Wage or Davis Bacon Act violations
- Improper subcontractor substitutions
- Buy America Act or Local Hire violations
- Billing for work done in violation of, or not in compliance with, any material term of the contact
There are many other grounds for a False Claims action.
Virtually any breach of the terms and conditions of a contract, or the plans or specifications for that contract, or any false or misleading statement in obtaining a contract or in applying for payment on a contract can constitute a "False Claim" under the State or Federal Laws.
On some state contracts that are in whole or in part Federally funded or financed, a contractor can be potentially liable under both the California and Federal False Claims Act on the same contract for the same actions!!!
Even if all work is done properly, and even if the Government does not pay the claim, some liability for at least penalties - or more- still could possibly be imposed.
Even subcontractors who do no directly submit any claims to the Government can still be liable for submitting False Claims if they submit an exaggerated claim to the prime contractor, with the knowledge the prime contractor will likely attempt to pass-through that claim to the Government.
Companies found guilty of submitting False Claims can also be debarred or prohibited from doing future business with the Government agency, and you may be required to report such debarment to other agencies you bid to, which could limit your ability to acquire new government contracts in the future, and result in your company being found to be a Non-Responsible bidder on future jobs.
(Of course, you are entitled to a Due Process hearing before any debarrment, as discussed in more detail in a related article on this website)
False Claims actions can also be brought by private whistleblowers, such as your own employees, subcontractors, competitors, or in some cases Government employees, acting as private "Whistleblowers" and seeking to recover a percentage of the Government's recovery.
There are also Criminal Penalties in California for submitting False Claims!
Therefore, it is quite important to consult with an experienced Government Contract attorney to help you assess and adopt business practices in your company that will avoid False Claims accusations.
And if you intend to submit a extra work, change order or delay etc contract claim of any significant size, or if there are any questions as to whether you have complied with all the material terms of the contract, plans, or specifications, you would be well advised to consult with a competent and experienced Government contract attorney to avoid or minimize your exposure to potential False Claims Act liability, and to maximize your chances of success on your claims, and avoid a catastrophic False Claims case that could destroy your business.