Fraud Against the Government and the False Claims Act: 5 Common Red Flags

The False Claims Act got its start in the Civil War era after dozens of wayward contractors acquired substantial sums of money from the government despite delivering subpar (or nonexistent) supplies to soldiers. Since then the Act has been applied to virtually every industry in the United States, resulting in billions of dollars in settlements on behalf of taxpayers. If you are suspicious of possible billing fraud or suspicious activity, the following industry-specific red flags may help you determine if you might have a case under the False Claims Act, which offers rewards of up to 30 percent of the total settlement or verdict.

#5: Enrollment Quotas

Within the education sector, enrollment quotas may be a red flag that fraud is underfoot. In recent years, a surge in federal student loan fraud has led to quite a few settlements with well-known institutions of higher education. In many of these cases, admissions staff were required to enroll a certain number of applicants eligible for student aid regardless of the students’ likelihood of ever graduating or landing a job.

#4: Excessive Spending

Is your position funded by a federal or state grant? If so, each dollar spent within the organization must be properly accounted for within the guidelines set forth in the grant agreement. In several recent settlements, grant recipients faced significant scrutiny and penalties for spending grant money on prohibited activities, including dinners, trips, or even research components not specifically delineated in the terms of the grant award.

#3: Haphazard Underwriting

Mortgage fraud is another growing area of concern, as it has cost the federal government hundreds of millions of dollars in insurance payouts since the 2008 housing crisis. While many of the big banks have faced their fate in court – resulting in staggering ten- and eleven-figure payouts – smaller lenders are still continuing the trend of approving residential mortgage loan applicants that are not necessary prime candidates for a loan. Oftentimes, the intentional fraud occurs in the initial application process or underwriting procedure, both of which should involve thorough investigative measures.

#2: Questionable Hiring Protocol

Under federal private sector contracts, contractors are required to abide by the terms of the agreement when it comes to hiring workers for the job at hand. In the defense sector, for instance, government contract agreements will often require certain qualifications and/or experience in those paid to complete work on behalf of the government. Moreover, contractors are usually limited in the number of foreign nationals (if any) that may work on a project, and must properly vet candidates for employment under a contract agreement.

#1: Excessive Scheduling & Short Patient Visits

Within the healthcare field, False Claims Act fraud often involves a gross exaggeration of the doctor’s time spent with the patient. Under applicable guidelines, doctors must code for the precise amount of time spent with a patient and cannot bill for a 30-minute visit if only a couple minutes were spent assessing the patient’s needs. If a practitioner appears to be scheduling patients back-to-back, while ordering the billing specialist to bill for a full 15- or 30-minute consultation, this could trigger False Claims Act liability.

Contact Berger Montague today

If you are aware of any of the above red flags, or would like to speak with an experienced attorney about your information, please contact Berger Montague today.