Companies that do business with the federal government must be cognizant of potential liability under the False Claims Act. Civil litigation may be inevitable at times as a result of occasional business disputes with suppliers, customers, former employees, or competitors. Companies, however, should be particularly cautious about litigation with the United States as the adverse party. The reasons may be obvious since the federal government has unlimited resources for litigation. The financial consequences under the FCA can be devastating to business operations. As such, companies should be familiar with the FCA, have internal controls and policies, and be prepared to promptlyinvestigate allegations of wrongdoing when they arise. This is simply the cost of doing business with the federal government.
FCA investigations and enforcement actions are frequent and have wide reach in most industries, including defense, energy, transportation, healthcare, and gaming. Any business with a government contract or that is receiving government funds as part of a project can have exposure under the FCA if wrongdoing occurs. For example, the Patient Protection and Affordable Care Act (colloquially known as “ObamaCare”) will result in the creation of health insurance exchanges that will offer insurance options and receive subsidies from the federal government for payment of premiums. Congress has ensured that the FCA will apply to fraud involving federal payments to such exchanges.
Originally published in Northern Nevada Business Weekly.
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