False Statements in Federal Grant Applications Present a Risk of Significant Financial Exposure to Grant Recipients

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[guest author: Thomas P. Barletta]

Two federal appellate courts have upheld awards of damages under the civil False Claims Act (FCA) (31 U.S.C. 3729) equal to three times the total amount of money paid under federal grants (US ex rel Longhi v US); US ex rel Feldman v van Gorp).

Longhi involved false statements made in connection with proposals for four Small Business Innovation Research grants, including false statements regarding the grantee’s key personnel, facilities and equipment, and prior experience. Feldman involved false statements made in connection with three renewal applications submitted under the National Institutes of Health’s T-32 grant program for certain pre- and post-doctoral training, including false statements in those applications regarding the fellowship program’s curriculum, resources, faculty, and training.

The damages awards in both cases were based on the theory that, unlike a procurement contract, a grant agreement does not result in a “tangible benefit” to the government, but rather provides either an “intangible benefit” to the government or a benefit to a third party, such as the research the fellows performed in Feldman. Accordingly, the courts found that the full amount paid to the recipients under the grants was an appropriate measure of FCA damages. Both cases were initiated by private parties (a former employee in Longhi and a former post-doctoral fellow in Feldman) under the qui tam provisions of the FCA.

Topics:  Damages, FCA, Federal Grants, Qui Tam

Published In: Business Torts Updates, Civil Remedies Updates, Government Contracting Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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