Chilivis Grubman often reports on False Claims Act (“FCA”) enforcement actions. Many high-dollar FCA settlements involve healthcare providers and businesses, in part, due to the number of claims for reimbursement that healthcare providers submit to the government and the FCA’s penalty structure. Under the FCA penalty structure, the government may recover three times its actual losses (treble damages). In addition to treble damages, Defendants face penalties for each violation of the FCA (e.g., each false statement or each false claim submitted or caused to be submitted).
While many press releases involve providers and businesses involved in the healthcare industry, it is important to recognize and remember that the FCA applies to any industry, like finance, education, and military contracting. Such was the case according to a recent U.S. Department of Justice press release.
On July 21, 2023, the DOJ announced that Booz Allen Hamilton Holding Corporation, the parent company of Booz Allen Hamilton, Inc., which is a government and military contractor, agreed to pay $377,453,150 to resolve allegations it violated the FCA. The FCA prohibits any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government. According to the government, contracting rules require “a nexus between the costs charged to a government contract and the objective of the contract. Thus, a contractor may charge to a government contract cost directly related to that contract, as well as indirect costs that benefit multiple contracts including the government contract.” Essentially, government contractors cannot use taxpayer funds to subsidize work not related to the contract.
Regarding Booze Allen, the government alleges that for about 10 years (from approximately 2011 to 2021), Booz Allen improperly allocated costs associated with its commercial and international business “that either had no relationship to those contracts and subcontracts or were allocated to those contracts and subcontracts in disproportionate amounts.” Booze Allen is accused of not revealing its methods for accounting for costs supporting its commercial and international businesses. The government purports that the improper cost allocation resulted in Booz Allen being reimbursed for costs not related to nor for the benefit of the United States.
The incentives the FCA provides to whistleblowers bolster the government’s ability to bring FCA actions. Under the qui tam provisions of the FCA, whistleblowers (also known as relators) may bring cases on behalf of the government, which may takeover, or intervene. Whistleblowers are entitled to 15% to 30% of the money the government recovers, based on several factors. The Booz Allen settlement resulted from a qui tam lawsuit filed by a single whistleblower, a former Booz Allen employee. The whistleblower will receive an astonishing $69,828,832 in connection with the settlement.
The qui tam case is captioned United States ex rel. Feinberg, v. Booz Allen Hamilton, Inc., Civ. A. No. 16-1911 (D.D.C.).
This case serves as a stark reminder that any entity doing business with the federal government – in any industry – must follow contractual obligations to avoid running afoul of fraud, waste, and abuse laws like the FCA.
The attorneys at Chilivis Grubman represent both companies and individuals in connection with government investigations, both criminal and civil, and in False Claims Act litigation. If you have any questions related to such matters, please contact us today.