From Bad to Worse: When Overpayments Become Reverse False Claims

• March 29, 2023

• Jonathan A. Porter , Husch Blackwell LLP

Imagine sitting in a dated Justice Department (DOJ) conference room. You have been led to a seat facing an imposing seal on the wall. On the seal is an eagle carrying an olive branch in one talon, and arrows in the other. As you stare at the eagle, you ask yourself, “why do those arrows seem to be pointing directly at me?”

You are jogged back to reality when you realize your side is finishing up your pitch to the DOJ lawyers, closing with an emphatic argument. “Sure, these claims weren’t technically compliant, but we didn’t know at the time that we were falling short. We only realized our technical shortcomings later and we stopped the practice. And therefore, we didn’t violate the False Claims Act and you should close your file on us.”

You are thrilled with this crescendo. A lot of time and resources have gone into getting to this point. “These Justice Department lawyers are trying to make a mountain out of a molehill,” you think to yourself. “Since when is being imperfect the same as committing fraud?”

The lead attorney for the government smiles and, after some pleasantries about the efforts put into the presentation, says, “I just have one question though. You may not have known at the time that you were submitting false claims, but how did you not violate the reverse false claim prong of the False Claims Act when you didn’t return the money?”

“Uh oh,” you think to yourself. “What’s that?”

ARTICLE TAGS

• Fraud & Abuse Practice Group
• Fraud and Compliance