With both the False Claims Act and the Administrative False Claims Act now part of the federal arsenal, companies dealing with US government funds can expect to see increased scrutiny of alleged false claims by the Department of Justice and administrative agencies.
Congress passed the Administrative False Claims Act in late December as part of the National Defense Authorization Act. The new law significantly expands federal agencies’ ability to investigate fraud claims and provides new incentives for agencies to initiate, pursue, and settle investigations of false claims, which are when companies make materially false statements to secure reimbursement through a government contract or federal program.
The False Claims Act, enacted in 1863 in response to fraud by government contractors during the Civil War, has been the government’s primary civil enforcement tool to remedy this type of fraud. The task of enforcement and investigation largely has fallen to the Justice Department or private whistleblowers.
But the AFCA empowers and encourages agencies to undertake their own investigations against alleged fraud at lower-dollar thresholds—thus diversifying the enforcement authority for false claims.
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