Previous False Claims Act (FCA) Fundamentals posts have examined how violations of certain federal laws can potentially expose entities to FCA liability when they receive money from the government.

This post focuses on how liability can also attach when entities withhold money owed to the government—commonly known as a “reverse false claim.”

Under the reverse false claims provision, 31 U.S.C. § 3729(a)(1)(G), liability can attach for either:

• Knowingly concealing, avoiding or decreasing an obligation to pay the government; or
• Knowingly creating or using (or causing another to create or use) a false record material to an obligation to pay the government.

The crux of a reverse false claim is whether the defendant owed an “obligation” to the government. “Obligation” is defined as “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.”

Examples of “obligations” courts have found could lead to reverse false claims include:

• A medical device manufacturer concealing substantial product defects from physicians who ultimately (and unknowingly) billed fraudulent claims to Medicare.
• A government contractor entering into a settlement agreement where it agrees to repay certain funds from the settlement to the government but then does not do so.
• A manufacturer importing materials with...

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