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What is the Federal Crime of False Billing?

Posted by Dmitry Gorin | Jun 28, 2022

For many decades, the federal government has hired private businesses and contractors to work for them. Every year, thousands of companies receive revenue from government contracts. At the same time, the government strictly regulates this work and watches for inaccuracies in payment claims.

If the feds suspect you billed them fraudulently, you may face a lawsuit from the government on the grounds of false billing under the False Claims Act (FCA).

The False Claims Act (FCA) is a law that, among other things, prohibits businesses and individuals from knowingly submitting, or causing to be submitted, false or fraudulent claims for payment to the government. The law is embodied in the federal code 31 U.S.C. §§ 3729 - 3733.

What is the Federal Crime of False Billing?

The bill was initially passed in the nineteenth century to ferret out and punish fraudulent defense contractors. The FCA imposes liability on businesses and individuals who knowingly defraud governmental programs, such as Medicare, Medicaid, and other federally funded programs.

A large number of these false claims occur within the medical sector. Still, unlike the crime of insurance fraud, which is a separate federal crime, the FCA deals mainly with fraudulent claims made to obtain federal dollars under false pretenses.

Enforcement of the False Claims Act is serious business for the federal government. They threaten health care professionals with harsh penalties after a criminal investigation brought by the U.S. Department of Justice after receiving information from whistleblowers or private citizens.

Since the DOJ and federal prosecutors will closely examine all credible complaints, health care providers often face scrutiny. Put simply, submitting false, fictitious, or fraudulent claims is a federal crime. 

The statute applies to individuals or businesses with a direct or indirect contract and pays for services from the United States government. Our federal criminal defense lawyers will discuss this crime in more detail below.

What is False Billing Under the FCA?

While the FCA may be used to penalize both individuals and businesses who attempt to file fraudulent claims, the concept of false billing deals primarily with businesses and contractors who tried to bill the government falsely for services rendered.

What is False Billing Under the FCA?

False billing effectively involves knowingly submitting a payment claim containing false or fraudulent information. This can apply to any service the government provides for pay, whether a construction project, defense project, medical care, or something else entirely.

In other words, the law lays our criminal liability for any person, business, or contractor who knowingly submits, or causes to submit, a false or fraudulent claim with the intent to receive payment from the federal government.

Submitting a false or inaccurate claim can also occur when it was submitted knowing there was a failure to perform reasonable due diligence. For example, perhaps the individual submitting the claim should have known the correct billing code, but they negligently submitted an incorrect code.

In general, this federal statute prohibits attempting to obtain money, goods, or services from the United States government related to different departments by presenting false, fictitious, or fraudulent claims. 

What Are Some Common Examples?

  • A dentist bills Medicaid for a teeth caning of a patient without actually performing the cleaning;
  • A defense contractor inflates the cost of a weapon part by 500 percent while concealing the itemization under a different category;
  • A nursing care facility performs a procedure or treatment on a patient who does not need that treatment to bill the patient's government-subsidized insurance;
  • A highway contractor double-bills the government for overtime for its employees on a highway construction project—effectively asking the government to pay for man-hours that were not performed;
  • A construction contractor on a government-subsidized project bills the government for materials that were not purchased or used.

Qui Tam Lawsuits and Whistleblower Protection

To help root out incidents of false billing, the FCA also incentivizes and protects "whistleblowers" who expose incidents of fraud. To this end, in addition to being sued by the federal government, a company that violates the FCA may also be subject to a qui tam lawsuit.

Qui tam is a legal provision that allows private citizens, typically whistleblowers, with information about fraud against the government to sue on behalf of the government to recover damages.

Under this provision, a qui tam plaintiff can receive between 15-25 percent of the total damages recovered by the government if the government does the litigating—and up to 35 percent of damages if the qui tam plaintiff litigates. Additionally, the company may be further penalized for attempting to punish a whistleblower.

What Are the Penalties of False Billing Under the FCA?

Violations of the FCA are typically enforced as civil lawsuits against the company that committed the fraudulent billing rather than prosecuting them criminally.

The federal government sues for significant damages and severe civil penalties (fines) on any business that knowingly files a false bill for payment from the government.

Penalties of False Billing Under the FCA

The standard penalty per false claim is three times the amount of the fraudulent claim PLUS an additional fine ranging between $5500 - $11,000 per claim. If a company routinely overbills the government, the total cost of these false bills can be exponential—enough, in some cases, to bankrupt the company.

If the case is pursued criminally, submitting false billing is a serious federal offense that could result in a sentence of up to five years in federal prison and a substantial fine.

Applying the Federal Sentencing Guidelines is essential in false claims cases as the advisory guideline sentencing range for a defendant will vary depending on the amount of loss against the United States. 

Even if the defendant's claim for payment was flagged for fraud and never paid out, they could still be held responsible for the total amount of the claim in the form of an enhanced offense level under the sentencing guidelines.

What Are the Defenses for False Billing?

The critical operative term in cases of false billing is that the contractor must have knowingly attempted to defraud the government with a false bill.

In other words, like all fraud crimes, the prosecutor has to prove that you knowingly intended to deceive the government into providing a payment you knew you weren't entitled to receive. Thus, the most common defenses for federal false billing allegations include:

  • Lack of intent to deceive,
  • Lack of knowledge,
  • Confusion over the payment terms,
  • Reasonable good-faith mistake.

When the government files a lawsuit alleging a violation of the FCA, the burden of proof is on the government to demonstrate that you or your company knew the bill was wrong and knowingly submitted it anyway.

Defenses for Federal False Billing

Thus, most defenses against false billing have to do with casting doubt on that claim—effectively showing that the bill was either accurate or that you were unaware that the bill was inaccurate.

Perhaps we can prove you made a reasonable good faith mistake requesting payment. Likewise, maybe the defendant had a good faith belief they were entitled to the payment. 

Other defenses could include duress, entrapment, or government misconduct.  Perhaps federal law enforcement agents relied on an unreliable informant during their investigation.  Maybe the evidence could be suppressed to undermine the government's case through a formal motion before the District Court.

If you or a family member is under investigation for false billing, our federal criminal defense attorneys can help you. Negotiating a favorable resolution to avoid the most severe penalties might be possible. Eisner Gorin is located in Los Angeles, California. We serve people across the United States on federal matters. You can reach us at (877) 781-1570 or use the contact form.

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About the Author

Dmitry Gorin

Dmitry Gorin is a licensed attorney, who has been involved in criminal trial work and pretrial litigation since 1994. Before becoming partner in Eisner Gorin LLP, Mr. Gorin was a Senior Deputy District Attorney in Los Angeles Courts for more than ten years. As a criminal tri...

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