I. Introduction / Overview
Although most commonly associated with fraud in government contracting and procurement, the False Claims Act (FCA) applies to a broad swath of financial interactions with the federal government. Most companies are aware of the legal exposure that can result from false claims for payment to the government — including civil penalties, treble damages, and the risk of debarment — but the false claim’s lesser-known sibling, the so-called reverse false claim, can inflict equally painful exposure from an entirely different sort of conduct. By focusing on money owed to the government rather than money paid by the government, the reverse false claim exposes to FCA liability companies that import goods into the United States, even in the absence of any federal sale or contract. For companies accustomed to FCA exposure at the point of contract or sale, the reverse false claim may inject additional FCA risk much earlier in the supply chain — at the point goods enter the United States.
In this three-part series, Sidley’s White Collar and International Trade groups explore the intersection of the FCA and trade-related laws and regulations to help clients understand more about this increasing area of risk. This first alert covers upcoming enforcement trends as well as recent changes in the language and interpretation of the FCA that make it easier for the government and private relators to pursue reverse false claim actions. The second alert will dive deeper into potential bellwether cases and how liability has unfolded in those cases. The third and final alert will identify for corporate counsel areas of future or heightened risk as well as steps corporate counsel can take to mitigate and protect their business clients from that risk.
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