What is the government's burden of proof in False Claims Act cases?

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What is the government’s burden of proof in False Claims Act cases?

The government’s burden of proof in False Claims Act (FCA) cases is to prove all essential elements of the cause of action, including damages, by a “preponderance of the evidence.” This means the government must show it is more likely than not that the defendant violated the FCA. They don’t need to prove it “beyond a reasonable doubt” like in a criminal case.

The FCA, also called Lincoln’s Law, was originally passed in 1863 to combat fraud by defense contractors during the Civil War. It allows the government to sue any person or company that knowingly submits false claims for payment to the federal government. Common examples are overbilling Medicare or Medicaid, or falsifying tests results to get FDA approval.

The law defines “knowingly” pretty broadly – it includes having actual knowledge you’re defrauding the government, as well as being “deliberately ignorant” or showing “reckless disregard” for the truth. So even if you don’t specifically intend to defraud the government, you can still be liable under the FCA.

What does the government have to prove?

To win a FCA case, the government has to show:

A false or fraudulent claim was made against the federal government
The defendant knew the claim was false or fraudulent (the “scienter” requirement)
The false claim was material or important to the government’s decision to pay out money

In June 2023, the Supreme Court ruled 9-0 in United States v. SuperValu that a defendant’s subjective belief is relevant to determining whether they had knowledge under the FCA. The Court rejected attempts to weaken the scienter standard to an “objectively reasonable” interpretation. This means prosecutors have to prove the defendant actually knew their claims were false, not just that a reasonable person would have known.

This recent ruling makes it a little harder for the government to meet its burden of proof. But the preponderance of evidence standard is still lower than in a criminal case, so it’s easier for prosecutors to show reckless disregard or deliberate ignorance.

What kind of evidence can the government use?

The government can use documentary evidence like false invoices, doctored test results, whistleblower testimony from employees, evidence that procedures weren’t followed, and more. Expert testimony is also commonly used in FCA cases to explain complex billing and coding processes to the jury.

Since direct evidence of knowledge or intent is hard to find, prosecutors often rely on circumstantial evidence. This includes things like suspicious timing of claims submissions, missing or inadequate documentation, and deviations from industry standards or the defendant’s own procedures.

Statistical sampling and extrapolation is another technique used to prove excessive false claims without having to audit every single record. For example, if a medical practice submitted 5,000 claims a year for 7 years, auditing a sample of 100 claims can reveal a high fraud rate. That rate can then be extrapolated to estimate total damages.

What defenses are available?

Common FCA defenses try to rebut one or more elements of the government’s case by arguing:

The claims weren’t actually false or fraudulent
The defendant didn’t have the requisite knowledge or intent (lacked “scienter”)
The claims weren’t material – the government would have paid them anyway
There are no damages or only negligible damages to the government

Given the broad definition of “knowingly” under the FCA, defendants often resort to arguing there was a good faith misunderstanding of complex regulations. They claim it was reasonable for them to believe their conduct was lawful. After SuperValu, this defense is a little weaker since subjective belief matters more.

Another common defense is to attack the methodology behind the government’s damages calculations as flawed or unreliable. Since FCA damages are trebled (tripled), getting the damages amount reduced can save defendants a lot of money!

Burden shifting to the defendant

In some cases, the burden may shift to the defendant to disprove allegations once the government establishes a prima facie case (a legally sufficient case unless disproven). This often happens when the government shows the defendant submitted claims along with certifications that turned out to be false. Then the burden flips onto the defendant to prove they weren’t at least deliberately ignorant about the truth of their certifications.

Conclusion

While the government’s burden of proof is lower than in criminal cases, meeting the FCA’s scienter requirement is still a challenge for prosecutors following SuperValu. Subjective belief and good faith defenses also make it harder for the government to show defendants “knowingly” defrauded Uncle Sam. But the preponderance standard, broad evidence rules, and potential burden shifting still make FCA cases favorable for the government in many instances.

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What is the government’s burden of proof in False Claims Act cases?