In recent months, Relators’ qui tam complaints have been subject to increased scrutiny by criminal prosecutors. In addition to civil False Claims Act (FCA) liability, individuals doing business with the federal government face potential criminal liability under various criminal fraud-related statutes. Potential charges for fraudulent activities are not limited to a criminal fraud charge, but also include bribery, false statements, conspiracy to defraud, wire fraud, mail fraud, and identity theft, among others. Most of these crimes are felonies and carry substantial penalties, including fines, freezing of assets, and imprisonment. Especially in the healthcare industry and defense procurement space, many criminal investigations originate as civil qui tam filings only later adopting a criminal component. These parallel investigations typically involve the U.S. Department of Justice (DOJ) and may include other enforcement agencies.

Recent DOJ rhetoric encourages an increased use of such parallel investigations. In September 2014, Assistant Attorney General for the Criminal Division of the DOJ, Leslie Caldwell, announced that the Criminal Division would be “stepping up” its review to look for potential criminal liability in qui tam complaints, noting that such complaints “are a vital part of the Criminal Divisions’ future efforts.”[1] Consistent with this message, Caldwell encouraged the Relator’s bar to notify the Criminal Division directly when a complaint is filed instead of coordinating only with the local U.S. Attorney’s Office. As part of the new process, the Criminal Division will receive and review new complaints so that prosecutors may determine the nature and extent of any criminal exposure.

Continue Reading New DOJ Qui Tam Protocols Likely to Lead to Increased Parallel Criminal Investigations

In the first three months of 2015, the U.S. government has been – as usual – quite busy on the sanctions front.  The United States has eased sanctions on Cuba, expanded sanctions on North Korea, Russia, and Venezuela, and introduced sanctions against cyber criminals.  And that does not even include Iran (with which preliminary agreement was reached on April 2) or continued, aggressive enforcement against sanctions violators.

What follows is our effort to briefly summarize key sanctions developments since the beginning of the year, and to offer predictions about potential new developments in the coming months.

Continue Reading Sanctions Update: First Quarter 2015 Brings New Restrictions, Potential Relief

A Maryland-based construction company required to pay “prevailing wages” under a Federal government contract recently settled for $400,000 claims that it had violated the False Claims Act (“FCA”) by failing to properly supervise lower-level contractors in the payment of prevailing wages to their workers. The case serves as a reminder that government contractors who fail to ensure compliance with wage requirements – whether under the Davis-Bacon Act (“DBA”), Service Contract Act (“SCA”), or Walsh-Healy Public Contracts Act (“PCA”) – can face significant liability. It also highlights the ongoing expansion of the federal government’s battle against procurement fraud.

Many Government Contractors Are Subject to a Prevailing Wage Rate Requirement

Most government contractors who provide services; do construction, alteration or repair work on public buildings; or manufacture certain goods are subject to a prevailing wage requirement. Those requirements include geographically determined wage rates and fringe benefit rates set by the Administrator of the Wage and Hour Division of the U.S. Department of Labor (“DOL”) for various labor classifications. Where a government contract incorporates such a requirement, government contractors, including their subcontractors, are required to pay wages at least as high as the prevailing wage rates.

Continue Reading The Growing Risks of Non-Compliance with Wage Rate Determinations

Billions of dollars every year are spent in the United States on “Federal health care programs,”¹ including Medicare, Medicaid and Tricare, among others.² For individuals and entities in the healthcare industry, reimbursement from these programs is a vital component of their business. However, many are unfamiliar with the authorities under which the Department of Health and Human Services (“HHS”) excludes individuals and entities from participation in Federal health care programs, nor are they familiar with the nuances of the exclusion program. Understanding the types of violations that can trigger exclusion, as well as the process for responding to a proposed exclusion, is necessary for parties receiving reimbursement from Federal health care programs to ensure their compliance program is adequate and to understand the steps that must be taken to mitigate the impact of a proposed exclusion.

Introduction

Pursuant to sections §1128 and §1156 of the Social Security Act (the “Act”), HHS, specifically the Office of the Inspector General (“OIG”), has the authority to exclude individuals and entities from Federal health care programs. Exclusion means that items and services furnished, ordered or prescribed by the excluded individual or entity are not reimbursable under Medicare, Medicaid and all other Federal health care programs. While exclusion by HHS is similar in some respects to suspension and debarment, it does not bar excluded parties from being awarded federal contracts and grants. Once a party is excluded from participation they are added to the List of Excluded Individuals/Entities (“LEIE”) maintained by HHS and the exclusion appears on the System for Award Management (“SAM”). Any healthcare entity participating in Federal health care programs that hires or contracts with an individual or entity on the LEIE may be subject to civil monetary penalties, so it is important that they establish processes and procedures to routinely (monthly is recommended) check the LEIE to ensure new hires, current employees, and potential contractors or subcontractors are not excluded.

Continue Reading Exclusions by the Department of Health and Human Services – Authorities and Procedures

We are all familiar with the “revolving door” between the public and private sector – government employees will often leave their posts and cross over to the private sector to capitalize on their experience in the government. However, when government employees make that transition, it is imperative that they consider the federal conflict of interest laws, which may prohibit them from taking certain private sector positions and, at minimum, require them to be screened from particular types of work on a go forward basis. Failure to consider these laws could lead to severe consequences. A recent plea agreement highlights the importance of remaining mindful of these rules when negotiating post-government employment.

On Tuesday, March 11, 2015, former U.S. Air Force Captain Adam J. J. Pudenz pleaded guilty in Iowa federal court to violating restrictions on post-government employment and making a false statement to law enforcement agents. In 2010, Pudenz served as a U.S. military contracting officer in Afghanistan and worked on several U.S. government contracts related to the purchase of clothing and boots from an Afghan trading company. Pudenz admitted that before leaving his position as a contracting officer in Afghanistan, he negotiated future employment with the same Afghan company. Pudenz ultimately began working for the trading company and lobbied the U.S. government on matters related to the contracts he had previously managed.

Continue Reading Recent Plea Deal Highlights Importance of Post-Government Employment Conflicts of Interest

According to GSA, the lack of transparency in prices paid on government contracts has led to significant price variations of up to 300% or more of purchases made by federal agencies and unnecessary duplication of contract vehicles.  In an attempt to address this concern, the General Services Administration (GSA) has issued a proposed rule (RIN-3090-AJ51) to increase visibility on prices paid by government buyers through the implementation of a transactional data reporting clause added to GSAR 552.216.

The proposed rule would require vendors to report prices paid for products and services during the performance of the contract including under orders and blanket purchase agreements.  The report would include 11 transactional data elements such as unit measures, quantity of item sold, prices paid per unit, and total price.  Contractors would submit these reports electronically through a “user-friendly, online reporting system.”  The rule would apply to orders placed against Federal Supply Schedule (FSS) contracts and other GWAC and IDIQ contracts administered by GSA.  The reporting requirement, however, would not apply to the U.S. Department of Veteran Affairs FSS contracts for pharmaceuticals, medical equipment, etc.  The rule, once finalized, would go into effect immediately for GWACs and IDIQ contracts but conducted in phases for FSS contracts.

Continue Reading GSA’s New Vision for FSS Contractors: No More Basis of Award Customer Monitoring in Exchange for Transactional Data

We recently authored an article examining the rise in states developing their own false claims act statutes and how this expansion is impacting government contractors. The article offers tips to government contractors on ways to mitigate the risk of state false claims actions.

The full article, “The Expanding Risk Of State FCA Actions,” was published by Law360 on March 6.

On March 2, 2015, new anti-human trafficking rules applicable to government contractors went into effect.  (New requirements applicable to Department of Defense (DoD) contractors, available here, went into effect on January 29, 2015.)  While government contracts have been subject to anti-human trafficking provisions for some time, these revised requirements, which implement Executive Order 13627 and parts of the National Defense Authorization Act for Fiscal Year 2013, include a new certification provision, mandatory reporting obligations, involvement of suspending and debarring officials in the review of reported violations, full cooperation with agency investigations, and publication of violations on FAPIIS, among other changes.

It is important that contractors recognize that all new contracts are subject to many of these new requirements, available here, and ID/IQ contracts will be modified to include them in future orders.  If they have not already done so, contractors should promptly determine which of the new requirements they are subject to and, if necessary, revise compliance policies and procedures accordingly.

Continue Reading Contractor Alert: New Anti-Human Trafficking Rule

I recently authored an article outlining a recent decision impacting the affiliation requirements between mentors and protégés when entering into a joint venture. As affirmed in the recent case, a mentor and protégé may enter into a joint venture to compete for government contracts, but must adhere to the strict SBA regulations to be considered.

To read the full article, “SBA-approved Mentor-protégé Agreement Not a ‘Fix-all’ for Affiliation,” that was published by Westlaw Journal Government Contract, access the PDF here: Westlaw Journal Government Contract March 2 2015.

Government contractors are always hunting for the next contract opportunity. Upon finding a promising solicitation, a contractor might first examine the performance requirements to answer the initial questions of “is this something we can do,” and “is this something we can win?” Reviewing the solicitation to address these questions is an important endeavor. However, before the contractor moves on to the often chaotic and frenetic stage of preparing a solicitation response, it would be wise to first take a beat and carefully read the Federal Acquisition Regulation (FAR) clauses incorporated into the solicitation.

The FAR clauses incorporated into a solicitation often contain administrative requirements, such as compliance and certification, that must be met by the contractor. These FAR requirements may come to bear in either the contractor’s response to the solicitation, the ultimate performance of the contract, or both. Either way, it is important that a contractor thoroughly review and fully understand the incorporated FAR clauses before beginning its response to the solicitation. Failure to do so can present all manner of problems down the road.

Continue Reading Learning from Bid Protests: The Importance of Understanding Incorporated FAR Clauses

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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