False Claims Act Case Studies
Two California real estate investors arranged for 27 home purchasers to finance their homes with HUD-guaranteed mortgages. To qualify the mortgages for the HUD guarantee, the investors themselves made the down payments on the homes but falsely certified in the loan documents that they had not done so. Because HUD would not have insured the mortgages if the seller-investors had been truthful, in 2007, the court granted summary judgment to the government, awarding nearly $6 million in damages, civil penalties and costs.
Export-Import Financing Fraud
A U.S. manufacturer relied on loans from the U.S. Export-Import Bank to finance the sale of irrigation pumps to Nigeria. In applying for financing, the exporter falsely certified that it had not paid “irregular” commissions to its Nigerian sales agent. The defendant exporter argued, among other things, that the government suffered no damage because the loans were repaid in full. The court disagreed, holding that even where fraudulently obtained loans are repaid in full, the original loan amount is a loss to the government and subject to trebling under the False Claims Act.
Health Care Fraud
Over a period of six years, an Atlanta-area hospital falsely claimed — among other things — inpatient status for patients whose charts showed they were admitted and discharged on the same day. These false billings to Medicare, together with others, resulted in an out-of-court settlement of $26 million. The relator was a hospital case manager whose responsibilities included reviewing patient files for Medicare billing accuracy. For her role in bringing the fraud to light, she was awarded approximately $5 million, 19 percent of the total settlement.
Defense Contract Fraud
The relator was a quality-control engineer working for a Boeing subcontractor on a contract to remanufacture CH-47D helicopters for the U.S. Army. After fatal chopper crashes in 1988, 1991, and 1993, the relator discovered that Boeing had installed defective transmission parts. After trying in vain to draw attention to the problem inside the company, he was laid off, in 1994, and filed his qui tam complaint under seal, in May 1995. Five years and 27,000 attorney hours later, in August 2000, he received $10.5 million as his share of a $50+ million government settlement.