Polansky and the Future of FCA Qui Tam Prosecution

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Jennifer A. ShortTjasse L. Fritz, and Bridget Mayer Briggs

Jennifer A. Short headshot image
Tjasse L. Fritz headshot image
Bridget Mayer Briggs headshot image

In its upcoming term, the U.S. Supreme Court is poised to address the issue of whether the United States can seek to dismiss a whistleblower’s False Claims Act (“FCA”) lawsuit after it has elected not to participate in the case. And, if it can seek dismissal, what standard should apply?

On June 21, 2022, the Court agreed to consider the matter of United States ex rel. Polansky v. Executive Health Resources, Inc. (Case No. 19-3810). In his cert petition, the whistleblower presses the theory that after the United States declines to intervene in an FCA qui tam case, it lacks any authority to dismiss the action. At a minimum, the petitioner argues that the Court should resolve a long-standing split among the Circuit Courts regarding the standard that applies to such a motion—a split that has splintered even further in response to an uptick in such motions since 2018.

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June 28, 2022: “Emerging Issues and Trends in Government Investigations and Fraud Enforcement”

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Jennifer A. Short headshot image

Blank Rome partners Jennifer A. Short and Justin A. Chiarodo, chair of the firm’s Government Contracts practice group, will serve as presenters for the CLE/CPD online webinar, Emerging Issues and Trends in Government Investigations and Fraud Enforcement, hosted by the Association of Corporate Counsel’s National Capital Region (“ACC NCR”) on Tuesday, June 28, 2022, from 12:30 to 2:00 p.m. EDT.

For more details, visit our website.

Beyond DOJ’s Blockbuster Year in FCA Recoveries, Whistleblower Activity and Investigations Continue

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Elizabeth N. Jochum and Jennifer A. Short

Jennifer A. Short headshot image


The attention-grabbing headline from the Department of Justice’s (“DOJ”) annually released statistics on False Claims Act (“FCA”) settlements and judgments is that the government recovered more than $5.6 billion from FCA cases in fiscal year (“FY”) 2021. While this is the second largest annual recovery in FCA history and the largest since 2014, procurement fraud cases represented a substantially smaller percentage of the total recoveries than in years past. Healthcare resolutions dominated, accounting for more than five billion of the $5.6 billion in settlements and judgments. In previous years, healthcare matters have accounted for closer to two-thirds of the total recoveries, making last year’s outsized healthcare figure—driven by the blockbuster opioid settlements of late 2020[1]—an outlier.

Beyond the top-line dollar figures, the report shows that FCA activity continues at a healthy, if not fully robust, pace. The COVID-19 pandemic continues to impact qui tam filings; the number of new whistleblower suits dropped to 598 in FY 2021, a ten-year low. The number of DOJ-initiated matters remains higher than the near-term average, particularly in healthcare, but also in Department of Defense (“DOD”)-related cases. Contractors, healthcare providers, and others—especially those who received federal funding through pandemic aid programs—can anticipate that FCA investigations and resolutions will play out over the next several years.

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Expect GSA to More Closely Scrutinize Trade Agreements Act Compliance

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Merle M. DeLancey Jr.

On January 21, 2022, the General Services Administration (“GSA”) Office of Inspector General (“OIG”) informed the Federal Acquisition Service (“FAS”) that ongoing monitoring by the OIG found that the FAS failed to properly monitor the sale of products for compliance with the Trade Agreements Act (“TAA”) during the COVID-19 response. Previously, in April 2020, GSA relaxed compliance with the TAA for a limited number of Federal Supply Classes (“FSCs”) to aid the government’s response to the COVID-19 pandemic. The applicable FSCs included those covering N95 masks, cleaners and disinfectants, disposable gloves, and hand sanitizers. After several extensions, the TAA exception policy expired on April 30, 2021.

The OIG identified two deficiencies in FAS’ implementation of the TAA exception policy. First, the OIG found that FAS failed to properly track the addition of non-compliant products to contracts. As a result, after expiration of the exception policy, there was no effective way for GSA to remove the non-compliant products from contracts. Second, the OIG found that GSA improperly permitted the addition of non-compliant products to GSA contracts. For example, some products that were added were unrelated to the government’s response to the pandemic; some products were added to GSA contracts prior to the effective date of the TAA exception policy; and, remarkably, in one case, a product was added to a contract that identified North Korea as its country of origin.

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FCA/FCPA: Fraud and Enforcement

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Blank Rome Partner Jennifer A. Short will serve as a speaker at Pub K Annual Review 2022, a four-day online event being held by PubKGroup January 24 through 27, 2022.

Jennifer’s session, “FCA/FCPA: Fraud and Enforcement,” will take place on Thursday, January 27, from 12:00 to 1:50 p.m. EST, and will break down the top trends in enforcement of the False Claims Act (“FCA”) and Foreign Corrupt Practices Act (“FCPA”).

Other panels include:

      • Bid Protests
      • Investigations, Disclosures, S&D
      • Labor and Employment
      • Costs, Pricing, and Audits
      • Grants and Cooperative Agreements
      • Cybersecurity and Information Technology (“CMMC”)
      • Claims, Disputes, and Terminations
      • Construction Contracting
      • Small Business Contracting
      • Mergers and Acquisitions
      • Statutes, Regulations, EOs, and Policies

CLE may be available.

Blank Rome is pleased to be a sponsor of this program.

For more information and to register, please visit the event webpage

Department of Justice to Prioritize Cybersecurity Fraud through New Civil Cyber-Fraud Initiative

Sharon R. Klein, Jennifer A. Short, and Robyn N. Burrows

Sharon R. Klein headshot image
Jennifer A. Short headshot image


On October 6, 2021, the U.S. Department of Justice (“DOJ”) announced a new Civil Cyber-Fraud Initiative to pursue cybersecurity fraud matters using the enforcement mechanisms of the False Claims Act (“FCA”).

This initiative follows DOJ’s four-month effort to review its cybersecurity strategy and reflects the government’s increased focus on contractor data security. Led by the Civil Division’s Commercial Litigation Branch, Fraud Section—i.e., the DOJ Section responsible for investigating and litigating FCA matters—the initiative targets government contractors and grant recipients that “put U.S. information or systems at risk” by “knowingly”:

      • providing deficient cybersecurity products or services;
      • misrepresenting the company’s cybersecurity practices or protocols; or
      • violating their obligations to monitor and report cybersecurity incidents and breaches.

We discuss the cybersecurity landscape preceding the new initiative, possible impacts and focus areas of the initiative, and how contractors should prepare for potential enforcement.

To read the full client alert, please visit our website

How to Know the Government Is Investigating You or Your Company in Connection with COVID Relief Funds

By Merle M. DeLancey Jr.Craig Stetson*, and Jennifer A. Short

In our previous blogs, we discussed the multiple government enforcers and regulators charged with authority to oversee the application, eligibility, and use of COVID relief funds. Here, we address how to know whether you or your company is under investigation or review or being considered for same. Sometimes it is obvious—for example, when the Federal Bureau of Investigation (“FBI”) along with other agencies raid your offices. Other times, the signs are subtle. 

The federal government has an arsenal of tools it uses to gather information for investigations and audits. These tools are not new and are not specific to COVID relief funds. However, some of the “new” entities created by COVID relief legislation (e.g., the Special Inspector General for Pandemic Recovery (“SIGPR”)), as well as the coordination of agency inspectors general on the Pandemic Response Accountability Committee (“PRAC”)), can use those same old tools to hone in on recipients of COVID-related funding.

Below are some practical tips to understand whether you are being investigated based upon investigative tools used by the government. 

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Paycheck Protection Program Audits Are Upon Us—Borrowers Prepare!

Merle M. DeLancey Jr., Craig Stetson*, and Jennifer A. Short

In our last post on this topic, we touched on how the acceptance, use, and forgiveness of Paycheck Protection Program (“PPP”) loans can be viewed in the context of a Defense Contract Audit Agency (“DCAA”) audit. This post focuses on audits and investigations involving PPP loans. Close scrutiny of PPP loans is not a prediction; it is reality. The Small Business Administration (“SBA”) has announced it will audit all PPP loans in excess of two million dollars following a lender’s submission of a borrower’s loan forgiveness application, and it reserves the right to “spot check” any PPP loan of a lesser amount at its discretion. The Department of Justice has already charged multiple individuals with PPP fraud. And this is just the beginning of what many think will be a tidal wave of enforcement activity involving PPP loans.

Overview of the PPP

The PPP is the largest relief measure for small businesses under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The government has made available nearly one trillion dollars in PPP relief funds through four separate funding measures ($349 billion via the CARES Act; $310 billion via the PPP and Health Care Enhancement Act; $284 billion via the Consolidated Appropriations Act of 2021; and $7.25 billion via American Rescue Plan Act of 2021).

The PPP makes available guaranteed SBA loans to small business that meet certain eligibility requirements. In addition, PPP loans can be forgiven fully if used properly to cover specified business expenses such as payroll, rent, utilities, mortgage interest, and other limited uses. As of April 11, 2021, the SBA had approved more than 9.5 million loans totaling more than $755 billion using more than 5,400 lenders.

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COVID-Related Audits and the DCAA’s New Audit Direction

Merle M. DeLancey Jr. and Craig Stetson*

This is the third in a series of posts regarding what we believe will be an onslaught of government investigations and audits of COVID relief funds and contracting. Previously, we identified likely categories of programs, contracts, and companies the government might investigate or audit. Below, we discuss the Defense Contract Audit Agency’s (“DCAA”) current direction, interests, and initiatives related to contractors’ receipt of COVID relief funds and the impact an uncertain business environment may have on government contract pricing and costing forecasts.

COVID Relief Funds

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) funding opportunities come with unique government contract compliance requirements and financial reporting obligations. The funding is not “free” and may result in financial consequences to unwary contractors. DCAA knows this and will be conducting audits to test contractors’ compliance with unique relief fund requirements. Contractors unaware of these accounting and reporting requirements risk DCAA questioning or denying costs.

In January 2021, DCAA issued an audit alert to its regional offices pertaining to COVID relief legislation and regulation.[1] The audit alert includes frequently asked questions and answers (“FAQs”) concerning contractors’ request or receipt of COVID relief funding. Originally released last summer, the FAQs have been revised and expanded several times. The FAQs telegraph DCAA’s position on various instances where COVID relief funding intersects with or impacts government contract cost accounting and compliance.

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The Likely Targets of COVID-Related Audits and Investigations

Merle M. DeLancey Jr. and Craig Stetson*

This is the second in a series of posts regarding what we believe will be an onslaught of government investigations and audits of COVID relief funds and contracting. Previously, we identified the government offices that will be conducting the investigations and performing the audits. Below, we identify three categories of programs, contracts, and companies we believe are more likely to be investigated or audited.

Programs/Contracts

The first group of companies ripe for audits are those accepting COVID relief funding and contractors performing large COVID-specific contracts, as well as contractors performing traditional government contracts that entail certain COVID-related twists impacting performance.

Companies accepting COVID relief funds are likely at the top of auditors’ lists for several reasons. First, because of the magnitude of funds at issue. Second, due to the complex and ambiguous eligibility, use, and reporting requirements. For example, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and supplemental legislation appropriated funds to reimburse eligible healthcare providers for healthcare-related expenses or lost revenues attributable to COVID. Receipt of funds was easy. Most recipients’ funds were automatically deposited into their bank accounts. But healthcare provider recipients have not yet been required to file reports attesting to the proper utilization of the relief funds. Relief funds recipients in other non-healthcare industries may also be affected. Certain monies received under the CARES Act also involve ongoing and downstream reporting requirements by companies regarding statutory limitations on compensation paid to certain employees and the receipt of a variety of potential tax credits. Thus, recipients’ use of funds has not been tested, and it is unlikely that all usage has been in compliance with the ambiguous requirements and multiple rounds of agency guidance and interpretations.

Continue reading “The Likely Targets of COVID-Related Audits and Investigations”
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