False Claims Act Overview at NDIA Small Business Conference
Learn about the False Claims Act discussed at the NDIA Small Business Conference in September 2015, covering civil suits, top cases, different types of false claims actions, recent criminal and civil fraud cases, and settlements related to SBIR programs.
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What You Need to Know About the False Claims Act NDIA Small Business Conference September 24, 2015 Jere W Glover Seidman and Associates 1001 Connecticut Ave, NW Washington, DC 20005 202-737-5734 jglover@seidmanlaw.com
The False Claims Act is Big Business Civil suits totaled $3.3 Billion Dollars in 2011 80 % of those cases were related to healthcare Top 10 cases: All healthcare: $2.7 of the $3.3 Top 3 FCA recoveries? GlaxoSmithKline $2B Pfizer $1B Bank of America $1B Less than a dozen involve SBIR NASA IG report to Congress was more than 25% of SBIRs had waste or fraud. HOWEVER these were really about travel receipts and paperwork, not fraud.
Other Types of False Claims Actions 1) Size of Business 2) Minority Ownership 3) Disabled Veteran 4) Work Not Performed by Small Business
Recent SBIR Criminal Fraud Cases U.S. v. Frost, September 12, 1997, 6th Circuit, 125 F.3d 346 (Traded degree for contract - conviction) U.S. v. Kashani, December 18, 2013, 2013 WL 6671672 (Criminal order of deferral) U.S. v. Anghaie, January 13, 2015, N.D. Florida, 2015 WL 163046 (Florida Professor conviction) U.S. v. Aldissi, January 23, 2015, M.D. Florida, 2015 WL 1268282 (Criminal conviction) U.S. v. Thomspon, May 28, 2015, D. South Dakota, 2015 WL 3440858 (Conviction) Recent Indictments Integrated Micro Sensors, April 28, 2014, S.D. Texas (Two University professors indicted for false statements and wire fraud) Arklight, February 4, 2015, E.D. Pennsylvania (Indictment for wire fraud, using university resources, company not real)
SBIR Civil Fraud Cases U.S. ex rel. Longhi v. Lithium Power Technologies, Inc., 530 F. Supp. 2d 888 (S.D. Tex. 2008) aff'd sub nom. U.S. ex rel. Longhi v. U.S., 575 F.3d 458 (5th Cir. 2009) (Qui Tam case) U.S. ex rel. Klein v. Omeros Corp., 897 F.Supp.2d 1058 (W.D. Wash. 2012) (Qui Tam case, size issues) Siebert v. Gene Sec. Network, Inc., 2013 WL 3052882 (N.D. Cal. June 17, 2013) (Qui Tam case, no Government, accounting misrepresentation) U.S. ex rel. Samandi v. Materials and Electrochemical Research Corp., CV-05-0124-TUC-DCB, (D. Ariz. 2011) (Qui Tam, Government lost before a Jury) Night Vision Corp. v. U.S., 469 F.3d 1369 (Fed. Cir. 2006) (SBTC Amicus Brief)
Recent SBIR Civil Settlements Thermacore, Inc., October 20, 2014 - $965,000 to settle allegations of duplicative SBIR award submissions nLight Photonics, April 21, 2015 - $420,000 to settle allegations of improper certification that business ownership was compliant with SBIR rules. Sand 9, Inc, May 14, 2015 - $625,000 to settle False Claims Act allegations of misrepresenting timekeeping and accounting.
Relator Teytelboym received %22 of the recovery or $250,000
USA, ex rel. Moisey Teytelboym, Ph.D. v. M.L Energia, Inc. and Moshe Lavid, Ph.D. Duplication of Research - 31 Duplicative Contracts - 41 Duplicative Proposals - 43 Duplicative Reports - 44 False Statements Concerning Commercialization - 47 PI not employed by company- 54 False Statements to DCAA - 63
Payments to Consultants/Subcontractors (direct expenses) - 65 Inflated Overhead Costs - 74 Personal Expenses in Company Overhead - 77 University Subcontracting- 78
How to Avoid the Problem? 1. Buy Director and Officer Insurance 2. Be Honest and use funds as intended 3. Check EVERYTHING in every proposal for accuracy 4. Make sure your employees, including scientists, are educated on the importance of being completely accurate 5. Make sure that your proposals state clearly what is different from other proposal 6. Deal with employee relations carefully
Department of the Navy Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Phase III Guidebook Phase III Guidance for Program Managers and Deputy Program Managers, Procuring and Administrative Contracting Officers, and Small Business Professionals on Using the SBIR/STTR Phase III Vehicle to Realize Mission Objectives, Program Requirements and Small Business Goals Deputy Assistant Secretary of the Navy for Research Development Test and Evaluation (RDT&E) Mr. Nickolas H. Guertin, Director for Transformation Department of the Navy SBIR and STTR Programs Office Mr. John R. Williams, Director Secretary of the Navy, Office of Small Business Programs Mr. Se n F. Crean, Director Mr. Bradley D. Taylor, SBIR/STTR Liaison
