Recently announced False Claims Act (FCA) settlements allow government contractors and other FCA defendants to receive compensation from the Department of Justice (DOJ) for voluntary self-disclosure and subsequent cooperation with the government. It shows how policies can be used.
On April 23, 2024, the Department of Justice resolved allegations that contractor Consolidated Nuclear Security, LLC (CNS) “intentionally submitted false applications to the government” based on hours recorded by CNS technicians. announced that it had agreed to pay $18.4 million to do the work, but the CNS technicians did not actually do the work. Cost-type contract with the U.S. Department of Energy (DOE). The most notable aspect of the settlement was that approximately 90% of the settlement amount, or $16.6 million, represented restitution or “single damages.” The FCA stipulates that he should be awarded 3x damages, and the settlement with the Department of Justice would typically result in double damages. However, in this case, rather than applying a 2x multiplier to a single damages amount, the Justice Department agreed to a 1.1x multiplier.
As stated in the settlement agreement, CNS achieved this significant discount by applying the Department of Justice's policy adopted in 2019 to reward voluntary disclosure, cooperation, and remediation in FCA matters. did. CNS voluntarily self-disclosed to the government after it was discovered that the employee had billed the government for hours he had recorded but not actually worked during his six years under the DOE contract. . According to CNS, CNS has since cooperated with the government's investigation and has taken corrective action in the following ways: (1) Dismiss any employee involved in fraudulent time billing. (2) identify and facilitate interviews with individuals who may have relevant information; (3) preserve relevant documents and electronic information to facilitate review by government investigators; (4) provide updated information regarding the financial impact on DOE; (5) Take measures to prevent similar misconduct from occurring again.
In a press release announcing the settlement with CNS, the Department of Justice emphasized the application of its disclosure and cooperation policy, stating that “CNS follows the Department's guidelines for considering disclosure, cooperation, and remediation in False Claims Act litigation. Based on this, he was given credit for the settlement.” The settlement agreement similarly cites the policy in Section 4-4.112 of the Judiciary Manual, stating that “CNS will comply with this policy based on the Department of Justice's Guidelines for Considering Disclosure, Cooperation, and Relief in False Claims Act Litigation. recognized in the settlement.”
Important points
- Unfair dismissal of workers will continue to be a rich source of FCA enforcement action and can result in significant financial losses for contractors due to the FCA's treble damages and per-breach penalty provisions.
- Government contractors and other potential FCA defendants must voluntarily disclose credible evidence of FCA violations and fully cooperate with subsequent government investigations in order to receive full credit under applicable law. However, by taking appropriate corrective actions, financial risks can be significantly reduced in some situations. Department of Justice Policy.
