Defense Contractor False Certification Claim Lawsuits

Common Types of Defense Contractor Fraud and False Certifications that Lead to False Claims Act Lawsuits

Defense contractor fraud is a common way that government contractors defraud the United States Government and taxpayers out of large amounts of money. Many whistle blowers have been successful in blowing the whistle on fraudulent defense contractors to reveal fraud schemes that put our troops in danger and steal money from the United States. Under False Claims Act litigation billions of dollars are regained from these fraudulent defense contractors. Some common ways defense contractors cheat the government are False Certification of Product Quality, Product Substitution, Cross Charging, False Certification of Services Provided, Charging for Services or Goods not provided, and Violations of the Truth-in-Negotiations Act ("TINA"), and Improper Cost Allocation.

False Certification of Product Quality commonly occurs after a product has been approved for mass production. The original prototypes of a product are typically created with high quality materials and parts including strong metals, seals, plastics, and components. However, after the original prototypes have been tested and approved, some defense contractors use inferior parts and materials to lower costs that make weapons, ships, vehicles, computers, electronics, and other military goods less reliable, weaker, and more prone to not work when needed. The defense contractor that provides a false certification of a product's quality has committed a false certification that may subject the defense contractor to a False Certification of Product Quality False Claims Act Law Suit.

The Defense of Department often requires its contractors to build weapons systems in accordance with very detailed product specifications because quality and reliability are critical with weapons systems and other military equipment. Failure to comply with these specifications and falsely certifying that these specifications were met can cause death and place our troops in danger. As such it is extremely important that appropriate quality assurance steps are taken in building or producing weapons systems and other military equipment and that a defense contractor's certification of compliance with these specifications can be trusted.

Similar to False Certification of Product Quality Qui Tam Claims are Product Substitution False Claims. These claims occur when a Defense Contractor that is under a government contract that specifies that the defense contractor build products using a certain grade, quality of parts, or materials & parts from American companies, fails to comply with the contract. These Defense Contractors often decide it is more profitable to use or substitute inferior parts or parts not made by American companies. Defense Contractors that use inferior parts or parts not made by American Companies as required by their government contract may be subject to a Product Substitution False Claim Act Law Suit.

Cross-Charging occurs when a Defense Contractor has a fixed-price contract, where the company receives a fixed price for a certain number of weapons no matter how much it costs to produce them and another that is a "cost-plus" contract, where the government pays the company for the cost of making the weapons, plus a percentage of its costs as a profit. In this circumstance the Defense Contractor has an economic incentive to charge the time it spends working on the fixed-price contract (where it gets paid the same no matter how much time it takes) to the cost-plus contract (where it gets paid for its costs plus profit). This may be accomplished by instructing employees to write down on their time cards that they worked on the cost-plus contract when they actually worked on the fixed-price contract. A Defense Contractor that charges fixed price work on a cost-plus contract is creating false claims or false certifications that may subject them to a Cross-Charging False Claims Act Law Suit.

Improper cost allocation false claims are a more subtle version of the cross-charging scheme. In this type of false claim, a defense contractor with government contracts and private commercial contracts fails to spread or allocate their costs fairly among the different jobs. These types of false claims are typically more difficult to detect as the defense contract usually tries to hide the misallocation in indirect costs or bury the misallocations in hard to interpret records. These improper allocation false claims are more common in large contracts where the product has military uses and private uses such as with large aircraft companies. Defense Contractors that deliberately allocate a disproportionate share of indirect or overhead costs to the government for the purpose on increasing there profits may cause themselves to be subject to Improper Allocation False Claims Law Suits, if the correct whistle blower reports the fraud.

When the government wants to purchase highly specialized weapons, military services, or other military equipment, it often is limited to one potential defense contractor because of the specialized need. This limited supply often creates monopoly power in the "sole-source supplier". This creates a problem in making sure that the sole-source supplier does not over charge the government for the good or services that it is supplying to the government. The Truth In Negotiation Act (TINA) requires the Defense Contractor to truthfully disclose all relevant information about its costs to the government in sole-source contract negotiations. Defense Contractors that submit false cost and pricing data to the Defense Department or failure of a sole-source Defense Contractor to provide accurate cost information to intentionally inflate costs to increase profits can cause liability for a violation of the Truth In Negotiation Act and result in a Truth In Negotiation Act Violation False Claims Act Law Suit.

Qui Tam Defense Contractor False Certification Claim Lawsuits, Defense Contractor Fraud Lawsuit Lawyers, and Other Qui Tam Claim Lawsuits

For more information on Qui Tam Claim Lawsuits and Qui Tam False Certification Lawyers, click on the following links: defense contractor false certification claim lawsuits, health care provider claim lawsuits, financial institute claim lawsuits, or other large contractor or subcontractor claim lawsuits.

Unlawful Medicare and Medicaid Referrals Under Stark Statute

In 1989, the United States Congress enacted the Stark statute which made it illegal for physicians to make self-referrals and prevented physicians from referring Medicare or Medicaid patients for certain designated health services to any entity with which the physician has a financial interest. The purpose of this law was to remove economic incentives that may encourage some physicians to make self-referrals or to refer certain designated health services to entities in which the physician has a financial interest, instead of referrals based on a patient's health and well being.

Stark Violation Claims and Stark Violation Lawsuits

Stark violations occur when a physician (as defined by Medicare) unlawfully refers Medicare or Medicaid patients to an entity in which the physician or the physician's immediate family has a financial interest. In these situations the physician is usually making these referrals for the purpose of the physician's own financial gain and is not working in the best interest of their patients. Repeated violations of the Stark Statute can create substantial wealth for self referring doctors and can cost tax payers millions, tens of millions, or even hundreds of millions of dollars. These violations can also be hard to detect by the government and patients. For this reason it is often health care administrators, hospital administrators, benefit coordinators, accountants, and other health care professionals that are able to discover fraudulent referral practices and blow the whistle on the unlawful practice.

Violations of the Stark Statute can result in both criminal and civil penalties for the self referring doctor as well as others benefiting from the fraudulent referral practices. Whistle blowers that properly blow the whistle on these unlawful referrals can not only regain large amounts of money for the United States government, saving tax payers millions of dollars that the physician and/or the entity have taken from the federal government, but the whistle blower can also collect a percentage of this recovery as compensation for bringing a Federal False Claim Act lawsuit that reveals these fraudulent referral practices.

The History and Evolution of the Stark Statute

The Stark Statute is named after California Representative Pete Stark who authored this legislation to prevent fraudulent referral practices that compromised the health of patients, cost the government billions of dollars, and made unethical doctors rich at the expense of patients and taxpayers. Congressman Pete Stark first proposed the Federal physician anti self-referral law in 1988, and what became known as "Stark I" was enacted by the Congress in 1989. At the same time Congress overhauled Medicare's physician payment program and adopted the Resource-Based Relative Value Scale (RBRVS) which is a system used to determine how much money medical providers should be paid by Medicare. The Stark I law initially applied only to clinical laboratory services and became effective with the Medicare fee schedule on January 1, 1992. The Health Care Financing Administration proposed implementing regulations for Stark I in March of 1992, and these rules were finalized on August 14, 1995. They have been codified at 42 C.F.R. 411.350 et seq.

In 1993, Medicare and Medicaid amendments were enacted by Congress that significantly expanded the Stark law to cover a long list of designated health services in addition to clinical lab services. These amendments added the referral prohibition to additional designated health services including: inpatient and outpatient hospital services; physical therapy; occupational therapy; radiology; radiation therapy (services and supplies); durable medical equipment and supplies; parenteral and enteral nutrients (equipment and supplies); prosthetics, orthotics and prosthetic devices and supplies; outpatient prescription drugs; and home health services. These amendments, which became effective January 1, 1995, became known as "Stark II."

Medicare and Medicaid Referral Violation Law Suits
(Qui Tam Law Suits)

Through Whistle Blower Lawsuits, Qui Tam Lawsuits, and other Health Care Fraud Lawsuits, hundreds of billions of dollars have been recovered from individuals and organizations that have committed health care fraud and stolen large amounts of money from the government. For more information on Stark Statute Violations and Medicare or Medicaid Referral Violation Law Suit, please go to the following web page on Medicare and Medicaid Referral Fraud Stark Violation Law Suits.