False Claims Act

The Civil False Claims Act (FCA) has become a pervasive and powerful tool by the US Government and by private whistleblower (qui tam) plaintiffs to litigate a wide spectrum of alleged frauds committed in the course of performing government contracts and federal assistance grants.  More than ever, given powerful financial incentives, federal contractors and grantees face the risk that private plaintiffs will allege violations of the FCA on behalf of the United States and claim significant damages and penalties based on the FCA’s remedies for treble damages and statutory penalties per claim. 

Steptoe’s Government Contracts Group has substantial experience representing and defending federal contractors and grantees from a wide variety of industries and individuals, in responding to alleged FCA claims asserted by the Government or private qui tam plaintiffs.  This experience includes assisting clients in government investigations and audits of alleged false claims and other procurement fraud, representing clients in pre-intervention settlement discussions with the Department of Justice, and defending clients in litigation against FCA claims.  Our experience also includes conducting internal investigations on suspected FCA violations and counseling our clients in evaluating and making disclosures under the FAR’s Contractor Code of Business Ethics and Conduct regulations at FAR Subpart 3.10 and FAR clause 52.203-13.

Steptoe has achieved substantial success on behalf of its clients in resolving or settling FCA matters without litigation.  Where matters cannot be resolved through settlement, Steptoe is equipped to vigorously litigate FCA claims on behalf of our clients.  In defending our clients against FCA allegations, our Government Contracts Practice also works with Steptoe’s premier White-Collar Criminal Defense Practice, combining Steptoe’s specialized knowledge of government contracts law with a team of lawyers with extensive trial experience, including many former federal prosecutors.  

Representative Matters

  • Steptoe represented a technology company in an internal investigation and in pre-intervention settlement negotiations of FCA violations alleged by the US Attorneys’ Office.  This matter resulted in a settlement before intervention by the Government.
  • United States ex rel. Cafasso v. General Dynamics C4 Systems, Inc., No CV06-1381PHXNVW (D. Ariz. 2009), aff’d by, 637 F.3d 1047 (9th Cir. Mar 24, 2011).   Steptoe successfully defended General Dynamics against a qui tam action filed by a former employee alleging, among other things, that General Dynamics defrauded the government by withholding disclosure of new inventions and that the company retaliated against the plaintiff.  The US District Court for Arizona held that the Plaintiff failed as a matter of law to assert violations of the FCA and the Court of Appeals for the Ninth Circuit affirmed this ruling, finding that the plaintiff failed to allege a false claim and that none of the plaintiff’s allegations “are cognizable under the [FCA].” 
  • Steptoe conducted an internal investigation for a government contractor in the aerospace industry relating to potential subcontractor defective pricing under a federal government prime contract and potential subcontractor violations of the civil FCA.  Steptoe also assisted the client in making a disclosure to the agency. 
  • Steptoe assisted a different aerospace defense contractor’s response to a DoD investigation into the company’s representations in proposals leading to the award of several government contracts.  The government’s concerns relate to representations made by the client in cost or pricing data provided to the government.
  • Steptoe represented individual employees of a drug manufacturer in connection with allegations of off-label marketing and the submission of false claims under Medicare, including preparation for interviews by the US Attorneys’ Office and testimony before the grand jury.
  • Steptoe lawyers defended one of the country's principal defense contractors in serial government criminal, administrative and civil investigations growing out of a qui tam complaint about the provision of countermeasures used on the B-1 Bomber an F-15 Fighter.  Once unsealed, the relator's claims were dismissed, but other issues arising from the government investigation led the government to intervene to pursue other claims.  Ultimately, three grand juries failed to return indictments against the company or any individuals, the administrative investigation was abandoned, and the civil claims were settled favorably.
  • Steptoe lawyers advised the independent directors of a major health care company during federal investigations of its billing practices and three civil False Claims Act suits, followed by shareholder derivative litigation, targeted at the Board's conduct.  Following an intensive independent investigation, the Board's conduct was validated, the company settled the qui tam litigation, and the Board adopted new governance procedures to oversee the compliance function.

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