The False Claims Act is commonly thought of as a mechanism to enforce state and federal healthcare laws. Indeed, in today’s enforcement environment, the majority of FCA actions do involve claims against healthcare providers for alleged violations of the Anti-Kickback Statute, Stark, or other laws aimed primarily at curbing healthcare fraud. It is important to remember, however, that the FCA can be used as a tool against any person or entity that receives money from the federal government, regardless of industry. In fact, in fiscal year 2014, more than half of the Department of Justice’s total recoveries came from banks and other financial institutions involved in making false claims for federally insured mortgages and loans. 

The far-reaching application of the FCA to industries outside the healthcare arena receives renewed focus this week with news that Education Management Corporation (“EDMC”) – the second-largest for-profit education company in the United States – has reached a settlement with DOJ in a long-running FCA lawsuit involving allegations that EDMC unlawfully recruited students in violation of Title IV of the Higher Education Act and parallel state statutes. The $95.5 million settlement is the largest ever in an FCA suit involving the Department of Education. The global settlement resolves four separate FCA lawsuits filed in federal courts in Pennsylvania and Tennessee and additional investigations under the consumer protection laws of 39 states and the District of Columbia concerning allegations that EDMC engaged in deceptive and misleading recruiting practices. The case is United States ex rel. Lynntoya Washington v. Education Management LLC et al., Civil Action No. 07-461 (W.D. Pa.).

Thus, while the lion’s share of attention generated by the FCA has its roots in healthcare, it is safe to assume that federal and state governments will continue to utilize the FCA in a wide array of fields to ensure compliance with the rules and regulations governing the receipt of federal funds. Given the extraordinary sums that DOJ has recouped in FCA actions in recent years from defense and other government contractors, technology and software companies, and, now, for-profit education providers, it would be foolish for any company that does business with the federal government to believe the FCA is not something it needs to worry about. 

A copy of DOJ’s announcement of the EDMC settlement can be found here.