Multinational companies should be alert to legal exposure under the False Claims Act (FCA). The FCA is a civil statute that can be quite damaging to a multinational company for several reasons:

• The FCA has extremely broad applicability, holding liable individuals and companies that make false claims to the government for payment or that conceal an obligation to pay money to the government. As discussed below, this is even broader than it seems.
• The FCA punishes not only “knowing” false statements but also those made with reckless disregard or deliberate ignorance as to their truth or falsity. Companies that should have known better or that took advantage of ambiguous requirements do not get a free pass.
• Each year, the Department of Justice opens investigations into several hundred FCA cases nationwide and recovers billions of dollars collectively in FCA case resolutions.
• The FCA imposes treble damages under which violators are penalized three times the amount of damages and, on top of that, violators owe an additional penalty of up to $27,018, per false claim. (The amount is adjusted annually for inflation.)
• Despite carrying treble damages and extensive penalties, the FCA is a civil statute that only requires proof by a preponderance of evidence (i.e., the more-likely-than-not standard). It does not require a higher burden such as the criminal beyond-a-reasonable-doubt standard.
• The FCA allows private individuals, in addition to the government, to file lawsuits. The individual whistleblower is called a “relator” who, if successful, can receive 10%–30% of the settlement or judgment amount. This bounty incentivizes individuals (often disgruntled employees or former employees) to report conduct they believe could constitute an FCA violation.
• FCA cases often take years for the government to investigate and resolve, diverting company resources and attention. More complex cases begin with years-long, confidential government investigations.

The FCA has a very broad reach. It can apply to anything involving federal funds. The following, non-exhaustive list provides some risk areas and some associated types of conduct that carry risk of FCA scrutiny:

• Trade:
  • Submission of an invoice or receipt that falsely represents a good’s value
  • An incorrect designation of a good’s country of origin