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Scott Roybal is the Practice Group Leader of the Government Contracts, Investigations & International Trade Practice Group.

Whistleblowers are a common character in investigations into governmental abuse.  They famously have exposed covert government surveillance programs, political corruption scandals, and even led to the impeachment of the president of the United States.  Some statutes also empower whistleblowers to bring claims against private businesses on behalf of the government for financial misconduct involving fraud, waste, and abuse.  In the wake of the COVID-19 pandemic, we expect to see a surge of new whistleblower claims alleging misconduct under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  Whistleblower claims could be detrimental or even fatal for businesses already struggling to recover from the economic impact of COVID-19.  Now more than ever, businesses must understand the risks and prepare for the inevitable emergence of whistleblowers to protect themselves from future claims.  
Continue Reading Prepare for a Perfect Storm of COVID-19 Whistleblower Claims

The devastating economic impact of the COVID-19 pandemic already has set in, with the future of thousands of businesses hanging in the balance.  Big and small businesses alike are finding it difficult to cope with the downturn.  The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provisions related to small business loans provide a glimmer of hope.  Among other forms of economic relief, the CARES Act created the $349 billion Paycheck Protection Program (“PPP”) to provide funding to assist small businesses impacted by the pandemic.  After the initial allocation of PPP funds was exhausted the President signed a bill providing an additional $484 billion in relief, including $310 billion for the PPP, on April 24, 2020[1].  It may turn out for some businesses, however, that these provisions will be nothing more than fool’s gold.  The U.S. Small Business Administration (“SBA”) loan programs, including the PPP under the CARES Act, only are available to qualifying businesses that strictly comply with complex rules related to the size of the business, including its employee count, financial condition, affiliations, control and ownership, and industry classifications.  Businesses that reflexively jumped at the SBA money grab without discipline or compliance are at risk of aggressive government enforcement that surely will follow.
Continue Reading Small Business Money Grab Under the CARES Act Brings Enforcement Risks

COVID-19 took the world by surprise and continues to spread across the globe in more than 210 countries and counting.  The outbreak in the United States escalated rapidly, with over 585,000 confirmed cases as of April 14, 2020.  The federal government and a number of hard-hit states were caught off guard, and soon learned that their inventories of personal protective equipment (“PPE”) and other life-saving equipment such as test kits and ventilators were insufficient to keep pace with the pandemic.  The demand for equipment to fight COVID-19 skyrocketed and government and commercial entities have shifted into high gear to respond.  Whether motivated by humanitarian concern or commercial enterprise, many state and local governments, companies and individuals are now looking abroad to procure critical supplies on an expedited basis.  At the same time, many foreign industrial manufacturers are positioning themselves for the high demand of exports by adapting their facilities to produce PPE.  For example, Chinese electric car maker BYD announced on March 13, 2020 it is now the largest face mask factory in the world—less than one month after converting its facilities in response to the pandemic.  In the midst of these exigent circumstances, the global supply chain landscape is replete with Foreign Corrupt Practices Act landmines—and well-intentioned companies hoping to partner with foreign PPE manufacturers could become a casualty if they don’t watch their step.
Continue Reading FCPA Landmines Beneath the Surface of the COVID-19 Crisis

There is more than $2 trillion on the line and the multi-trillion-dollar question is: Who’s minding the store?  On March 27, 2020, in response to the financial set-back created by the novel COVID-19 pandemic, President Trump signed into law the more than $2 trillion Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) – by far the largest economic relief package in U.S. history.[1]  The CARES Act’s purpose is to keep the U.S. economy afloat and provide relief to struggling Americans, large corporate sectors, and small businesses while the nation battles this pandemic.  With $500 billion allocated for big corporations, $377 billion for small businesses, and another $153.5 billion for healthcare, these relief moneys (like with most government funds) are sure to come with strings attached in the form of complex regulations and substantial oversight, with enforcement not far behind.
Continue Reading The CARES Act – Who’s Minding the Store?

Introduction

Federal and state governments are ready to roll out over one trillion dollars in funding in response to the novel coronavirus (COVID-19) pandemic.  As past is often prologue, we expect this new round of massive government spending to someday be subjected to strict government oversight, targeted audits and investigations, and whistleblowers all searching for potential fraud, waste and abuse.  Economic downturns and the unfortunate necessity of layoffs may also lead to an increased risk of whistleblower claims by former employees.  Flooding the healthcare industry and other negatively impacted industry streams with hundreds of billions in aid will no doubt prove too tempting for the ever-present fraudsters in society who are always looking to take advantage.  As we have learned from past crises, however, when government enforcement eventually gets around to casting its False Claims Act (FCA) nets far and wide in search of potential fraud and abuse, many unwary businesses may be ensnared along with the usual fraudsters because of their sloppy or reckless practices. Deficient practices today could trigger an FCA investigation or enforcement action tomorrow along with all of its draconian treble damages and penalties.  This article details the risks businesses face under the FCA when responding to COVID-19, and provides guidance on how to guard against them now.


Continue Reading Guard Against False Claims as Massive Government Spending Rolls Out to Combat COVID-19

We previously reported on the viability of the “implied certification” theory of FCA liability based on oral argument before the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar.  We concluded that the theory—under which a claim for payment can be false without an express certification, but because the government contractor has not complied with an applicable statute, regulation, or contractual provision—did not appear to be headed for extinction.  It turns out we were right.
Continue Reading FCA’s “Implied Certification” Theory Survives

Last week’s argument before the Supreme Court in Universal Health Services, Inc. v. United States ex rel. Escobar had the potential to put false claims based on an “implied certification” in the crosshairs. Instead, based on the weight of questioning by a plurality of justices, it appears that some form of implied certification theory may survive. (We previously reported on this case, here.)
Continue Reading Did the FCA’s “Implied Certification” Theory Dodge a Bullet?

The Inspector General Act of 1978 aimed to “consolidate existing auditing and investigative resources to more effectively combat fraud, abuse, waste and mismanagement in the programs and operations of [the executive branch].” To fulfill this mandate, the Act created the Offices of Inspector General (“OIG”) in various executive departments and agencies, including the Department of Defense (“DOD”), and authorized them to conduct and supervise audits and investigations to prevent and detect fraud, waste, and abuse. The DOD OIG’s primary investigative weapon has been the subpoena. More recently, however, the DOD OIG has subtly expanded its investigative arsenal by calling upon the Defense Contract Audit Agency (“DCAA”) to step up its fraud inquiries and by conducting more “Quality Assessments” and “Audits” without sounding the warning shot of the subpoena.
Continue Reading OIG Investigations (Without Subpoena Bells and Whistles) Coming to a Program Near You