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Construction Industry News

Local Government Agencies May Be Sued Under the False Claims Act


January 12, 2004


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(A version of this article appears in the Construction Law Digests, published by the West Group.)


By James E. Acret

The False Claims Act provides for civil penalties against “any person” who “knowingly presents… to an officer or employee of the United States government… a false or fraudulent claim for payment or approval.” 31 USC §3729 (a) (1). If the claim succeeds, the defendant is liable to the government for a civil penalty of $5,000 to $10,000 for each violation, treble damages and costs.

Relator filed this qui tam action claiming that Cook County submitted false statements to obtain grant funds to study a treatment regimen for pregnant drug addicts. The county moved to dismiss the action, arguing that it was not a “person.” The 7th U.S. Circuit Court of Appeals held that local governments commonly receive all sorts of federal funding and that Congress intended them to be “persons” subject to the False Claims Act. Cook County, Illinois v. U.S. ex rel. Chandler, 538 U.S. 119, 2003 DJDAR 2775 (7th Cir. 2003).


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