False Statements in Federal Grant Applications Present a Risk of Significant Financial Exposure to Grant Recipients

Two federal appellate courts have upheld awards of damages under the civil False Claims Act (FCA) (31 U.S.C. 3729) equal to three times the total amount of money paid under federal grants (US ex rel Longhi v US); US ex rel Feldman v van Gorp).
Longhi involved false statements made in connection with proposals for four Small Business Innovation Research grants, including false statements regarding the grantee’s key personnel, facilities and equipment, and prior experience. Feldman involved false statements made in connection with three renewal applications submitted under the National Institutes of Health’s T-32 grant program for certain pre- and post-doctoral training, including false statements in those applications regarding the fellowship program’s curriculum, resources, faculty, and training.

The damages awards in both cases were based on the theory that, unlike a procurement contract, a grant agreement does not result in a “tangible benefit” to the government, but rather provides either an “intangible benefit” to the government or a benefit to a third party, such as the research the fellows performed in Feldman. Accordingly, the courts found that the full amount paid to the recipients under the grants was an appropriate measure of FCA damages. Both cases were initiated by private parties (a former employee in Longhi and a former post-doctoral fellow in Feldman) under the qui tam provisions of the FCA.

This post was written by:
Thomas P. Barletta 
TBarletta@steptoe.com

Steptoe & Johnson LLP
1330 Connecticut Avenue, NW
Washington, DC 20036

202.429.8058 direct
703.593.5930 mobile
202.261.0551 fax

The views expressed in this article are those of the author and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.