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Fraud During the Time of the Coronavirus

The National Whistleblowers Center has already called for a special coronavirus Committee in the Department of Justice and the DoJ has also claimed it would prosecute fraudsters related to COVID-19.  

I think what we also need to do is lay down our markers now, for what constitutes fraud.  A lot of money is about to go out the door and we should be glad that if it goes to help that is what it is meant to do.  Still, we have to say now what we will go after. We need to build support and constantly remind everyone that fraud is not acceptable even in an emergency, and maybe especially in an emergency. Otherwise, this will be a trillion-dollar opportunity for ripping the rest of us off.

We have seen major government mobilizations before, only to have contractors, both big and small, use any and every excuse they can both to claim what was obviously fraud was not and to find new ways to hide the evidence of their malfeasance. So we need to remind everyone that whistleblower protections matter or you will never learn the truth. 

If you determine that government resources have some limits even in a national emergency, then you cannot countenance fraud.  This does require the government to think about it and maybe the plaintiff’s bar to remind them to do so. Back in the day, when there were reports of money being dropped from airplanes by the United States, wise lawyers knew there was no way to bring such a case under the False Claims Act. If the United States is determined to waste money, it is difficult to prosecute fraud. 

This is exactly why we need to call on the U.S. to remember this problem. It may be as simple as remembering to put in the contract, what it is there are buying.  

Yes, we need to be a little reasonable about all of this.

Of course, if the U.S. needs to order a billion dollars of face masks to be delivered to the Mass General Hospital overnight, and even if that exceeds the masks actually used, nobody cares. We want the front lines in this emergency to have what they need, in fact, want them to have much more than what they need, so they can be sure to be able to do their jobs.  

If the company making the masks makes a reasonable profit in supplying them, it is a good thing. That’s right, it’s good when companies do an honest job for the United States and for us to make a reasonable return on their investment. Meaning that the good companies will succeed.

However, if a company assures the Mass General and the Government that it’s masks approaches the standard of mask that is needed, when they know their mask is nothing like that is needed, that’s fraud. 

Multiply that by everything in the supply chain and you see where the potential for fraud is. Hospitals are going to be desperate to get what they need, taking advantage of them is not acceptable. If there is a bailout of an industry, and that industry is supposed to keep its employees on the payroll in exchange for that money, and they do not, that is fraud as well. 

See the difference? Fraud is no more excusable in an emergency than it is at any other time. In fact, you could argue that since the consequences of fraud are life or death in an emergency less excusable. 

We have heard for years, with respect to Iraq, Afghanistan and other wars, the excuse that oh well it’s a war you can’t really expect them to do X. 

We can and we must. 

The health care workers, like the soldiers on the front lines, don’t really worry too much about a contractor making a profit, but they do want the tank or the Jeep, or the face mask to work. They do want the delivery of 1,000 vehicles to be 1,000, not 100. They want the number of masks and the number of test kits to equal what they ordered, if they are supposed to be “new”, they can’t be re-used either.

The False Claims Act was created because scam artists in the apocryphal story sold guns that did not shoot, and mules that were dead to the Union Army. This angered Congress. It was a war, a national emergency if you like then too. Would Abraham Lincoln buy the idea that “there was a virus going on” as an excuse to cover up for fraud? No, he would not. Did he see this law as anti-business? No, he did not.

Neither can we.