False Statement or Record: U.S.C. Section 3729(a)(1)(B)

Violations of 31 U.S.C. section 3729(a)(1)(B) encompass virtually all types of False Claims Act cases and are almost always paired with violations of 3729(a)(1)(A) for presenting a false claim.

A person violates section 3729(a)(1)(B) when he or she “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.”

Making a Material False Record or Statement

A person “knowingly makes…, a false record or statement material to a false or fraudulent claim” when he or she:

  1. Creates and a record or statement that he knows is false, and;
  2. The false record or statement is material to the government’s decision to pay a claim.

This is the most straightforward type of false statement case. To violate this subsection, a person need only make a false statement or record that could influence the government’s decision to pay a false claim.

A contractor who knowingly creates time sheets that are inaccurate in order to support a false claim to the government has knowingly made a false record material to the government’s decision to pay a claim. Similarly, a contractor who certifies to the government that charges listed on an invoice are accurate, when he or she knows that they are actually inflated, has knowingly made a material false statement. Cases of filing false time sheets can not only result in civil penalties, they can result in criminal charges and, if convicted, incarceration.

Using a Material False Record or Statement

A person “knowingly… uses…, a false record or statement material to a false or fraudulent claim” when he:

  1. Obtains a statement or record he knows is false, but that was made by someone else;
  2. Transmits that false statement or record to the government, and;
  3. The false statement is material to the government’s decision to pay a claim.

This type of violation occurs when a person knowingly takes advantage of a false statement or record made by someone else. This often happens when a contractor relies on statements made by some third party to justify a particular claim. For example, suppose an equipment manufacturer creates a report stating that one of its products meets all government safety specifications, which the manufacturer knows is untrue. If a government contractor knew that this report was false, but purchased some of these products, and then used the manufacturer’s report to support a claim for payment to the government, the contractor would have knowingly used a material false record.

Causing a Material False Record or Statement to be Made or Used

A person “knowingly… causes to be made or used, a false record or statement material to a false or fraudulent claim” when he:

  1. Does something that causes someone else make or use a statement or record that he or she knows to be false;
  2. The other person transmits that false statement or record to the government, and;
  3. The false statement is material to the government’s decision to pay a claim.

This type of violation occurs when a person engages in conduct that causes someone else to make or use a false record or statement. For example, If a general contractor certifies to the government that all of the materials used in the construction of a building or structure had met certain safety standards, when one of his subcontractors actually used an unsafe material, the subcontractor has caused the general contractor to make a false statement.

If the subcontractor had explicitly certified to the general contractor that it had used approved materials, and the general contractor presented that certification to the government, then the subcontractor would have caused the general contractor to use a false statement.

In either of these examples, if the general contractor was unaware that the subcontractor had used unsafe materials, the general contractor would not have violated the FCA and would have no liability for the false statements that it made or used. However, the subcontractor would be liable.

To Violate the FCA, False Records or Statements must be Material

In order for a false record or statement to violate the False Claims Act, it must be material to one or more false claims that have been presented to the government. If a contractor creates false time sheets intending to use them to double bill the government, but then has a change of heart and does not actually present the false claim, no violation of the False Claims Act has occurred. Similarly, if a company creates false time sheets and uses them to overcharge a non-governmental clients, no violation of the False Claims Act has occurred.

No Actual Damages are Necessary to Violate the False Claims Act

Regardless of the type of 3729(a)(1)(B) violation, the conduct that triggers liability is the presentation of a false claim to the government. It does not matter whether the government actually pays that false claim, the fact that it was presented is enough. Of course, if the government did not actually pay any money, then a person’s liability is likely limited to civil penalties and a large collection will be virtually impossible.

Liability for Making, Using, or Causing a False Record or Statement

A person who knowingly makes or uses a false record or statement, or knowingly causes a false record or statement to be made or used, is liable for three times the amount paid by the United States on any false claims to which those false records or statements are material. That person is also liable for civil penalties of between $5,500 and $11,000 for each false claim.