Most qui tam cases involve Medicaid and Medicare fraud and defense contractor fraud. But fraud also occurs in other areas where the government spends hundreds of billions of dollars annually on goods and services. Qui tam lawsuits can be filed against companies that are cheating the government by failing to provide the government with the "best price" for goods and services in Multiple Award Schedule contracts with the General Services Administration, overcharging the government in public works projects and federal government construction projects and defrauding the government in many other ways.

For instance, Bechtel and its partner in a joint venture, Parsons Brinckerhoff, paid $407 million to settle criminal charges and a qui tam lawsuit for their work on the massive "Big Dig" construction project in Boston, Massachusetts.

Some of the areas where fraud might occur and could be the basis of a False Claims Act case are:

• Multiple Award Schedule contracts with the General Services Administration
• Public works projects and federal government construction
• Research programs
• Customs
• Environmental programs
• Loan guarantees
• Underpayment of royalties on government-leased land
• Agricultural subsidies and other agricultural programs
• Municipal bonds ("yield-burning")

News articles about Phillips & Cohen cases involving other types of fraud

Public works projects and federal government construction

The federal government spends billions on public works projects and construction of federal buildings. Fraudulent practices by contractors include bid-rigging, overcharging for contracts and failing to follow project specifications. All of those practices could be the basis of a qui tam lawsuit brought under the False Claims Act.

In the Bechtel/Parsons Brinckerhoff qui tam case over the "Big Dig" construction project in Boston, Bechtel/Parson Brinckerhoff admitted that it had violated the terms of its contract and failed to properly oversee the safe and proper contruction of the Big Dig project. For instance, Bechtel/Parsons Brinckerhoff certified the I-90 connector tunnel's safety and proper construction when it knew expoxy bolts were failing to withstand the load of the ceiling panels. The collapse of that tunnel's ceiling killed a woman in a car in 2006. Bechtel/Parsons Brinckerhoff paid $407 million and smaller contractors on the Big Dig project paid $51 million to settle the qui tam lawsuit as well as criminal charges. Out of that total $458 million settlement, $23 million went to the federal government to settle the qui tam case and $40 million went to the state of Massachusetts under its false claims law.

In an unrelated case, a construction company hired to build Army barracks settled a qui tam lawsuit that charged it did not follow contract plans and specifications, failed to report substantial construction defects and engaged in a cover-up to hide the problems.

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Research programs

The federal government provides grants for research on a wide variety of topics. Sometimes grant recipients use the funds to pay for salaries or expenses for another research project or other work then charge those costs off on the federal grant or inflate their costs for conducting research projects.

At academic medical centers, federal payments for research overhead, called indirect payments, total tens of millions of dollars a year. The government and the medical center determine a reasonable overhead rate for the hospital, then the government agrees to mark up each research grant by a fixed rate for the next year to cover incidental expenses. This usually includes items like heat and electricity bills and housekeeping for the part of the hospital used for the research, and sometimes even mortgage payments for lab buildings.

One of the largest qui tam settlements involving a research grant was against New York University Medical Center, which paid $15.5 million to the federal government. The government said the medical center provided a "false, inaccurate and incomplete picture" of its overhead costs for research projects. The center allegedly gave the government waste disposal bills that were already paid by other sources, inflated housekeeping bills and counted as overhead unrelated items, such as food for the medical school commencement dinner.

NYSERNet.Net Inc., a nonprofit consortium of New York universities, paid the federal government $1.4 million to settle a whistleblower lawsuit brought by a Phillips & Cohen client that charged it was secretly passing on grant money from the National Science Foundation to AppliedTheory Communications, a related for-profit corporation; disregarded the competitive selection process required by federal grant conditions; and rigged its bidding process to award lucrative contracts for services specified in the grant to AppliedTheory, according to the lawsuit. In another violation of grant conditions, NYSERNet sold assets developed and produced with federal grant awards and failed to disclose the proceeds as program income in its audit reports or use the program income in compliance with the grant conditions, the lawsuit said.

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Customs

Most goods imported into the U.S. are subject to customs duties. Companies that undervalue imports to lower the amount of customs duties they have to pay or who underpay customs duties through other fraudulent schemes are liable under the False Claims Act.

Environmental programs

The federal government spends substantial sums on programs to clean up hazardous and toxic waste. It also requires contractors to follow all environmental laws and regulations, such as the Clean Water Act. Any contractor that deliberately overcharges the government for hazardous and toxic waste clean-up, gets paid by the government for work that it doesn't perform or whose service doesn't meet government specifications would be liable under the False Claims Act.

For instance, an environmental testing firm settled a qui tam lawsuit that charged the firm had failed to properly test the level of hazardous substances in soil and water samples as required under contracts with the Army Corps of Engineers.

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Loan guarantees

The federal government has many loan guarantee programs, including loans for education, housing and small businesses. If the loan is not repaid and fraudulent misrepresentation was made to obtain these loan guarantees, then there might be a sufficient basis for a False Claims Act lawsuit.

A cosmetology school and its owners paid $2 million to settle a qui tam case alleging false statements and certifications that the vocational school met all statutory and regulatory requirements to participate in the Guaranteed Student Loan and Pell Grant programs. According to the lawsuit, the school falsified time cards, attendance records and academic records to make it appear as though students were attending classes and maintaining satisfactory progress to qualify for the federal financial assistance.

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Underpayment of royalties on government-leased land

Oil and gas production on federal and Indian lands are governed by lease agreements between the Interior Department and private companies. By law, the companies must pay the federal government and Indian tribes a percentage of the value of the oil and gas as a royalty. Companies also must pay royalties on any timber harvested or minerals such as coal mined from federal and Indian lands.

Major oil companies have paid more than $500 million to the federal government to settle qui tam cases alleging they knowingly undervalued oil extracted from public and Indian lands to reduce the royalties they had to pay.

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Agricultural subsidies and other agricultural programs

The False Claims Act also applies to any fraudulent misrepresentation or scheme to obtain agricultural subsidies or funds from other agricultural programs.

A major U.S. grain company paid $25 million to resolve a False Claims Act case that involved sales of agricultural products to Iraq through a foreign company participating in a Department of Agriculture program for exporters of agricultural products.

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Municipal bonds ("yield-burning")

In the municipal bond market, some investment banking firms engaged in fraudulent schemes known as "yield-burning," where they charged excessive prices for U.S. Treasury securities sold to municipalities in connection with certain types of tax-exempt bond refinancings.

These refinancing transactions -- known as "advance refundings" -- permitted municipalities to refinance their debt at lower interest rates when interest rates decline, and therefore lower their borrowing costs.

More than two dozen Wall Street investment banking firms - including Goldman Sachs & Co., Paine Webber Inc., Prudential Securities Inc. and Merrill Lynch Pierce Fenner & Smith Inc. - paid more than $200 million to settle a qui tam lawsuit brought by former investment banker Michael Lissack and related federal and state charges for yield burning. Lissack, represented by Phillips & Cohen, first exposed the Wall Street practice of yield burning, which the government had not known was being done.

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