The False Claims Act (“FCA”) was enacted by Congress in 1863 which provides that any person who knowingly submits false claims to the government is liable for the damages. There is a civil penalty imposed on each false claim, which currently sits anywhere from $5,500 to $11,000 per false claim. One who is liable for violating the FCA can also be liable for treble the amount of the government’s damages. If one has violated the FCA but reports the violations to the government, under certain circumstances, the FCA allows that person to be liable for not less than double damages.
Recently, the United States filed a complaint against Lakeway Regional Medical Center, Surgical Development Partners, and other individuals for violating the FCA by improperly obtaining a loan insured by the Federal Housing Administration (“FHA”) and for impermissibly distributing project funds for the development of Lakeway Regional Medical Center in Lakeway, Texas. The FHA, which is part of the U.S. Department of Housing and Urban Development, provides mortgage insurance on loans made by approved lenders through the U.S. FHA provides lenders with protection against losses if a property owner defaults on their mortgage.
Here, the complaint alleged FHA insured loans used to build hospitals in underserved areas where the defendants participated in a scheme to improperly obtain a FHA-insured loan to build Lakeway hospital. Refunds to investors were allegedly delayed when the investors had canceled their investments to make it appear as if the project met the mortgage covenant requirements regarding cash on hand that was required to close to loan. It was further alleged that the defendants impermissibly distributed project funds for the project. The defendants allegedly applied for federally insured mortgages under false pretenses where they misrepresented facts in order to obtain an FHA insured loan. As a result, a settlement was reached with the defendants for allegedly violating the FCA. The terms of the settlement and any amount received by any whistleblower were not disclosed by the DOJ.
If you have knowledge of fraud being committed by your current or former employer against the government, consider speaking with an attorney today to learn your rights. Josh Borsellino is an experienced FCA attorney that understands the laws surrounding the FCA. He offers free consultations and be reached at 817.908.9861 or 432.242.7118.