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From page 4... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES This study is a survey of practices used to protect transportation departments against construction contract and DBE fraud. This study will examine the activities of states and federal agencies in the false claims arena and will identify various forms of DBE fraud and the related scope of remedies used by state and federal governments to prevent and detect it. Read the entire page →
From page 5... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES makes or uses a false record or statement to obtain payment or approval of a false or fraudulent claim.25 Other bases for FCA violations include: • possession, custody, or control of property or money used with intent to defraud the government; • willful concealment of property and delivery of less property than the amount for which the person receives a certificate or receipt;26 • authorization to make or deliver a document which certifies receipt of property used by the government with intent to defraud the government, and/or to make or deliver the receipt without completely knowing that the information on the receipt is true;27 • knowingly buy or receive a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge the property;28 • knowingly make or use a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government.29 A critical component of liability under the FCA is a person's submission of a false claim. A claim is broadly defined as any request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient, if the U.S. Read the entire page →
From page 6... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES is sufficient to trigger liability under the definition; the government does not have to have actually paid the sum requested or have directly received the claim.32 Examples of when a false claim is established include: when a contractor seeks payment for a product not delivered or for work not performed;33 when a request for payment is made but the work for which the contractor seeks payment does not comply with the contract specifications; and when there is a failure to meet technical requirements that focus on performance of environmental laws, wage and hour regulations, and Occupational Safety and Health Administration (OSHA) regulations. Read the entire page →
From page 7... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES government,37 and that the defendant knowingly made a false statement to get a claim he knew was false, paid or approved.38 Liability is established when the contractor has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information.39 Liability may also be grounds for debarment from entering into future government contracts.40 2. Types of Fraud Prosecuted Under the FCA The USDOT and state DOTs are seeing a wide variety of fraudulent schemes occurring, ranging from false claims for work never performed, false certification by contractors, kickbacks between contractors, bid-rigging to DBE fraud.41 To assist in identifying fraudulent activity, the Taxpayers Against Fraud Education Fund (TAF) Read the entire page →
From page 8... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES • Being over-paid by the government for sale of a good or service, and then not reporting that overpayment. • Misrepresenting the value of imported goods or their country of origin for tariff purposes. Read the entire page →
From page 9... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES allegations are based, or if the relator has voluntarily provided the information to the government before filing an action that is based on such information, he is not barred from bringing a qui tam action under the FCA.48 Finally, prior action can be used as an affirmative defense to the FCA. The prior action bar prevents qui tam relators from bringing actions based upon allegations or transactions that are the subjects of a civil suit or an administrative civil money penalty proceeding in which the government is already a party49 or actions based on the facts underlying another pending qui tam action.50 4. Read the entire page →
From page 10... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES damages were caused by the false submission.55 Likewise, the government may elect to pursue alternative remedies available, including suspension and debarment.56 B Criminal False Claims Act (FCA) Read the entire page →
From page 11... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES the crimes listed in 18 U.S.C. Read the entire page →
From page 12... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES RICO cases.68 Before RICO, U.S. Attorneys were the only ones that could enforce mail and wire fraud statutes. Read the entire page →
From page 13... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES D False Statements Under Title 18 USC §1001 Similar to the FCA, false statements, as opposed to false claims made to the government, may also be prosecuted. Read the entire page →
From page 14... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES governmental agencies with the authority to indict violators for federal felonies and provides for a lower burden of proof.76 Since 1934, the statute has prohibited the making of "any false or fraudulent statements or representations...in any matter within the jurisdiction of any department or agency of the United States or of any corporation in which the United States of America is a stockholder."77 E State False Claims Law While the federal FCA remains an available tool to combat construction fraud, many states have enacted individual statutory schemes and approaches to combat false claims in their states. Read the entire page →
From page 15... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES with real guidance as to implementing their own false claim statutes. The 1986 amendments provided for: • The elimination of the "government possession of information" bar against qui tam lawsuits; • The establishment of defendant liability for "deliberate ignorance" and "reckless disregard" of the truth; • Restoration of the "preponderance of the evidence" standard for all elements of the claim including damages; • Imposition of treble damages and civil fines of $5,000 to $10,000 per false claim; • Increased rewards for qui tam plaintiffs of between 15-30 percent of the funds recovered from the defendant; • Defendant payment of the successful plaintiff's expenses and attorney's fees, and; • Employment protection for whistleblowers including reinstatement with seniority status, special damages, and double back pay.80 As you will see in the below tables, states differ as to the statutory scheme and approach they utilize to fight fraud. Read the entire page →
From page 16... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES STATES General False Claims Statutes Other False Claims Statutes False Statement RICO Qui Tam Action Criminal Civil Penalties Included in the Statutes Penalties Construction Included in Related False the Claims Included Statutes in the Statutes Connecticut X (medical) X X Delaware X X X X X D.C. Read the entire page →
From page 17... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES STATES General False Claims Statutes Other False Claims Statutes False Statement RICO Qui Tam Action Criminal Civil Penalties Included in the Statutes Penalties Construction Included in Related False the Claims Included Statutes in the Statutes Vermont X X X Virginia X (taxpayer) X X X Washington X X W Read the entire page →
From page 18... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES We did not receive a large response from states as to the internal procedures they utilize to detect fraudulent activities in their state. The responses we did receive are outlined below in Table 2. Read the entire page →
From page 19... ... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES REPORTING STATES Procedures in Place to Detect and Investigate False Claims in Construction Contracts Legal Devices, Tactics, or False Claim Abuses that Have Occurred in Construction Contracts in Your State Techniques Improvements to Used to Your Fraud Prosecute False Prevention Claims in Construction Contracts Protocols Needed and/or Recommendations to Recommended Improve This Area reviews project records and performance 3. If fraud appears, there is a referral to the West Va. Read the entire page →

From page 4...

... NCHRP 20-6, STUDY TOPIC 13-1 A SURVEY OF STATE PRACTICES FOR PROTECTING TRANSPORTATION AGENCIES AGAINST CONSTRUCTION AND DISADVANTAGED BUSINESS ENTERPRISE FRAUD INCLUDING USE OF CONTRACTOR SUSPENSION AND DEBARMENT PROCEDURES This study is a survey of practices used to protect transportation departments against construction contract and DBE fraud. This study will examine the activities of states and federal agencies in the false claims arena and will identify various forms of DBE fraud and the related scope of remedies used by state and federal governments to prevent and detect it.