Researchers from the Urban Institute wrote an opinion piece
urging the federal government to clarify and/or narrow the types of violations committed by Federal Housing Administration lenders that can be subject to enforcement through the False Claims Act.

In the article, they argue that recent ramped-up False Claims Act enforcement efforts had resulted in an increase in insurance claims, and had scared off lenders from participating in FHA programs.

They thus urged the FHA to either (a) narrow the regulations to which a lender certified compliance, or (b) clarify and narrow the kind of “mistakes” that can give rise to liability under the False Claims Act.

The argument is premised on the notion that the Department of Justice (or whistleblowers – who are empowered to bring an action under the False Claims Act) can use the False Claims Act to combat “any and actions mistakes, irrespective of substance, size, intent ….”

The premise of the article is deeply flawed. The False Claims Act only can be used against those that “knowingly” defraud the government or that act with “intent to defraud” the government. Also, the U.S. Supreme Court has ruled that any False Claims Act suit based on the certification of compliance with government rules must be based on rules that are “material” to the government’s decision to pay funds to the defendant, and that technical or trivial violations cannot sustain False Claims Act liability.

Click here to read opinion piece.