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Does the False Claims Act also cover situations where the defendant owes the Government money, called "reverse false claims"?

Yes. The "reverse" False Claims Act provision in 31 U.S.C. § 3729 (a)(7) makes it illegal for a defendant to misrepresent the facts to avoid paying an "obligation" owed the Government. With a few notable exceptions, most courts have strictly limited (a)(7)’s applicability to incidents where the obligation concealed, avoided, or decreased was a current, immediate legal obligation to pay money owed, such as in a contract, judgment, or acknowledgment of indebtedness. The Department of Justice has also discouraged pursuit of cases involving innovative interpretations of this provision and, thus, most (a)(7) relators must work hard to obtain a recovery.

An example of a violation of the “reverse false claims” provision occurred where defendants failed to record, in tow boat logs, illegally discharged pollutants. The defendants’ policy was to record legal discharges, but not illegal ones. Reverse false claims existed because the defendants did not disclose to the Government their dumping of wastes and chemicals into the waterways, thus concealing or avoiding their obligation to pay cleanup costs for Clean Water Act violations. These cases involved Government contractors supplying jet fuel for the Air Force whose contracts included standard Clean Water Act and other environmental compliance clauses.

Another excellent of the application of the reverse False Claims Act provision was in the cases involving oil companies' understatement of royalties owed to the Government for oil pumped from federal lands.

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