By: Taylor Stonerock, Chelsea Gulinson, and Robert J. Itri
The Administrative False Claims Act (“AFCA”), previously known as the Program Fraud Civil Remedies Act of 1986 (“PFCRA”) is an infrequently used, but related counterpart to the more well-known False Claims Act (“FCA”). The FCA is a widely used tool by the Department of Justice (“DOJ”) to prosecute false claims and statements in federal courts, often initiated by whistleblowers known as qui tam relators. Those targeted by the FCA are subject to treble damages and civil monetary penalties that currently range from $14,308 to $27,894 per claim. The AFCA, in turn, allows administrative agencies to investigate and pursue cases concerning false claims and statements in administrative proceedings, primarily targeting smaller dollar fraud cases that the DOJ opts not to investigate or prosecute. The AFCA imposes civil penalties of up to $5,000 for each false claim and statement, and double damages.
Recovery under the FCA is staggering: in fiscal year 2024, the DOJ recovered $2.9 billion in FCA settlements, with health care settlements responsible for $1.67 billion of those recoveries.[1] In 2024, relators filed a record-breaking 979 qui tam suits. In contrast, the PFCRA has been hardly used and has seen a correspondingly low number of recoveries over the years.
Congress appears ready to change that. Through the Servicemember Quality of Life Improvement and National Defense Authorization Act, signed into law on December 23, 2024, Congress revitalized the PFCRA by renaming it as the AFCA and making other, significant changes aimed at enhancing the government’s ability to combat fraud and recover funds lost to false claims.[2] One of the most significant changes that Congress made to the AFCA is increasing the ceiling for damages: the AFCA now empowers federal agencies to pursue and settle fraud claims of up to $1 million—a substantial increase from the PFCRA’s cap of $150,000.[3] Recovery under the AFCA now first goes to reimbursing the agency for its investigation and prosecutions costs, with remaining funds deposited into the Treasury.[4] And, agencies can now conduct their own investigations and issue subpoenas without extensive DOJ involvement.
Congress also made changes to the AFCA to more closely align it with the FCA. For example, the AFCA’s statute of limitations was extended to match that of the FCA,[5] and certain terms in the AFCA are now defined in the same manner as those in the FCA.[6] These changes appear to provide new incentives for agencies to pursue claims more frequently under the AFCA—particularly claims that the DOJ might not pursue under the FCA. Still, the AFCA does not contain a whistleblower provision, and unlike the FCA, prohibits not only false claims, but also false statements—broadly defined—made in the absence of submission of a false claim.
Although the PFCRA has seen little use since its enactment, the newly expanded scope of authority given to administrative agencies under the AFCA may increase investigations and enforcement under the Act. Within 180 days of its enactment, the statute requires each agency head to update their existing regulations and procedures and promulgate any new regulations and procedures to carry out the Act. In the meantime, individuals and organizations should ensure that effective compliance policies and procedures are in place to limit exposure under the FCA and AFCA.
If you would like more information about the FCA or AFCA, please contact Bob Itri, Chelsea Gulinson, or Taylor Stonerock.
[1] https://www.justice.gov/archives/opa/pr/false-claims-act-settlements-and-judgments-exceed-29b-fiscal-year-2024.
[2] Pub. L. No. 118-159.
[3] 31 U.S.C. §3803(c)(1).
[4] 31 U.S.C. §3806(g)(1)(A).
[5] 31 U.S.C. §3808(a).
[6] 31 U.S.C. §3801(a)-(d).
