B-204345, OCT 21, 1985
Highlights
SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE THIS IS TO EXPRESS OUR CONTINUED SUPPORT FOR THE ENACTMENT OF LEGISLATION TO AUTHORIZE FEDERAL AGENCIES TO LEVY ADMINISTRATIVE PENALTIES FOR CERTAIN FALSE CLAIMS AND STATEMENTS MADE TO THE UNITED STATES. WE HAVE TESTIFIED IN SUPPORT OF BILLS SIMILAR TO S.1134. HOW EXTENSIVE IS IT. WE ARE PLEASED TO SEE THAT THE BILL UNDER CONSIDERATION BY THE CONGRESS. NO SINGLE BASE WAS DEFRAUDED FOR MORE THAN $6. EACH CASE WAS PRESENTED TO NINE SEPARATE UNITED STATES ATTORNEYS. WAS DECLINED AT EACH OFFICE BECAUSE THE DOLLAR VALUE WAS TOO LOW. SUCH AS: (1) MODIFYING THE STANDARD OF LIABILITY TO AUTHORIZE THE IMPOSITION OF PENALTIES WHEN A PERSON SUBMITS CLAIMS OR STATEMENTS THAT HE KNOWS OR HAS REASON TO KNOW ARE FALSE.
B-204345, OCT 21, 1985
FRAUD - FALSE CLAIMS - ADMINISTRATIVE ACTION - PENALTIES DIGEST: COMPTROLLER GENERAL'S COMMENTS ON S. 1134, THE PROGRAM FRAUD CIVIL PENALTIES ACT OF 1985, TO THE CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT, COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE. COMMENTS EXPRESS GAO'S CONTINUED SUPPORT FOR THE ENACTMENT OF LEGISLATION TO AUTHORIZE FEDERAL AGENCIES TO LEVY ADMINISTRATIVE PENALTIES FOR CERTAIN FALSE CLAIMS AND STATEMENTS MADE TO THE UNITED STATES. GAO FIRMLY BELIEVES SUCH LEGISLATION WOULD FURTHER STRENGTHEN THE GOVERNMENT'S OVERALL ABILITY TO COMBAT FRAUD, WASTE AND ABUSE WITHIN GOVERNMENT PROGRAMS.
THE HONORABLE WILLIAM S. COHEN: CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE
THIS IS TO EXPRESS OUR CONTINUED SUPPORT FOR THE ENACTMENT OF LEGISLATION TO AUTHORIZE FEDERAL AGENCIES TO LEVY ADMINISTRATIVE PENALTIES FOR CERTAIN FALSE CLAIMS AND STATEMENTS MADE TO THE UNITED STATES. WE FIRMLY BELIEVE SUCH LEGISLATION WOULD FURTHER STRENGTHEN THE GOVERNMENT'S OVERALL ABILITY TO COMBAT FRAUD, WASTE AND ABUSE WITHIN GOVERNMENT PROGRAMS.
AS YOU KNOW, WE HAVE TESTIFIED IN SUPPORT OF BILLS SIMILAR TO S.1134, THE PROGRAM FRAUD CIVIL PENALTIES ACT OF 1985, BEFORE THE SENATE GOVERNMENTAL AFFAIRS COMMITTEE ON TWO PREVIOUS OCCASIONS. IN 1982 WE EXPRESSED OUR SUPPORT OF S. 1780, AND IN 1983 WE SUPPORTED THE ENACTMENT OF S. 1566. OUR POSITION STEMS FROM A 1981 REPORT ENTITLED "FRAUD IN GOVERNMENT PROGRAMS: -- HOW EXTENSIVE IS IT-- HOW CAN IT BE CONTROLLED?" (AFMD-81- 57; MAY 7, 1981), IN WHICH WE RECOMMENDED THAT THE CONGRESS CONSIDER ENACTING LEGISLATION GIVING AGENCIES THE AUTHORITY TO ADMINISTRATIVELY IMPOSE CIVIL MONEY PENALTIES AGAINST PERSONS WHO DEFRAUD THE GOVERNMENT. OUR STUDY SHOWED THAT THE DEPARTMENT OF JUSTICE DECLINED TO PROSECUTE ABOUT 61 PERCENT (7,800) OF 12,900 FRAUD CASES REFERRED FOR PROSECUTION. IN MANY OF THOSE CASES JUSTICE DECLINED TO PROSECUTE ON THE GROUNDS THAT THE CASES INVOLVED SMALL DOLLAR AMOUNTS, HAD NO PROSECUTIVE MERIT, OR JURY APPEAL. WE BELIEVED, AND CONTINUE TO BELIEVE, THAT THE ESTABLISHMENT OF AN ADMINISTRATIVE PENALTY SYSTEM COULD PROVIDE THE GOVERNMENT WITH A VIABLE ALTERNATIVE REMEDY IN SUCH CASES. SUCH A SYSTEM WOULD NOT ONLY STRENGTHEN THE GOVERNMENT'S ABILITY TO RECOVER MISAPPROPRIATED FUNDS, BUT ALSO SERVE AS A DETERRENT AGAINST OTHERS COMMITTING SIMILAR OFFENSES.
WE ARE PLEASED TO SEE THAT THE BILL UNDER CONSIDERATION BY THE CONGRESS-- S. 1134-- HAS RECEIVED STRONG SUPPORT FROM THE JUSTICE DEPARTMENT AND THE INSPECTOR GENERAL COMMUNITY. IN JUSTICE'S TESTIMONY BEFORE YOUR SUBCOMMITTEE THIS PAST JUNE, IT RECOGNIZED THAT THE ADMINISTRATIVE RESOLUTION OF FRAUD CASES INVOLVING SMALL AMOUNTS OF MONEY WOULD OFFER THE GOVERNMENT AN EFFICIENT AND EFFECTIVE ALTERNATIVE TO LITIGATING SUCH CASES IN FEDERAL COURTS, USUALLY A LENGTHY AND COSTLY PROCESS. REPRESENTATIVES FROM THE INSPECTOR GENERAL COMMUNITY ALSO PROVIDED NUMEROUS EXAMPLES DURING THEIR TESTIMONY OF WHERE S. 1134 WOULD BE MOST APPROPRIATELY USED. THE DEPUTY INSPECTOR GENERAL OF THE DEPARTMENT OF DEFENSE (DOD) CITED A CASE IN WHICH A CONTRACTOR OPERATED A PARTS STORE ON 10 DIFFERENT MILITARY BASES. HE ILLEGALLY INFLATED PARTS PRICES ON EACH CONTRACT. WHILE THE TOTAL FRAUD AMOUNTED TO OVER $50,000, NO SINGLE BASE WAS DEFRAUDED FOR MORE THAN $6,000. EACH CASE WAS PRESENTED TO NINE SEPARATE UNITED STATES ATTORNEYS, AND WAS DECLINED AT EACH OFFICE BECAUSE THE DOLLAR VALUE WAS TOO LOW. SEEKING AN ADMINISTRATIVE PENALTY SUCH AS PROVIDED FOR IN S. 1134 WOULD BE A VIABLE ALTERNATIVE REMEDY IN SUCH A CASE.
YOUR SUBCOMMITTEE HAS MADE SEVERAL NOTABLE CHANGES TO THE PROPOSED LEGISLATION SINCE OUR 1983 TESTIMONY ON S. 1566, THE PREDECESSOR OF S. 1134, SUCH AS: (1) MODIFYING THE STANDARD OF LIABILITY TO AUTHORIZE THE IMPOSITION OF PENALTIES WHEN A PERSON SUBMITS CLAIMS OR STATEMENTS THAT HE KNOWS OR HAS REASON TO KNOW ARE FALSE; (2) CLARIFYING THE EFFECT OF A FINDING OF LIABILITY UNDER AN ADMINISTRATIVE PROCEEDING, AS NOT AUTOMATICALLY REQUIRING A CONTRACTOR'S SUSPENSION OR DEBARMENT; (3) CLARIFYING THAT THE ASSESSMENT FOR FALSE CLAIMS APPLIES TO DOUBLE THE AMOUNT FALSELY CLAIMED RATHER THAN DOUBLE THE AMOUNT CLAIMED; AND (4) SEPARATING THE POSITION OF INVESTIGATING OFFICIALS AND REVIEWING OFFICIALS SO AS TO ENSURE INDEPENDENT PROSECUTORIAL REVIEW. ALTHOUGH WE HAVE NOT HAD TIME TO THOROUGHLY REVIEW THE OTHER SUBCOMMITTEE AMENDMENTS, WE CONSIDER THE ABOVE CHANGES, PRIMARILY DESIGNED TO FURTHER INSURE THAT THE ADMINISTRATIVE PENALTY SYSTEM IS FAIRLY AND OBJECTIVELY ADMINISTERED, TO BE IMPROVEMENTS OVER THE PRIOR BILL.
WE COMMEND YOUR PARTICULAR INTEREST AND EFFORTS IN THIS AREA, AND WE LOOK FORWARD TO WORKING WITH CONGRESS IN INSURING THE ENACTMENT OF LEGISLATION AUTHORIZING AGENCIES TO LEVY ADMINISTRATIVE PENALTIES, AS A MEANS OF COMBATING FRAUD, WASTE AND ABUSE WITHIN GOVERNMENT PROGRAMS.