Program Fraud:

Implementation of the Program Fraud Civil Remedies Act of 1986

AFMD-91-73: Published: Sep 13, 1991. Publicly Released: Oct 25, 1991.

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Pursuant to a congressional request, GAO reviewed federal agencies' implementation of the Program Fraud Civil Remedies Act of 1986 (PFCRA) which provides agencies with an administrative remedy for small-value fraud cases that the Department of Justice declines to pursue under criminal and civil statutes prohibiting false claims and statements.

GAO found that: (1) the eight agencies reviewed issued rules and regulations to implement PFCRA that were consistent with the act's provisions, but seven agencies issued the regulations after the deadline that the act specified; (2) almost all of the agencies designated, or made arrangements to obtain, the specified senior-level officials, which included the authority head, a reviewing official, an investigating official, and a presiding officer; (3) between October 21, 1986 and September 30, 1990, the eight agencies identified 213 potential PFCRA fraud cases, and referred 122 to the reviewing officials, but referred only 41 of those cases to the Department of Justice for approval to proceed with administrative action; (4) the 81 remaining cases were not submitted because 42 were still undergoing review, 7 were returned to the agencies' investigating officials for further development, and 32 were declined for referral primarily because of insufficient evidence; (5) agency officials believe that certain statutory elements of PFCRA, such as the $150,000 ceiling on false claim cases and the act's limited applicability to certain federal social welfare, disability, and retirement programs, limits the universe of cases against which the act can be used as a fraud remedy; and (6) procedural and other reasons, such as the potential that cost associated with a case could exceed the monetary recovery and the act's cumbersome procedural requirements, led to agencies' infrequent use of the act.