Program FraudImplementation of the Program Fraud Civil Remedies Act of 1986 Gao ID: AFMD-91-73 September 13, 1991
The Program Fraud Civil Remedies Act of 1986 provides federal agencies with an administrative remedy for small-dollar fraud cases that the Department of Justice declines to pursue. The act permits agencies to conduct administrative proceedings to determine the liability of those alleged to have made, presented, or submitted false, fictitious, or fraudulent claims or statements. Civil penalties of up to $5,000 for each false claim are authorized, as well as an assessment of up to double the amount falsely claimed in cases where federal payment has been made. The act also places a ceiling of $150,000 on the amount of a claim or group of related claims that may be addressed under the act. This report presents information on how eight agencies have used the act, as well as their views on why use has been limited. Between October 1986 and September 1990, a total of 41 cases had been referred to Justice for approval of administrative action. The cases involved contractor, employee, and employee disability compensation fraud. As of May 1991, 15 of the cases had been resolved for a total of $327,604, and $107,819 had been collected. Twenty cases were still under active consideration.
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.