United States Ex Rel. Longhi v. United States
575 F.3d 458 | Court of Appeals for the Fifth Circuit | 2009
What This Case Means for Subcontractors
A former employee sued a company for lying on federal research grant applications. The company made false statements to get Small Business Innovation Research (SBIR) funding. The court ruled that false statements in grant proposals are illegal under the False Claims Act if they could influence the government's decision to fund the project—even if the government ultimately paid anyway. The company lost and had to pay nearly $5 million in damages and penalties.
Key Takeaways
- •Any false statement in a federal grant or contract proposal can trigger False Claims Act liability if it could reasonably influence the government's funding decision. Accuracy matters more than outcome.
- •Employees can sue on behalf of the government for false statements in proposals. Protect your company by ensuring all grant applications, certifications, and representations are truthful and complete.
- •False Claims Act violations can result in triple damages plus civil penalties per false claim. A single misleading statement in a proposal can cost millions. Review all federal submissions carefully before submitting.
False statements need only have natural tendency to influence government decision.
Frequently Asked Question
If we submit a grant proposal with false information but the government funds us anyway, can we still get in trouble?
Yes. The court ruled that false statements are illegal if they could naturally influence the government's decision—regardless of whether the government actually paid you. The government doesn't have to prove the false statement changed the outcome. If a statement could have mattered to their funding decision, it's a violation.
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