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The New Normal: False Claims

We are all too familiar with the false claim actions that result in criminal and civil penalties and potential disbarment. In the last month alone, a Connecticut construction company paid a $2.4 Million dollar fine, a Chicago based company settled the claims against it for $12 Million, a New York based company forfeited $55 Million in a plea deal with the District Attorney’s Office and finally the US Attorney for the Southern District of New York commenced an action against another contractor for allegedly using a “pass through” to meet its DBE requirements on a contract.

We are all too familiar with the false claim actions that result in criminal and civil penalties and potential disbarment. In the last month alone, a Connecticut construction company paid a $2.4 Million dollar fine, a Chicago based company settled the claims against it for $12 Million, a New York based company forfeited $55 Million in a plea deal with the District Attorney’s Office and finally the US Attorney for the Southern District of New York commenced an action against another contractor for allegedly using a “pass through” to meet its DBE requirements on a contract.

The heightened scrutiny of our industry has raised some interesting questions when it comes to even mundane day to day practices. One that I want to touch upon today, is when there is “wiggle room” on your price for an additional work order to allow for negotiating movement. Can that situation result in a false claim? You know you are going to end up at the negotiation table to get “beat up” on your number for the work. Have you ever just given a quote and the owner accepted it? I don’t think so.

There are many variables in determining the price for a proposal. It is not an exact science. Delays, impacts, weather, labor efficiency, and material cost fluctuations all play a role.  Some helpful hints for staying out of trouble: (i) document everything (ii) have detailed backup as to how the price, overhead and profit was calculated including labor, material, insurance, difficulties expected to be encountered, overall impact costs to the project, etc.; (iii) document everything; (iv) maintain all correspondence; (v) document everything; (vi) be truthful, do not inflate the numbers; always (vii) document everything; and finally (vii) negotiate in good faith. 

If you ever find yourself facing a false claim or unsure of your legal footing, feel free to contact Connell Foley’s New York Construction Law Group for guidance on this or any other construction related issues.

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