Submitting Claims to UST Fund? Don’t Become Next Target of Office of Enforcement’s New Fraud, Waste & Abuse Unit

by | Jul 23, 2013

shortz, lara, michelsonOn April 17, 2013, the California State Water Resources Control Board (“SWRCB”) announced that it had given the green light to its Office of Enforcement (“OE”) to staff a permanent unit within the OE called the Fraud, Waste and Abuse Unit.  The SWRCB states that the purpose of this unit is to “root out fraud, waste and abuse against unscrupulous consultants and claimants submitting false, misleading or inflated invoices for reimbursement to the Underground Storage Tank Cleanup Fund. These cases are being referred to the State Attorney General’s office, frequently resulting in civil and/or criminal prosecutions.

Everyone could be a target

The Unit was originally launched as a pilot program in February 2010, around the time that a $1.2M judgment was entered against E2C Remediation, Inc., an environmental and consulting firm located in Bakersfield.  Subsequently, the Unit has targeted multiple consultants across California, subjecting them to civil and criminal prosecution. (To date, all the Unit’s targets have been consultants. However, the Unit has stated its intent to go after claimants/owners. Thus, UST Owners that submit requests for reimbursement to the UST Cleanup Fund should be equally concerned.)  A number of the targeted consultants have been subjected to criminal prosecution for traditional fraud including submitting invoices for reimbursement to the UST Cleanup Fund when no work was performed, or billing equipment purchased for a different project.   However, even if you are not participating in unlawful practices, you may still be the target of an investigation.

The Unit is casting a wide net; the criteria for being targeted by the SWRCB, or the AG’s office, can be quite expansive and often difficult to pinpoint. For example, you may be targeted for billing the UST Cleanup Fund for personnel or equipment rates that are inconsistent with the cost guidelines, no matter how outdated they are.  Or, you may find yourself in trouble for not keeping adequate back-up documentation to support your invoices, such as time sheets and field logs.  Simply charging higher than the “going rates” of your competitors’ may flag you as a potential target for the Unit.

What are the red flags the unit is looking for?

Any of the following information (or lack thereof) may raise a red flag, potentially subjecting you to an investigation:

  • Missing information in your requests for reimbursement (did you receive multiple requests for additional information from the claims reviewer?)
  • Invoices that appear altered or tampered with
  • Consistent errors in your reimbursement requests
  • Lack of and/or inconsistent back-up documentation
  • Multiple projects near the $1.2M ceiling
  • Rates for personnel and/or equipment that exceed the average rates in the community
  • A high number of reimbursement requests tied up in appeals
  • Internal complaints by your employees about your firm’s billing practices
  • Public Records Act requests being made for your files (although this may be difficult for you to know)

It is important to note that any combination of the above factors may land you on the Unit’s radar.  Additionally, it is also possible that one of your employees or former employees may be making direct complaints to the SWRCB about your business operations.  In addition to triggering Unit investigations, “whistleblower” actions may also result in civil lawsuits being filed by your employee on behalf of the SWRCB. (These lawsuits are referred to as “Qui Tam” lawsuits, wherein the whistleblower is entitled to bring an action under the California False Claims Act on behalf of the State and/or SWRCB.  This type of action entitles the whistleblower to collect a percentage of any judgment that would otherwise go to the State and/or SWRCB.)

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