Miss the thirty-day deadline and the State Department may impose the maximum penalty with no right of appeal, under a rule that took effect without anybody being asked
Thirty days from service of the complaint to file an answer. Miss it and the State Department may impose the maximum penalties and assessments, with no right of appeal.
That provision is not new, but it now sits in a regulation most people affected by it have never read, because the department rewrote the whole thing on Friday and put it into effect without asking for comment. The old Program Fraud Civil Remedies Act rules, forty-seven sections of them by the department's own count, are replaced by a part with six.
Why now
Congress renamed the statute. Section 5203 of the fiscal year 2025 defence authorisation, enacted on 23 December 2024, amended the 1986 Program Fraud Civil Remedies Act, retitled it the Administrative False Claims Act, and required every agency to conform its regulations. State has now done that, and used the occasion to collapse the structure rather than patch it.
The department's stated approach is to cite the controlling statute wherever it can and repeat statutory language only where the regulated public needs it in one place.
The numbers that survive the rewrite
The civil penalty for a false claim or a false statement is $14,308. On a claim, the department may also seek an assessment of up to twice the amount of the claim itself.
There is a ceiling on the administrative route, and it is the provision that decides which forum a contractor ends up in. The reviewing official may issue a complaint over a claim only where the amount demanded does not exceed $1,000,000, and a group of related claims submitted at the same time as part of a single request counts as one for that purpose. Nothing in the rule stops the government joining unrelated claims in a single complaint regardless of amount.
The limitation periods run long. Notice must go out by the later of six years after the violation, or three years after the facts became known or should have become known to the Under Secretary for Management, with an outer limit of ten years.
Who decides
Three offices, and they are deliberately separated.
The Inspector General investigates, and may use the subpoena power the statute provides. The Assistant Legal Adviser for Buildings and Acquisitions is the reviewing official who decides whether a complaint issues. The Under Secretary for Management is the authority head. Before any complaint can go out, the reviewing official has to send the Attorney General written notice setting out the reasons, the evidence, the claims at issue, an estimate of the amount, any exculpatory or mitigating circumstances known, and a statement that there is a reasonable prospect of actually collecting. The Department of Justice then has to approve in writing.
No notice, no comment
The department issued this as a final rule without prior notice, on the ground that it is a rule of agency organisation, procedure or practice, and separately for good cause because comment would be unnecessary. It cites four appellate decisions for the proposition, going back to a 1987 case on where the line between procedural and substantive rules falls. It takes the position that this is not a rule under the Congressional Review Act either, while saying it will send it to both houses and the Comptroller General anyway.
Two small things in the text suggest the rewrite moved quickly. The preamble cites the defence authorisation as Public Law 118-59 while the authority citation for the new part cites Public Law 118-159. And the regulatory flexibility paragraph, in a State Department rule, reads that DHS has determined there will be no significant economic impact on a substantial number of small entities.
