False Claims Act Expands Scope to Immigration in Federal Work

The False Claims Act has long been used by the Department of Justice to combat health care and government contract fraud. Now the department is using the FCA for immigration enforcement.

Two recent FCA civil settlements with federal government contractors totaling millions of dollars, over allegations of immigrants, called “unauthorized aliens” by DOJ, performing work billed to the government, serve as a warning.

DOJ announced on Sept. 18 that Bayonne Drydock and Repair Corp. agreed to pay more than $4 million to settle FCA allegations that project subcontractors owned by the company’s contract and risk manager employed “unauthorized aliens.” DOJ alleged that these employees worked on ship contracts in violation of the E-Verify provision of the Federal Acquisition Regulations. The manager pleaded guilty to knowingly hiring and continuing to employ “unauthorized aliens” in violation of 8 U.S.C. Sections 1324a(a)(2) and (f)(1) and 18 U.S.C. Section 2. Notably, neither the manager’s guilty plea nor the company’s cooperation with the investigation was enough to save it from the $4 million settlement.

In January, DOJ announced a similar settlement with Bollinger Shipyard LLC. Bollinger paid more than $1 million to settle claims it had failed to verify certain workers’ employment eligibility.

These settlements didn’t definitively end the matters; DOJ reserved the power to pursue additional criminal charges and other remedies. FCA actions like these can also result in debarment from future federal contracts and treble damages.

Immigration Priorities

The Bayonne and Bollinger FCA settlements are in line with the federal government’s focus on immigration as announced in February by Attorney General Pam Bondi. Bondi stated that DOJ “shall use all available criminal statutes to combat the flood of illegal immigration that took place over the last four years and to continue to support the Department of Homeland Security’s immigration and removal initiatives.”

In May, Acting Assistant Attorney General Matthew Galeotti reemphasized DOJ’s position, articulating that “priority areas of focus” for the Criminal Division’s Corporate Whistleblower Awards Pilot Program include “violations by corporations of federal immigration law.”

The GOP tax and spending package, which passed in July, provides $170 billion towards immigration enforcement, with about $75 billion earmarked for ICE, meaning aggressive immigration enforcement efforts are just getting started.

Numerous federal and state law enforcement agencies, including those who have previously concentrated on other enforcement areas, are now devoting substantial resources to immigration enforcement. On Sept. 4, federal search warrants were executed at the Hyundai plant in Georgia to search for evidence of unlawful employment of “illegal aliens.”

In this investigation, Homeland Security Investigations was assisted by: ICE; IRS Criminal Investigation; Enforcement and Removal Operations; the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the Department of Labor’s Office of Inspector General; the US Marshal Service; and the Georgia State Patrol.

According to FBI Director Kash Patel’s statement before the US House Committee on the Judiciary on Sept. 17, the FBI has made “over 25,000 immigration-related arrests” since Jan. 20. Over the last few months, personnel across the FBI’s 55 field offices have participated in Operation Allied Corridor, an ICE/HSI-led operation to advance enforcement priorities related to Title 8, the US law governing immigration and nationality.

As federal law enforcement continues to increase its focus on illegal immigration, businesses face potential increased enforcement actions involving immigration fraud.

What Should Businesses Do?

Businesses should ensure they comply with all immigration laws. To protect against civil and criminal enforcement actions, including FCA liability for knowingly employing unauthorized individuals, businesses should:

• Train managers. They should know that they shouldn’t be hiring unverified employees.
• Audit employment verification procedures. Conduct periodic audits to ensure I-9 and E-Verify processes are up to date and comply with law in form and substance.
• Maintain all necessary records. Ensure I-9 documentation is complete and retained in accordance with applicable laws.
• Track expiration dates for work authorizations. A common error is the failure to reverify an employee whose work authorization expires.
• Encourage internal reporting. Promote a culture of compliance by having an internal reporting system and comprehensive process to address any complaints from potential whistleblowers.
• Seek advice of counsel. Consult with knowledgeable counsel and auditors to ensure compliance procedures meet the requirements. Upon learning of a possible violation or receiving a letter or CID from DOJ, engage counsel early to help assess an appropriate response.

Specific to FCA liability, businesses should also carefully review compliance with government contract certifications. It is important to determine what the certification obligations are, analyze the effectiveness of compliance procedures, and ensure certifications are accurate.

Due to the increased focus on immigration enforcement, civil and criminal liability for businesses employing unauthorized individuals is possible. The best protection is not only to be aware of the risks, but to be prepared for when the federal government comes knocking.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Jenny Sugar and Tanisha Palvia are members of Moore & Van Allen’s litigation group.

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