A recent webinar hosted by DLA Piper considered the current discourse on AI regulations and their use in False Claims Act (FCA) enforcement.
The panelists discussed how the United States seeks advancements in AI and has therefore refrained from imposing limits on its use. In fact, the current administration appointed a Chief AI Officer to spearhead the nation’s AI strategy, as per the “Winning the AI Race: America’s AI Action Plan.” At the state level, however, regulations demand the safer use of AI, with California taking the lead. The panelists argue that the tensions surrounding AI regulation place FCA cases on the technology’s misconduct in an uncertain terrain.
The qui tam provisions of the False Claims Act enable whistleblowers to file lawsuits on behalf of the government. The panelist highlighted how express False Certifications, a subset of FCA cases, now encompass misrepresentations of AI capabilities. In contrast, Implied False Certifications prohibit the failure to disclose AI defects or limitations. FCA liabilities also outlaw the billing for engineers when employing automated agents instead.
The panelist defined the growing trend of “AI-washing,” the tech world’s iteration of “greenwashing,” as instances in which companies exaggerate or fabricate AI capabilities to gain market advantage. In a recent case, SEC v. Saniger, the founder of a technology start-up faced FCA allegations after relying on manual labor rather than their purported use of AI to mislead investors and inflate its value. In addition to SEC v. Saniger, several companies have used AI to deceive customers.
On the flip side, the panelists underscored, whistleblowers have begun using AI tools to expose these misuses. For example, AI has been employed to “analyze billing patterns, detect duplicate claims, and flag noncompliance with contract terms.” While liabilities in AI usage are accumulating, the technology itself can serve as a countermeasure.
The panelists concluded by stressing AI’s reach and that the False Claims Act is only one of many facets of the law shifting in response to AI.
