Program Fraud Civil Remedies Act — Administrative Enforcement

The Program Fraud Civil Remedies Act of 1986 (31 U.S.C. §§ 3801–3812, Pub. L. 99-509) gives every federal agency the power to impose civil money penalties and assessments on individuals or entities who submit false claims or statements to the government — without filing a lawsuit in federal court. Think of it as a "DIY False Claims Act" that agencies run through their own administrative machinery: an investigating official, a reviewing official, and an Administrative Law Judge (ALJ), all working inside the agency. Each federal agency implements PFCRA through its own regulations — Treasury uses 31 CFR Part 16, the Department of Education uses 34 CFR Part 33, the VA uses 38 CFR Part 42, and the Department of Transportation uses 49 CFR Part 31 — but the procedures are substantively identical because they all derive from the same statute.

Legal Authority

• 31 U.S.C. §§ 3801–3812 — Program Fraud Civil Remedies Act of 1986 (Pub. L. 99-509); authorizes each federal agency to impose civil money penalties and assessments for false claims and statements submitted to the government through an internal administrative process rather than federal court litigation
• 31 CFR Part 16 — Treasury PFCRA implementing regulation; substantively identical parallel regulations at 34 CFR Part 33 (Education), 38 CFR Part 42 (VA), 49 CFR Part 31 (DOT), and parallel parts across all cabinet departments

Key Mechanics

The Program Fraud Civil Remedies Act (PFCRA) gives every federal agency an in-house False Claims Act: a streamlined administrative process for imposing civil money penalties on persons who submit false claims or false statements to the government without the delay of federal court litigation. Three actors: (1) an investigating official (typically the agency IG) who investigates and refers cases if evidence warrants; (2) a reviewing official who examines the referral and issues a complaint initiating the proceeding; and (3) an Administrative Law Judge (ALJ) who presides over the hearing with full evidentiary procedures. Penalties reach approximately $13,000 per false claim (periodically inflation-adjusted) plus an assessment equal to twice the false claim amount. The original $150,000-per-referral dollar threshold limits PFCRA to smaller-amount cases; larger fraud cases go to DOJ for FCA litigation. After the ALJ's decision, either party may appeal to the agency head; the agency head's decision is then subject to judicial review in federal circuit court. PFCRA vs. False Claims Act: the FCA (31 U.S.C. §§ 3729-3733) is a judicial statute with qui tam whistleblower provisions and treble damages; PFCRA is administrative-only with double assessments, no qui tam, lower maximum penalties but much faster resolution — each agency runs its own proceeding without DOJ involvement.

Current Rule (2026)

What This Rule Does

The PFCRA creates a purely administrative track for addressing fraud against federal programs. Before PFCRA, agencies that discovered relatively small-value fraud had a choice between referring the matter to DOJ for criminal prosecution (resource-intensive, high burden of proof) or ignoring it (ineffective deterrence). PFCRA created a middle path: agencies can pursue civil penalties and assessments on their own, through an ALJ, without needing DOJ referral.

Who is covered. PFCRA applies to any person — individual or entity — who: (1) makes, presents, or submits a claim for payment from a federal agency knowing it is false, fictitious, or fraudulent; or (2) makes a written statement to a federal agency knowing it is false, fictitious, or fraudulent and material to a claim. The statute covers contractors, grantees, benefits applicants, vendors — anyone presenting claims for federal money. It does not require actual payment to have been made; a false claim that was submitted but not yet paid is still actionable.

What penalties look like. The maximum civil penalty is $5,000 per false claim or statement (subject to inflation adjustment under the Federal Civil Penalties Inflation Adjustment Act; agencies must publish their current penalty maximums). In addition, for each false monetary claim, the agency may impose a civil assessment of up to twice the amount of the claim — so a contractor who submits a false $50,000 invoice can face up to $5,000 in penalty plus $100,000 in assessment, totaling $105,000, all administratively. PFCRA is not about criminal punishment; the remedy is civil and financial.

The jurisdictional cap. PFCRA applies only when the false claim or statement does not exceed $150,000 in value at the time of the violation. This cap distinguishes PFCRA enforcement from False Claims Act cases, which handle any dollar amount. For major procurement fraud or large grant misappropriation, agencies typically refer to DOJ for FCA enforcement or criminal prosecution; PFCRA handles the smaller-scale or routine false-statement cases agencies can handle themselves.

How the Administrative Process Works

PFCRA proceedings are structured to mirror judicial proceedings while keeping them inside the agency. The process has three stages:

Investigation and referral. An investigating official — typically an Inspector General — investigates potential violations and, if the evidence is sufficient, refers the matter to a reviewing official (typically the head of the agency's legal counsel or a designated official). The reviewing official makes an independent judgment that the case has merit before any formal proceeding begins. This two-step filter prevents frivolous enforcement actions.

Complaint and ALJ hearing. If the reviewing official approves, they file a written complaint with an ALJ — either the agency's own ALJ or one detailed from another agency. The complaint must specify each alleged violation with particularity. The defendant has 30 days to file an answer; failure to answer may result in a default judgment. If an answer is filed, the ALJ schedules a hearing on the record with full procedural rights:

• Discovery: both sides may take depositions, serve interrogatories, request document production, and seek admissions
• Witnesses: parties exchange witness lists and exhibit lists at least 15 days before the hearing
• Rules of evidence: the Federal Rules of Evidence apply, subject to ALJ modification for fairness
• Representation: defendants may be represented by counsel at their own expense
• Burden of proof: the agency bears the burden — preponderance of the evidence standard

ALJ decision and appeal. After the hearing, the ALJ issues a written decision including findings of fact, conclusions of law, and the penalty and assessment amounts (if any). Either party may appeal to the authority head — typically the agency head or a designated senior official — who reviews the record and may affirm, modify, or reverse. Final agency orders are subject to judicial review in federal district court under the Administrative Procedure Act.

Key Provisions

• § 16.2 / § 33.2 / § 42.2 — Definitions: "Claim" means a request for payment from federal funds; "statement" means any representation, certification, assertion, or document submitted to the agency; ALJ means an Administrative Law Judge appointed under 5 U.S.C. § 3105
• § 16.3 — Investigation: Investigating official conducts investigation and may use subpoena power available to the agency
• § 16.7 — Notice: Before filing a complaint, the reviewing official must give the defendant written notice of the allegations and an opportunity to respond informally — a pre-complaint screening that often resolves cases through settlement
• § 16.9 — Answer: Defendant must file answer within 30 days; the answer must admit or deny each allegation with specificity; blanket denials are disfavored
• § 16.10 — Default: If no answer is filed, the reviewing official may refer to the ALJ for a default determination — the ALJ must still find that the evidence supports the allegations before entering a default order
• § 16.21 — Discovery: Both parties have the right to production of documents, admissions, depositions, and interrogatories; the ALJ manages the discovery schedule
• § 16.38 — ALJ decision: ALJ must issue a written decision within 30 days of close of record; the decision is final unless appealed within 30 days
• § 16.41 — Authority head review: Agency head (or delegatee) may affirm, reduce, reverse, or remand the ALJ's decision

How It Affects You

If you submit claims to federal agencies — as a contractor, grantee, healthcare provider, or benefits applicant — PFCRA creates accountability for false statements even when the dollar amount is too small for DOJ False Claims Act attention. Agencies with active OIG offices (HHS, VA, DoD, Treasury) use PFCRA to handle false billing, false certifications, and fraudulent representations that might not rise to the level of criminal referral but nonetheless warrant sanction.

Compared to the False Claims Act: PFCRA has no qui tam provision — private citizens cannot bring PFCRA claims on behalf of the government. PFCRA also does not offer triple damages, and it caps at $150,000 per claim. But PFCRA can move faster (no court filing needed) and the burden of proof is lower (preponderance, not beyond reasonable doubt). Agencies often use PFCRA in conjunction with contract debarment or grant suspension — the financial penalty runs parallel to exclusion from future federal business.

Settlement: Most PFCRA cases settle before ALJ hearing. The reviewing official can negotiate a settlement at any stage; agencies have incentive to resolve cases without the cost of a full ALJ proceeding. A settlement typically includes an agreed penalty and assessment amount, often reduced from the maximum, plus any corrective action the agency requires.

Implementing Regulations

The Department of Transportation implements PFCRA at 49 CFR Part 31 — structurally identical to other agencies' implementations but scoped to DOT programs:

• § 31.1 — Basis and purpose: implements PFCRA for DOT programs; the "authority" is DOT; the "authority head" is the Assistant Secretary or Deputy Assistant Secretary for Budget and Programs
• § 31.2 — Definitions: "claim" means any request to DOT for property, services, or money (including grants, loans, insurance, or benefits); claims made to DOT grant recipients or contractors that draw on DOT-provided funds are also covered — reaching down the contracting chain
• § 31.3 — Basis for civil penalties: knowing submission of a false, fictitious, or fraudulent claim or statement triggers liability; "knowing" means with actual knowledge or in deliberate ignorance or reckless disregard of the truth — the same mental state as the FCA
• § 31.7 — Pre-complaint notice: the reviewing official must give the defendant written notice of the allegations and opportunity to respond before filing a formal complaint — a dispute resolution screen that frequently resolves cases without a hearing
• § 31.9 — Complaint: if the reviewing official proceeds, the complaint is filed with a DOT ALJ; the complaint must specify each alleged violation; defendant has 30 days to answer
• § 31.10 — Default: failure to answer results in an initial decision imposing the maximum allowable penalties and assessments; the default decision becomes final after 30 days unless the defendant demonstrates extraordinary circumstances prevented timely response
• §§ 31.17–31.38 — Hearing rights: full APA-style hearing with discovery, cross-examination, expert witnesses, and written briefs; the ALJ's decision is not final until either not appealed within 30 days or reviewed by the authority head
• § 31.41 — Authority head review: either party may request authority head review of the ALJ's initial decision; the authority head may affirm, reduce, reverse, or remand; the authority head's decision is the final agency action

DOT's PFCRA program targets false claims in its grant and loan programs: FHWA (highway formula and discretionary grants), FTA (transit capital and operating grants), FAA (airport improvement grants and AIP funds), FRA (railroad safety and infrastructure grants), MARAD (maritime financing programs), and the RRIF (Railroad Rehabilitation and Improvement Financing) and TIFIA loan programs. The $150,000 cap means DOT-PFCRA handles smaller grant fraud cases while referring larger multi-million-dollar cases to DOJ. DOT's Inspector General is the designated investigating official under Part 31.

Recent rulemakings: 73 FR 33329 (June 2008) — updated penalty adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act; 62 FR 6720 (1997) — conforming amendments; 53 FR 881 (1988) — original rule.

Other Agency Implementations

Because PFCRA covers every federal agency that disburses funds, the statute is implemented by parallel regulations across the executive branch — all using the same investigating official / reviewing official / ALJ framework. In addition to DOT (49 CFR Part 31), Treasury (31 CFR Part 16), Education (34 CFR Part 33), and VA (38 CFR Part 42), significant implementations include:

• 40 CFR Part 27 (EPA) — EPA's PFCRA implementation covers the full range of EPA grant, loan, and cooperative agreement programs: Superfund cost-sharing agreements, Clean Water Act state revolving fund grants, RCRA corrective action cooperative agreements, and environmental justice grants. EPA's Inspector General serves as the investigating official; the EPA ALJ Docket handles PFCRA cases alongside other EPA administrative enforcement proceedings.
• 43 CFR Part 35 (DOI) — The Department of the Interior implements PFCRA for its grant programs through the Bureau of Land Management, National Park Service, Fish and Wildlife Service, and Bureau of Indian Affairs programs; the DOI Inspector General is the designated investigating official for claims against Interior-funded tribal grants, grazing fee programs, and natural resource extraction royalties.
• 45 CFR Part 79 (HHS) — The Department of Health and Human Services deploys PFCRA for its vast portfolio of grants and cooperative agreements across NIH, CDC, HRSA, SAMHSA, and ACF; given HHS's volume of grant disbursements (over $700 billion/year when including Medicaid FFP), the HHS OIG's use of PFCRA complements the False Claims Act and exclusion authority as a civil enforcement tool for smaller-scale grant fraud.
• 45 CFR Part 681 (NSF) — The National Science Foundation implements PFCRA for research grants and cooperative agreements; NSF's Inspector General targets false claims in grant applications, effort reporting, and cost sharing representations; the $150,000 jurisdictional cap fits well with smaller grant mischarging cases that do not warrant a full DOJ referral.
• 45 CFR Part 2554 (AmeriCorps / CNCS) — The Corporation for National and Community Service (now AmeriCorps) applies PFCRA to its AmeriCorps State and National, VISTA, and Senior Corps grant programs; AmeriCorps-CNCS's OIG uses PFCRA for false member enrollment records, fabricated service hours, and misrepresented match contributions.
• 45 CFR Part 1174 (National Endowment for the Arts) — The NEA implements PFCRA for its arts grant programs; NEA's Inspector General is the designated investigating official for false grant applications, misrepresented project activities, and mischarging of direct costs to NEA-funded projects.

Additional agency implementations newly codified in the CFR:

• 22 CFR Part 35 (DOS) — The Department of State implements PFCRA for its foreign assistance grants, contracts, and cooperative agreements administered through State program bureaus (Bureau of International Security and Nonproliferation, Bureau of Population, Refugees, and Migration, and other offices); the State OIG serves as the investigating official; PFCRA covers false claims in Leahy Law certifications, grant progress reports, and contractor invoices for State-administered programs
• 22 CFR Part 224 (USAID) — USAID's implementation covers the full portfolio of foreign assistance: development grants to foreign governments and NGOs, USAID contracts with implementing partners, and food aid programs; USAID's OIG is among the most active in overseas fraud investigation; PFCRA's $150,000 cap makes it appropriate for smaller implementing partner false-billing cases that do not warrant DOJ referral given the cost of international litigation
• 22 CFR Part 521 (USAGM) — The U.S. Agency for Global Media (Voice of America, Radio Free Europe, Radio Liberty) applies PFCRA to grants to its broadcasting grantee entities and contracts with production and technical vendors; USAGM's OIG handles investigating official functions
• 29 CFR Part 22 (DOL) — The Department of Labor implements PFCRA for its extensive grant portfolio: Workforce Innovation and Opportunity Act (WIOA) formula and competitive grants, Job Corps contracts, registered apprenticeship grants, OSHA training grants, mine safety grants, and other DOL-funded programs; the DOL OIG's PFCRA enforcement complements its active criminal prosecutions for large-scale employment fraud and grant theft
• 13 CFR Part 142 (SBA) — The Small Business Administration implements PFCRA for its loan guarantee programs, direct loan programs, and disaster assistance grants; SBA's portfolio includes 7(a) business loans, 504 certified development company loans, SBIC licensing, and SBDC/SCORE grants. SBA OIG false-claim cases under PFCRA typically involve lenders or borrowers submitting false certifications on SBA Form 1919 (borrower information), misrepresenting the use of loan proceeds, or making false claims in applications for SBA disaster assistance loans. The rule was updated at 91 FR 13219 (March 2026) to reset penalty amounts under the Federal Civil Penalties Inflation Adjustment Act. SBA's program-level scale — the agency guaranteed approximately $50 billion in loans in FY2024 — means PFCRA is an important secondary tool alongside SBA's direct suspension and debarment authority and OIG criminal referrals for larger fraud
• 15 CFR Part 25 (Commerce) — The Department of Commerce implements PFCRA for its grant, loan, and cooperative agreement programs administered through NOAA, NIST, EDA (Economic Development Administration), NTIA, and other Commerce bureaus; Commerce's portfolio spans weather service contracts, standards and technology research grants, coastal zone management cooperative agreements, and broadband deployment grants (under NTIA's BEAD program); the Commerce OIG serves as the investigating official; a significant category of Commerce PFCRA cases involves false matching-fund representations in EDA and NTIA grant applications, where applicants overstate non-federal cost share to secure larger federal awards
• 14 CFR Part 1264 (NASA) — The National Aeronautics and Space Administration implements PFCRA for its research contracts, grants, and cooperative agreements with universities, research institutions, and aerospace contractors; NASA's Inspector General serves as the investigating official; NASA PFCRA cases frequently involve false hours charged to cost-reimbursement contracts at the national laboratories and university aerospace engineering departments that perform NASA-funded research; the $150,000 jurisdictional cap fits many smaller research-hour mischarging cases that don't warrant a full DOJ False Claims Act referral; the rule implements 31 U.S.C. § 3809 under NASA's general agency authority (51 U.S.C. § 20113)
• 10 CFR Part 1013 (DOE) — The Department of Energy implements PFCRA for its vast research and infrastructure portfolio: grants and cooperative agreements through the Office of Science and ARPA-E, loan guarantees under the Loan Programs Office, and contractor invoices from the national laboratory management and operations contractors (Bechtel, AECOM, Battelle, and others). DOE's OIG serves as the investigating official; the DOE ALJ docket handles PFCRA cases that do not settle at the reviewing official stage. DOE's PFCRA enforcement is particularly active in two areas: (1) false effort reporting on Office of Science grants — researchers who charge salaries to DOE grants for time spent on non-DOE projects; and (2) false invoices from M&O contractors at national laboratories, where cost-plus contracts create opportunities for mischarging overhead costs to DOE accounts. The rule's authority derives from DOE's general agency authority (42 U.S.C. § 7256) and PFCRA's umbrella mandate (31 U.S.C. §§ 3801–3812)
• 10 CFR Part 13 (NRC) — The Nuclear Regulatory Commission implements PFCRA for false claims and statements submitted in connection with NRC-licensed activities, contractor invoices for NRC contracts, and fee exemption applications by nonprofit organizations that receive reduced NRC licensing fees. The NRC Inspector General serves as the investigating official; PFCRA provides NRC with civil penalty authority for smaller-scale false statement cases — often fee waivers fraudulently claimed by commercial licensees that misrepresented their nonprofit status. NRC also uses Part 13 for false statements in license applications and renewal applications, where the standard criminal false-statement provisions (18 U.S.C. § 1001) may not reach and where the civil enforcement track avoids the higher burden of criminal prosecution. Authority: 42 U.S.C. § 5841 (AEA); 31 U.S.C. §§ 3801–3812

The substantive rules in each agency's PFCRA implementation are nearly identical — the same $5,000-per-violation penalty, 2× false-claim assessment, $150,000 jurisdictional cap, and ALJ hearing process — because each derives from the same statute (31 U.S.C. §§ 3801–3812). Agency-specific differences are limited to the names and titles of the investigating official, reviewing official, and authority head, and sometimes the ALJ forum (large agencies have their own ALJ offices; smaller agencies often borrow ALJs from the Office of Medicare Hearings and Appeals or USDA ALJ offices).

Statutory Authority

• 31 U.S.C. § 3802 — Authorizes the civil penalty ($5,000 per false claim/statement) and assessment (2× false monetary claims) applicable to persons who knowingly make false claims or statements
• 31 U.S.C. § 3803 — Establishes the investigating official/reviewing official/ALJ structure and requires pre-complaint notice to the defendant
• 31 U.S.C. § 3805 — Governs ALJ conduct of hearings including discovery, evidence, and procedural rights
• 31 U.S.C. § 3808 — Provides for appeal to the authority head and sets the standard of review
• 31 U.S.C. § 3812 — Preserves all other civil and criminal remedies; PFCRA is not exclusive — agencies may pursue PFCRA penalties alongside FCA referrals, contract remedies, and criminal prosecution

Recent Rulemakings

No major structural amendments since 1986. Agencies periodically update penalty amounts under the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. § 2461 note), as accelerated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. Current maximum penalty per violation exceeds $5,000 at most agencies after inflation adjustment.

Pending Action