The article, “Addressing the language and scope of the Federal Priority Act,” studies the past, present, and future reach of the Federal Priority Act, a law that allows the federal government’s claims against a debtor to take priority over any other claims.
The statute dates back centuries, but is little-known among today’s practitioners, which is problematic, particularly since the FPA may impose personal liability upon representatives of the person making the improper payment, e.g., corporate officers and directors. Since 2011, the government has used the FPA to recover significant sums from all types of insolvent businesses and individuals — manufacturers, insurance companies, shareholders of a tech company, government contractors, even an individual attorney.
“Different government agencies have invoked the FPA fairly actively in recent years,” Claire writes. “Since the end of 2011, the Act has been cited in approximately 15 cases. Of these cases, the most common circumstances involved claims against insolvent government debtors arising from unpaid estate taxes. The common facts tended to involve an executor of an estate who distributed an estate’s funds before paying debts owed to the federal government, and consequently left the estate with insufficient funds to fully discharge its debt to the federal government.”
This article gives an overview of the FPA, the types of cases where FPA claims crop up, successful defenses against the Act, and the surprisingly expansive breadth the law has enjoyed before federal and appellate courts.
Claire concentrates her practice in the areas of Health Care Fraud and Abuse, False Claims Act litigation and other complex white-collar civil litigation. Drawing upon her 14-year history with the Department of Justice and service as a Civil Chief, Claire represents and advises health care providers, registrants under the Controlled Substances Act and government contractors. She frequently guides physician groups, hospitals, pharmaceutical groups and others through the maze of complex and overlapping government regulatory schemes and assisting with the resolution of compliance concerns.