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OPINION

A tool to help level the playing field for low-income tenants

The False Claims Act, DOJ’s principal fraud-fighting statute, can be used to back up aggrieved tenants with the strong arm of the federal government.

In 2015, City of Boston housing inspectors found more than 30 violations at this Allston rental. This image shows a point at the base of the house where rats burrowed inside.Dina Rudick

It happens all the time to low-income tenants: apartments crumbling and in disrepair, mold growing on the walls, pest infestations, unfair extra charges, and landlords who will not make things right so long as they can still make a buck. We are five years out since Matthew Desmond’s Pulitzer Prize-winning bestseller, “Evicted: Poverty and Profit in the American City,” and for these mistreated tenants, there remains little ability to enforce their right to safe and stable housing. For the most part, they remain at the mercy of the almighty landlord.

But a recent Boston-area US Department of Justice enforcement action highlights a very powerful tool available to tenants to help realign this inherent imbalance of power. It’s an option everyone interested in housing justice should keep in mind. It involves using the False Claims Act, DOJ’s principal fraud-fighting statute, to back up aggrieved tenants with the strong arm of the federal government.

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That is exactly what DOJ did with its False Claims Act action against a Chelsea landlord for allegedly overcharging tenants who participated in the Housing Choice Voucher Program. Under this program (also referred to as Section 8), HUD covers all or part of a tenant’s monthly rent and utilities subject to the landlord’s agreement not to charge more than the amount set by the local public housing agency administering the program.

In the Chelsea case, the landlord did not stick to its end of the bargain. Instead, unbeknownst to the government, the landlord wrested extra dollars from its Section 8 tenants by improperly charging them for water. Extracting these kinds of surplus payments for utilities, parking, or even extra rent, is a common practice among unscrupulous Section 8 landlords. And DOJ has proved it will take action when it learns of these abuses.

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But illegal overcharges are only one form of Section 8 fraud the False Claims Act covers. Unsafe or shoddy housing falls equally within the statute’s reach. After all, the whole point of the Section 8 program is to ensure suitable housing for low-income individuals. Anything less is a direct affront to this important government program.

The False Claims Act, also known as “Lincoln’s Law,” was originally enacted to go after war profiteers selling defective weapons and lame mules to the Union Army during the Civil War. Since then, it has become the government’s primary enforcement tool to redress all forms of fraud against the government.

What makes the act particularly effective, and why it is especially well-suited to address Section 8 housing fraud, is the statute’s whistle-blower (or qui tam) provisions, which allow whistle-blowers to sue violators on the government’s behalf. This means if individual tenants are subject to illegal overcharges, substandard housing, unsafe conditions, or the like, they can sue the offending landlords in the government’s name.

The case would be filed under seal — kept secret — while the government investigates and decides whether to take over the litigation. If the government takes a pass, the whistle-blower can continue pursuing the case on their own. Either way, if the case is successful, the whistle-blower is entitled to a significant portion of the government’s recovery (anywhere from 15 to 30 percent).

The False Claims Act thus levels the playing field between low-income tenants and their well-resourced landlords by bringing the government into the mix. It also provides tenants with greater access to legal counsel with the promise of what can be a sizeable monetary award. In short, the statute provides disadvantaged tenants — or those seeking justice on their behalf — a potent pathway to rein in and set straight shady landlords.

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There have been several recent cases, like the case in Chelsea, brought by whistle-blowing tenants. Like another Boston-area action last year against a landlord who allegedly charged for extra rent and water. And an action last year against a Michigan landlord alleging similarly pernicious behavior. And the case currently proceeding in Washington, D.C., claiming unsafe and unsanitary housing conditions.

The clear takeaway for Section 8 tenants feeling helpless and hopeless against landlords behaving badly is that they do not have to take it anymore. The False Claims Act evens the scales. And it safeguards the limited funds currently available for Section 8 vouchers. In fact, it may just be the best way of ensuring every single dollar of Section 8 funds goes toward safe and affordable housing, not to landlords trying to exploit America’s most important affordable housing program.

Gordon Schnell and Elizabeth Soltan are attorneys with Constantine Cannon, specializing in representing whistle-blowers under the False Claims Act.