Short title

This Act may be cited as the

False Claims Act Correction Act of 2007

Liability for false claims

Section 3729 of title 31, United States Code, is amended to read as follows:

3729.

False claims

(a)

Liability for certain acts

(1)

In general

Any person who— (A)knowingly presents, or causes to be presented for payment or approval a false or fraudulent claim for Government money or property, (B)knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim for Government money or property paid or approved, (C)has possession, custody, or control of Government money or property and, intending to— (i)defraud the Government, (ii)retain a known overpayment, or (iii)knowingly convert the money or property, permanently or temporarily, to an unauthorized use,

fails to deliver or return, or fails to cause the return or delivery of, the money or property, or delivers, returns, or causes to be delivered or returned less money or property than the amount due or owed,

(D)authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true, (E)knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge the property, (F)knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, or (G)conspires to commit any violation set forth in any of subparagraphs (A) through (F),

is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government or its administrative beneficiary sustains because of the act of that person, subject to paragraphs (2) and (3).

(2)

Lesser penalty if defendant cooperates with investigation

In an action brought for a violation under paragraph (1), the court may assess not less than 2 times the amount of damages which the Government or its administrative beneficiary sustains because of the act of the person committing the violation if the court finds that— (A)such person provided to those officials of the United States who are responsible for investigating false claims violations, all information known to the person about the violation within 30 days after the date on which the person first obtained the information; (B)such person fully cooperated with any Government investigation of the violation; and (C)at the time such person provided to the United States the information about the violation under subparagraph (A), no criminal prosecution, civil action, or administrative action had commenced with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation. (3)

Assessment of costs

A person violating paragraph (1) shall, in addition to a penalty or damages assessed under paragraph (1) or (2), be liable to the United States Government for the costs of a civil action brought to recover such penalty or damages. (b)

Definitions

For purposes of this section— (1)the terms known, knowing, and knowingly mean that a person, with respect to information— (A)has actual knowledge of the information, (B)acts in deliberate ignorance of the truth or falsity of the information, or (C)acts in reckless disregard of the truth or falsity of the information,

and no proof of specific intent to defraud is required;

(2)the term Government money or property means— (A)money or property belonging to the United States Government; (B)money or property that— (i)the United States Government provides or has provided to a contractor, grantee, agent, or other recipient, or for which the United States Government will reimburse a contractor, grantee, agent, or other recipient; and (ii)is to be spent or used on the Government’s behalf or to advance a Government program; and (C)money or property that the United States holds in trust or administers for any administrative beneficiary; (3)the term claim includes any request or demand, whether under a contract or otherwise, for Government money or property; and (4)the term administrative beneficiary means any entity, including any governmental or quasi-governmental entity, on whose behalf the United States Government, alone or with others, serves as custodian or trustee of money or property owned by that entity. (c)

Statutory Cause of Action

Liability under this section is a statutory cause of action all elements of which are set forth in this section. No proof of any additional element of common law fraud or other cause of action is implied or required for liability to exist for a violation of these provisions. (d)

Exemption from Disclosure

Any information that a person provides pursuant to subparagraphs (A) through (C) of subsection (a)(2) shall be exempt from disclosure under section 552 of title 5. (e)

Exclusion

This section does not apply to claims, records, or statements made under the Internal Revenue Code of 1986.

Civil actions for false claims

(a)

Actions by private persons generally

Section 3730(b) of title 31, United States Code, is amended— (1)in paragraph (1), by striking the last sentence and inserting the following: The action may be dismissed only with the consent of the court and the Attorney General.; (2)in paragraph (2), by inserting after the second sentence the following: In the absence of a showing of extraordinary need, the written disclosure of any material evidence and information, and any other attorney work product, that the person bringing the action provides to the Government shall not be subject to discovery.; (3)in paragraph (4), by striking subparagraph (B) and inserting the following:

(B)notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action, and, within 45 days after the Government provides such notice, shall either— (i)move to dismiss the action without prejudice, or (ii)notify the court of the person’s intention to proceed with the action and move the court to unseal the complaint, and any amendments thereto, so as to permit service on the defendant and litigation of the action in a public forum.

A person who elects to proceed with the action under subparagraph (B)(ii) shall serve the complaint within 120 days after the person’s complaint is unsealed under such subparagraph.

; and

(4)by amending paragraph (5) to read as follows:

(5)When a person brings an action under this subsection, no person other than the Government may join or intervene in the action, except with the consent of the person who brought the action. In addition, when a person brings an action that is pled in accordance with this subsection and section 3731(e), no other person may bring a separate action under this subsection based on the facts underlying a cause of action in the pending action.

(b)

Rights of the parties to qui tam actions

Section 3730(c)(5) of title 31, United States Code, is amended by striking the second sentence and inserting the following:

An alternate remedy includes—(A)anything of value received by the Government from the defendant, whether funds, credits, or in-kind goods or services, in exchange for an agreement by the Government either to release claims brought in, or to decline to intervene in or investigate the action initiated under subsection (b); and (B)anything of value received by the Government based on the claims alleged by the person initiating the action, if that person subsequently prevails on the claims.

If any such alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under this section, except that the person initiating the action may not obtain an award calculated on more than the total amount of damages, plus any fines or penalties, that could be recovered by the United States under section 3729(a).

(c)

Award to qui tam plaintiff

Section 3730(d) of title 31, United States Code, is amended— (1)in paragraph (1)— (A)in the first sentence, by inserting an award of after receive; (B)by striking the second and third sentences and inserting the following: Any payment to a person under this paragraph or under paragraph (2) or (3) shall be made from the proceeds, and shall accrue interest, at the underpayment rate under section 6621 of the Internal Revenue Code of 1986, beginning 30 days after the date the proceeds are paid to the United States, and continuing until payment is made to the person by the United States.; and (C)in the last sentence, by striking necessarily; (2)in paragraph (2)— (A)in the second sentence, by striking and shall be paid out of such proceeds; and (B)in the third sentence, by striking necessarily; and (3)by amending paragraph (3) to read as follows:

(3)(A)Whether or not the Government proceeds with the action, if the court finds that the action was brought by a person who either— (i)planned and initiated the violation of section 3729 upon which the action was brought, or (ii)derived his or her knowledge of the action primarily from specific information relating to allegations or transactions (other than information provided by the person bringing the action) that the Government publicly disclosed, within the meaning of subsection (e)(4)(A), or that it disclosed privately to the person bringing the action in the course of its investigation into potential violations of section 3729,

then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action that the person would otherwise receive under paragraph (1) or (2) of this subsection, taking into account the role of that person in advancing the case to litigation and any relevant circumstances pertaining to the violation. The court shall direct the defendant to pay any such person an amount for reasonable expenses that the court finds to have been incurred, plus reasonable attorneys’ fees and costs.

(B)If the person bringing the action is convicted of criminal conduct arising from his or her role in the violation of section 3729, that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. Such dismissal shall not prejudice the right of the United States to continue the action, represented by the Department of Justice.

(d)

Certain actions barred

Paragraph (4) of section 3730(e) of title 31, United States Code, is amended to read as follows:

(4)(A)Upon timely motion of the Attorney General of the United States, a court shall dismiss an action or claim brought by a person under subsection (b) if the allegations relating to all essential elements of liability of the action or claim are based exclusively on the public disclosure of allegations or transactions in a Federal criminal, civil, or administrative hearing, in a congressional, Federal administrative, or Government Accountability Office report, hearing, audit, or investigation, or from the news media. (B)For purposes of this paragraph, a public disclosure includes only disclosures that are made on the public record or have otherwise been disseminated broadly to the general public. An action or claim is based on a public disclosure only if the person bringing the action derived the person’s knowledge of all essential elements of liability of the action or claim alleged in the complaint from the public disclosure. The person bringing the action does not create a public disclosure by obtaining information from a request for information made under section 552 of title 5 or from exchanges of information with law enforcement and other Government employees if such information does not otherwise qualify as publicly disclosed under this paragraph.

(e)

Relief from retaliatory actions

Subsection (h) of section 3730 of title 31, United States Code, is amended to read as follows:

(h)

Relief from retaliatory action

Any person who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms or conditions of employment, or is materially hindered in obtaining new employment or other business opportunities, by any other person because of lawful acts done by the person discriminated against or others associated with that person— (1)in furtherance of an actual or potential action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, or (2)in furtherance of other efforts to stop one or more violations of section 3729,

shall be entitled to all relief necessary to make the person whole. Such relief shall include reinstatement with the same seniority status such person would have had but for the discrimination, 2 times the amount of back pay or business loss, interest on the back pay or business loss, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees. An action under this subsection may be brought in the appropriate district court of the United States for the relief provided in this subsection.

(f)

Relief to administrative beneficiaries

Section 3730 of title 31, United States Code, is amended by adding at the end the following new subsection:

(i)

Damages collected for financial loses suffered by administrative beneficiaries

After paying any awards due one or more persons who brought an action under subsection (b), the Government shall pay from the proceeds of the action to any administrative beneficiary, as defined in section 3729(b), all amounts that the Government has collected in the action for financial losses suffered by such administrative beneficiary. Any remaining proceeds collected by the Government shall be treated in the same manner as proceeds collected by the Government for direct losses the Government suffers from violations of section 3729. Nothing in section 3729 or this section precludes administrative beneficiaries from pursuing any alternate remedies available to them for losses or other harm suffered for them that are not pursued or recovered in an action under this section, except that if such alternate remedy proceedings are initiated after a person has initiated an action under subsection (b), such person shall be entitled to have such alternative remedies considered in determining any award in the action under subsection (b) to the same extent that such person would be entitled under subsection (c)(5) with respect to any alternate remedy pursued by the Government.

False claims procedure

(a)

Statute of limitations; intervention by the Government

Subsection (b) of section 3731 of title 31, United States Code, is amended to read as follows:

(b)

Statute of limitations; intervention by the Government

(1)

Statute of limitations

A civil action under section 3730 (a), (b), or (h) may not be brought more than 10 years after the date on which the violation of section 3729 or 3730(h) is committed. (2)

Intervention

If the Government elects to intervene and proceed with the action under section 3730, the Government may file its own complaint, or amend the complaint of a person who brought the action under section 3730(b), to clarify or add detail to the claims in which it is intervening and to add any additional claims with respect to which the Government contends it is entitled to relief. For purposes of paragraph (1), any such Government pleading shall relate back to the filing date of the complaint of the person who originally brought the action to the extent that the Government’s claim arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the person’s prior complaint.

(b)

Standard of proof

Section 3731(c) of title 31, United States Code, is amended— (1)by striking (c) In and inserting (c) Standard of Proof.—In; and (2)by striking United States and inserting plaintiff. (c)

Notice of Claims; void contracts, agreements, and conditions of employment

Section 3731 of title 31, United States Code, is amended by adding at the end the following new subsections:

(e)

Notice of Claims

In pleading an action brought under section 3730(b), a person shall not be required to identify specific claims that result from an alleged course of misconduct if the facts alleged in the complaint, if ultimately proven true, would provide a reasonable indication that one or more violations of section 3729 are likely to have occurred, and if the allegations in the pleading provide adequate notice of the specific nature of the alleged misconduct to permit the Government effectively to investigate and defendants fairly to defend the allegations made. (f)

Void contract, agreements, and conditions of employment

(1)

In general

Any contract, private agreement, or private term or condition of employment that has the purpose or effect of limiting or circumventing the rights of a person to take otherwise lawful steps to initiate, prosecute, or support an action under section 3730, or to limit or circumvent the rights or remedies provided to persons bringing actions under section 3730(b) and other cooperating persons under section 3729 shall be void to the full extent of such purpose or effect. (2)

Exception

Paragraph (1) shall not preclude a contract or private agreement that is entered into— (A)with the United States and a person bringing an action under section 3730(b) who would be affected by such contract or agreement specifically to settle claims of the United States and the person under section 3730; or (B)specifically to settle any discrimination claim under section 3730(h) of a person affected by such contract or agreement.

(d)

Conforming amendments

Section 3731 of title 31, United States Code, is amended— (1)in subsection (a), by striking (a) A subpena and inserting (a) Service of Subpoenas.—A subpoena; and (2)in subsection (d), by striking (d) Notwithstanding and inserting (d) Estoppel.—Notwithstanding.

False claims jurisdiction

Section 3732 of title 31, United States Code, is amended by adding at the end the following new subsection:

(c)

Service on state or local authorities

With respect to any State or local government that is named as a co-plaintiff with the United States in an action brought under subsection (b), a seal on the action ordered by the court under section 3730(b) shall not preclude the Government or the person bringing the action from serving the complaint, any other pleadings, or the written disclosure of substantially all material evidence and information possessed by the person bringing the action on the law enforcement authorities that are authorized under the law of that State or local government to investigate and prosecute such actions on behalf of such governments.

Civil Investigative Demands

(a)

Civil Investigative Demands

Section 3733(a)(1) of title 31, United State Code, is amended— (1)in the matter preceding subparagraph (A), by inserting , or a designee (for the purposes of this section), after Whenever the Attorney General; and (2)in the matter following subparagraph (D), by— (A)striking may not delegate and inserting may delegate; and (B)adding at the end the following: Any information obtained by the Attorney General or a designee of the Attorney General under this section may be shared with any a person bringing an action under section 3730(b) if the Attorney General or the designee determines that it is necessary as part of any false claims law investigation.. (b)

Procedures

Section 3733(i)(3) of title 31, United States Code, is amended to read as follows:

(3) Use of Material, Answers, or Transcripts in false claims actions and other proceedings

Whenever any attorney of the Department of Justice has been designated to handle any false claims law investigation or proceeding, or any other administrative, civil, or criminal investigation, case, or proceeding, the custodian of any documentary material, answers to interrogatories, or transcripts of oral testimony received under this section may deliver to such attorney such material, answers, or transcripts for official use in connection with any such investigation, case, or proceeding as such attorney determines to be required. Upon the completion of any such investigation, case, or proceeding, such attorney shall return to the custodian any such material, answers, or transcripts so delivered which have not passed into the control of a court, grand jury, or agency through introduction into the record of such case or proceeding.

(c)

Definitions

Section 3733(l) of title 31, United States Code, is amended— (1)in paragraph (6), by striking and after the semicolon; (2)in paragraph (7), by striking the period at the end and inserting ; and; and (3)by adding at the end the following:

(8)the term official use means all lawful, reasonable uses in furtherance of an investigation, case, or proceeding, such as disclosures in connection with interviews of fact witnesses, settlement discussions, coordination of an investigation with a State Medicaid Fraud Control Unit or other government personnel, consultation with experts, and use in court pleadings and hearings.

Government right to dismiss certain actions

Section 3730(b) of title 31, United States Code, is amended by adding at the end the following:

(6)(A)Not later than 60 days after the date of service under paragraph (2), the Government may move to dismiss from the action the person bringing the action if the person is an employee of the Federal Government and— (i)all the necessary and specific material allegations contained in such action were derived from an open and active fraud investigation by the executive branch of the Government; or (ii)subject to subparagraph (B), the person bringing the action learned of the information that underlies the alleged violation of section 3729 that is the basis of the action in the course of the person’s employment by the United States. (B)In the case of a person to whom subparagraph (A)(ii) applies— (i)if the employing agency has an Inspector General and the person, before bringing the action— (I)disclosed in writing to the Inspector General substantially all material evidence and information that relates to the alleged violation that the person possessed, and (II)notified in writing the person’s supervisor and the Attorney General of the disclosure under subclause (I), or (ii)if the employing agency does not have an Inspector General and the person, before bringing the action— (I)disclosed in writing to the Attorney General substantially all material evidence and information that relates to the alleged violation that the person possessed, and (II)notified in writing the person’s supervisor of the disclosure under subclause (I),

the motion under subparagraph (A) may be brought only after a period of 12 months (and any extension under subparagraph (C)) has elapsed since the disclosure of information and notification under clause (i) or (ii) was made, and only if the Attorney General has filed an action under this section based on such information.

(C)Before the end of the 12-month period described under subparagraph (B), and upon notice to the person who has disclosed information and provided notice under subparagraph (B)(i) or (ii), the Attorney General may file a motion seeking an extension of that 12-month period. The court may extend that 12-month period for an additional period of not more than 12 months upon a showing by the Government that the additional period is necessary for the Government to decide whether or not to file an action under this section based on the information. Any such motion may be filed in camera and may be supported by affidavits or other submissions in camera. (D)For purposes of subparagraph (B), a person’s supervisor is the officer or employee who— (i)is in a position of the next highest classification to the position of such person; (ii)has supervisory authority over such person; and (iii)such person believes is not culpable of the violation upon which the action under this subsection is brought by such person. (E)A motion to dismiss under this paragraph shall set forth documentation of the allegations, evidence, and information in support of the motion. (F)Any person bringing an action under paragraph (1) shall be provided an opportunity to contest a motion to dismiss under this paragraph. The court may restrict access to the evidentiary materials filed in support of the motion to dismiss, as the interests of justice require. A motion to dismiss and papers filed in support or opposition of such motion may not be— (i)made public without the prior written consent of the person bringing the civil action; and (ii)subject to discovery by the defendant. (G)If the motion to dismiss under this paragraph is granted, the matter shall remain under seal. (H)Not later than 6 months after the date of the enactment of this paragraph, and every 6 months thereafter, the Attorney General shall submit to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives a report on— (i)the cases in which the Department of Justice has filed a motion to dismiss under this paragraph; (ii)the outcome of such motions; and (iii)the status of the civil actions in which such motions were filed.

Effective date

The amendments made by this Act shall take effect on the date of the enactment of this Act and shall apply to any case pending on, or filed on or after, that date.