[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 458 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 458
To amend the False Claims Act.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 24, 2009
Mr. Grassley (for himself, Mr. Durbin, Mr. Leahy, Mr. Specter, and Mr.
Whitehouse) introduced the following bill; which was read twice and
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend the False Claims Act.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``False Claims Act Clarification Act
of 2009''.
SEC. 2. FALSE CLAIMS GENERALLY.
Section 3729 of title 31, United States Code, is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Liability for Certain Acts.--
``(1) In general.--Subject to paragraph (2), any person
who--
``(A) knowingly presents, or causes to be
presented, a false or fraudulent claim for payment or
approval;
``(B) knowingly makes, uses, or causes to be made
or used, a false record or statement to get a false or
fraudulent claim paid or approved;
``(C) conspires to commit a violation of
subparagraph (A), (B), (D), (E), (F), or (G) or
otherwise to get a false or fraudulent claim paid or
approved;
``(D) has possession, custody, or control of
property or money used, or to be used, by the
Government and knowingly delivers, or causes to be
delivered, less than all of that money or property;
``(E) is 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;
``(F) 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; or
``(G) 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 knowingly conceals,
avoids, or decreases an obligation to pay or transmit
money or property to the Government,
is liable to the United States Government for a civil penalty
of not less than $5,000 and not more than $10,000, as adjusted
by the Federal Civil Penalties Inflation Adjustment Act of 1990
(28 U.S.C. 2461 note; Public Law 104-410), plus 3 times the
amount of damages which the Government sustains because of the
act of that person.
``(2) Reduced damages.--If the court finds that--
``(A) the person committing the violation of this
subsection furnished officials of the United States
responsible for investigating false claims violations
with all information known to such person about the
violation within 30 days after the date on which the
defendant first obtained the information;
``(B) such person fully cooperated with any
Government investigation of such violation; and
``(C) at the time such person furnished the United
States with the information about the violation, no
criminal prosecution, civil action, or administrative
action had commenced under this title with respect to
such violation, and the person did not have actual
knowledge of the existence of an investigation into
such violation,
the court may assess not less than 2 times the amount of
damages which the Government sustains because of the act of
that person.
``(3) Costs of civil actions.--A person violating this
subsection shall also be liable to the United States Government
for the costs of a civil action brought to recover any such
penalty or damages.'';
(2) by striking subsections (b) and (c) and inserting the
following:
``(b) Definitions.--For purposes of this section--
``(1) the terms `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 `claim'--
``(A) means any request or demand, whether under a
contract or otherwise, for money or property and
whether or not the United States has title to the money
or property, that--
``(i) is presented to an officer, employee,
or agent of the United States; or
``(ii) is made to a contractor, grantee, or
other recipient if the United States
Government--
``(I) provides or has provided any
portion of the money or property
requested or demanded; or
``(II) will reimburse such
contractor, grantee, or other recipient
for any portion of the money or
property which is requested or
demanded; and
``(B) does not include requests or demands for
money or property that the Government has paid to an
individual as compensation for Federal employment or as
an income subsidy with no restrictions on that
individual's use of the money or property; and
``(3) the term `obligation' means a fixed duty, or a
contingent duty arising from an express or implied contractual,
quasi-contractual, grantor-grantee, licensor-licensee, fee-
based, or similar relationship, and the retention of any
overpayment.'';
(3) by redesignating subsections (d) and (e) as subsections
(c) and (d), respectively; and
(4) in subsection (c), as redesignated, by striking
``subparagraphs (A) through (C) of subsection (a)'' and
inserting ``subsection (a)(2)''.
SEC. 3. GOVERNMENT RIGHT TO DISMISS CERTAIN ACTIONS.
Section 3730(b) of title 31, United States Code, is amended--
(1) in paragraph (2), by striking ``Rule 4(d)(4)'' and
inserting ``rule 4''; and
(2) by adding at the end the following:
``(6)(A) Not later than 120 days after the date of service
under paragraph (2), the Government may move to dismiss from
the action a qui tam relator that is an employee of the Federal
Government, or that is an immediate family member of an
employee of the Federal Government, if--
``(i) the necessary and specific material
allegations contained in such action were derived from
a filed criminal indictment or information or an open
and active criminal, civil, or administrative
investigation or audit by the Government into
substantially the same fraud alleged in the action;
``(ii) the duties of the employee's position
specifically include uncovering and reporting the
particular type of fraud that is alleged in the action,
and the employee, as part of the duties of that
employee's position, is participating in or has
knowledge of an open and active criminal, civil, or
administrative investigation or audit by the Government
of the alleged fraud;
``(iii) 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,
and either--
``(I) in a case in which the employing
agency has an inspector general, such person,
before bringing the action has not--
``(aa) disclosed in writing
substantially all material evidence and
information that relates to the alleged
violation that the person possessed to
such inspector general; and
``(bb) notified in writing the
person's supervisor and the Attorney
General of the disclosure under
division (aa); or
``(II) in a case in which the employing
agency does not have an inspector general, such
person, before bringing the action has not--
``(aa) disclosed in writing
substantially all material evidence and
information that relates to the alleged
violation that the person possessed, to
the Attorney General; and
``(bb) notified in writing the
person's supervisor of the disclosure
under division (aa); or
``(iv) 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,
made the required disclosures and notifications under
clause (iii), and--
``(I) less than 18 months (and any period
of extension as provided for under subparagraph
(B)) have elapsed since the disclosures of
information and notification under clause (iii)
were made; or
``(II) within 18 months (and any period of
extension as provided for under subparagraph
(B)) after the disclosures of information and
notification under clause (iii) were made, the
Attorney General has filed an action based on
such information.
``(B) Prior to the expiration of the 18-month period
described under subparagraph (A)(iv)(II) and upon notice to the
person who has disclosed information and provided notice under
subparagraph (A)(iii), the Attorney General may extend such 18-
month period by 1 additional 12-month period.
``(C) For purposes of subparagraph (A), 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.
``(D) A motion to dismiss under this paragraph shall set
forth documentation of the allegations, evidence, and
information in support of the motion.
``(E) Any person against whom the Government has filed a
motion to dismiss under subparagraph (A) 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
evidentiary material filed in support or opposition of such
motion shall 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.
``(F) Upon granting a motion filed under subparagraph (A),
the court shall dismiss the qui tam relator from the action.
``(G) If the motion to dismiss under this paragraph is
granted, the matter shall remain under seal.
``(H) Not later than 12 months after the date of the
enactment of this paragraph, and every 12 months thereafter,
the Department of Justice shall submit a report to the
Committee on the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives relating to--
``(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 false claims civil actions in
which such motions were filed.
``(I) Nothing in this paragraph shall be construed to limit
the authority of the Government to dismiss an action or claim,
or a person who brings an action or claim, under this
subsection for any reason other than the grant of a motion
filed under subparagraph (A).''.
SEC. 4. BARRED ACTIONS.
(a) Provisions Relating to Actions Barred.--Section 3730(b)(1) of
title 31, United States Code, is amended by adding at the end the
following: ``No claim for a violation of section 3729 may be waived or
released by any action of any person who brings an action under this
subsection, except insofar as such action is part of a court approved
settlement of a false claim civil action brought under this section.
Nothing in this paragraph shall be construed to limit the ability of
the United States to decline to pursue any claim brought under this
subsection, or to require court approval of a settlement by the
Government with a defendant of an action brought under subsection (a),
or under this subsection, unless the person bringing the action objects
to the settlement under subsection (c)(2)(B).''.
(b) Dismissal.--Section 3730(e)(4) of title 31, United States Code,
is amended to read as follows:
``(4) A court shall dismiss an action or claim or the
person bringing the action or claim under subsection (b), upon
a motion by the Government filed on or before service of a
complaint on the defendant under subsection (b), or thereafter
for good cause shown if--
``(A) on the date the action or claim was filed,
substantially the same matters, involving the same
wrongdoer, as alleged in the action or claim were
contained in, or the subject of--
``(i) a filed criminal indictment or
information, or an open and active criminal,
civil, or administrative investigation or
audit; or
``(ii) a news media report, or public
congressional hearing, report, or
investigation, if within 90 days after the
issuance or completion of such news media
report or congressional hearing, report, or
investigation, the Department of Justice or an
Office of Inspector General opened a fraud
investigation or audit of the facts contained
in such news media report or congressional
hearing, report, or investigation as a result
of learning about the public report, hearing,
or investigation;
``(B) any new information provided by the person
does not add substantial grounds for additional
recovery beyond those encompassed within the
Government's existing criminal indictment or
information, or an open and active criminal, civil, or
administrative investigation or audit; and
``(C) the Government's existing criminal indictment
or information, or an open and active criminal, civil,
or administrative investigation or audit, or the news
media report, or congressional hearing, report, or
investigation was not initiated or published after the
Government's receipt of information about substantially
the same matters voluntarily brought by the person to
the Government.''.
(c) Qui Tam Awards.--Section 3730(d) of title 31, United States
Code, is amended--
(1) in paragraph (1), by striking the second sentence and
inserting ``If the person bringing the action is not dismissed
under subsection (e)(4) because the person provided new
information that adds substantial grounds for additional
recovery beyond those encompassed within the Government's
existing indictment, information, investigation, or audit, then
such person shall be entitled to receive a share only of
proceeds of the action or settlement that are attributable to
the new basis for recovery that is stated in the action brought
by that person.''; and
(2) by striking paragraph (3) and inserting the following:
``(3)(A) Whether or not the Government proceeds with the action,
the court may, to the extent the court considers appropriate, reduce
the share of the proceeds of the action which a 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), if the court
finds that person--
``(i) planned and initiated the violation of section 3729
upon which the action was brought; or
``(ii) derived the knowledge of the claims in 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, as
that term is defined in subsection (e)(4)(A), or that the
Government disclosed privately to the person bringing the
action in the course of its investigation into potential
violations of this subchapter.
``(B) If the person bringing the action is convicted of criminal
conduct arising from the role of that person 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.''.
SEC. 5. RELIEF FROM RETALIATORY ACTIONS.
Section 3730(h) of title 31, United States Code, is amended to read
as follows:
``(h) Relief From Retaliatory Actions.--
``(1) In general.--Any employee, government contractor, or
agent shall be entitled to all relief necessary to make that
employee, government contractor, or agent whole, if that
employee, government contractor, or agent is discharged,
demoted, suspended, threatened, harassed, or in any other
manner discriminated against in the terms and conditions of
employment because of lawful acts done by the employee,
government contractor, or agent on behalf of the employee,
government contractor, or agent or associated others in
furtherance of other efforts to stop 1 or more violations of
this subchapter.
``(2) Relief.--Relief under paragraph (1) shall include
reinstatement with the same seniority status that employee,
government contractor, or agent would have had but for the
discrimination, 2 times the amount of back pay, interest on the
back pay, 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.''.
SEC. 6. STATUTE OF LIMITATIONS.
Section 3731(b) of title 31, United States Code, is amended to read
as follows:
``(b)(1) A civil action under section 3730 may not be brought more
than 10 years after the date on which the violation of section 3729 or
3730 is committed.
``(2) Upon intervention, the Government may file its own complaint
in intervention or amend the complaint of a person who has brought an
action under section 3730(b) to clarify or add detail to the claims in
which the Government is intervening and to add any additional claims
with respect to which the Government contends it is entitled to relief.
For statute of limitations purposes, 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 claim of the
Government arises out of the conduct, transactions, or occurrences set
forth, or attempted to be set forth, in the prior complaint of that
person.''.
SEC. 7. CIVIL INVESTIGATIVE DEMANDS.
Section 3733 of title 31, United States Code, is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) in the matter preceding subparagraph
(A)--
(I) by inserting ``, or a designee
(for purposes of this section),'' after
``Whenever the Attorney General''; and
(II) by striking ``the Attorney
General may, before commencing a civil
proceeding under section 3730 or other
false claims law,'' and inserting ``the
Attorney General, or a designee, may,
before commencing a civil proceeding
under section 3730(a) or other false
claims law, or electing under section
3730(b),''; and
(ii) in the matter following subparagraph
(D)--
(I) by striking ``may not
delegate'' and inserting ``may
delegate''; and
(II) by 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 qui tam
relator if the Attorney General or
designee determine it is necessary as
part of any false claims act
investigation.''; and
(B) in paragraph (2)(G), by striking the second
sentence;
(2) in subsection(i)(2)--
(A) in subparagraph (B), by striking
``, who is authorized for such use under regulations
which the Attorney General shall issue''; and
(B) in subparagraph (C), by striking ``Disclosure
of information to any such other agency shall be
allowed only upon application, made by the Attorney
General to a United States district court, showing
substantial need for the use of the information by such
agency in furtherance of its statutory
responsibilities.''; and
(3) in subsection (l)--
(A) in paragraph (6), by striking ``and'' after the
semicolon;
(B) in paragraph (7), by striking the period and
inserting ``; and''; and
(C) by adding at the end the following:
``(8) the term `official use' means any use that is
consistent with the law, and the regulations and policies of
the Department of Justice, including use in connection with
internal Department of Justice memoranda and reports;
communications between the Department of Justice and a Federal,
State, or local government agency, or a contractor of a
Federal, State, or local government agency, undertaken in
furtherance of a Department of Justice investigation or
prosecution of a case; interviews of any qui tam relator or
other witness; oral examinations; depositions; preparation for
and response to civil discovery requests; introduction into the
record of a case or proceeding; applications, motions,
memoranda and briefs submitted to a court or other tribunal;
and communications with Government investigators, auditors,
consultants and experts, the counsel of other parties,
arbitrators and mediators, concerning an investigation, case or
proceeding.''.
SEC. 8. FALSE CLAIMS SETTLEMENTS.
(a) Reports by Attorney General.--Not later than November 1 of each
year, the Attorney General shall submit a report to the Committee on
the Judiciary of the Senate and the Committee on the Judiciary of the
House of Representatives that describes each settlement or compromise
of any claim, suit, or other action entered into with the Department of
Justice that--
(1) relates to an alleged violation of section 1031 of
title 18, United States Code, or section 3729 of title 31,
United States Code (including all settlements of alternative
remedies); and
(2) results from a claim of damages in excess of $100,000.
(b) Contents of Reports.--The descriptions of each settlement or
compromise required to be included in the annual report under
subsection (a) shall include--
(1) the overall amount of the settlement or compromise and
the portions of the settlement attributed to various statutory
authorities;
(2) the amount of actual damages, or in the event no actual
amount is available a good faith estimate of the damages,
estimated to have been sustained and the minimum and maximum
potential civil penalties incurred as a consequence of the
defendants that is the subject of the settlement or compromise;
(3) the basis for the estimate of damages sustained and the
potential civil penalties incurred;
(4) the amount of the settlement that represent damages and
the multiplier or percentage of the actual damages applied in
the actual settlement or compromise;
(5) the amount of the settlement that represents civil
penalties and the percentage of the potential penalty liability
captured by the settlement or compromise;
(6) the amount of the settlement that represents criminal
fines and a statement of the basis for such fines;
(7) the length of time involved from the filing of the
complaint until the finalization of the settlement or
compromise, including--
(A) the date of the original filing of the
complaint;
(B) the time the case remained under seal;
(C) the date upon which the Department of Justice
determined whether or not to intervene in the case; and
(D) the date of settlement or compromise;
(8) whether any of the defendants, or any divisions,
subsidiaries, affiliates, or related entities, had previously
entered into 1 or more settlements or compromises relating to
section 1031 of title 18, United States Code, or section
3730(b) of title 31, United States Code, and if so, the dates
and monetary size of such settlements or compromises;
(9) whether the defendant or any of its divisions,
subsidiaries, affiliates, or related entities--
(A) entered into a corporate integrity agreement
relating to the settlement or compromise;
(B) entered into a deferred prosecution agreement
relating to the settlement or compromise; and
(C) had previously entered into 1 or more corporate
integrity agreements relating to section 3730(b) of
title 31, United States Code, or a deferred prosecution
agreement relating to section 1031 of title 18, United
States Code, and if so, whether the previous corporate
integrity agreements covered the conduct that is the
subject of the settlement or compromise being reported
on or similar conduct;
(10) in the case of settlements involving Medicaid, the
amounts paid to the Federal Government and to each of the
States participating in the settlement or compromise;
(11) whether civil investigative demands were issued in
process of investigating the case;
(12) in qui tam actions, the percentage of the settlement
amount awarded to the relator, and whether or not the relator
requested a fairness hearing pertaining to the percentage
received by the relator or the overall amount of the
settlement;
(13) the extent to which officers of the department or
agency that was the victim of the loss resolved by the
settlement or compromise participated in the settlement
negotiations; and
(14) the extent to which relators and their counsel
participated in the settlement negotiations.
SEC. 9. SEVERABILITY.
If any provision or application of this Act is held invalid, the
invalidity shall not affect other provisions or applications of this
Act which can be given effect without regard to the invalid provision
or application, and to this end the provisions or applications of this
Act are severable.
SEC. 10. EFFECTIVE DATE AND APPLICATION.
(a) In General.--Except as provided under subsections (b) and (c),
the amendments made by this Act shall take effect on the date of
enactment of this Act and shall apply to all civil actions filed
before, on, or after that date.
(b) False Claims.--The amendments made by section 2 shall take
effect on the date of enactment of this Act and shall apply to conduct
occurring after that date of enactment.
(c) Statute of Limitation.--The amendment made to section
3731(b)(1) of title 31, United States Code, by section 6 of this Act
shall take effect on the date of enactment of this Act and shall apply
to civil actions filed after that date of enactment.
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