[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.
                                 <all>