[Congressional Record Volume 145, Number 99 (Wednesday, July 14, 1999)]
[Extensions of Remarks]
[Page E1540]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                1986 AMENDMENTS TO THE FALSE CLAIMS ACT

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                         HON. HOWARD L. BERMAN

                             of california

                    in the house of representatives

                        Wednesday, July 14, 1999

  Mr. BERMAN. Mr. Speaker, thirteen years ago, Congress passed the 1986 
Amendments to the False Claims Act. They have been an enormous success.
  As the principal sponsors of those amendments, Senator Grassley and I 
are gratified to see how well they have worked. Recoveries to the 
United States Treasury pursuant to the False Claim Act have increased a 
remarkable 40-fold compared to the period before the amendments were 
adopted. More than $2.5 billion has been recovered to date from qui tam 
 lawsuits, with half of that amount coming in the last few years. 
Another $3 billion in recoveries is anticipated from the pending cases 
the government has already joined. This exponential growth in 
recoveries to the Treasury is expected to continue.
  The biggest payoff however has been in the deterrence of fraud. An 
analysis by William L. Stringer, the former Chief Economist for the 
U.S. Senate Committee on Budget, has estimated the deterrence 
attributable to the qui tam  provisions of the False Claims Act for the 
first 10 years (through 1996) is $35 billion to $75 billion. He 
estimates that the next 10 years will produce additional savings of 
$105 billion to $210 billion. Indeed, many believe that the substantial 
reduction in Medicare outlays in recent years is due in no small part 
to the effect these amendments have had in curtailing fraud.
  It is not an overstatement to suggest that there has been a cultural 
shift within companies that do business with the government. Because of 
the vigilance of the citizenry and the use of the qui tam  provisions 
of False Claims Act, companies and entities are changing the way they 
do business with the government. Instead of developing strategies of 
``revenue enhancement'' when dealing with the government, these same 
entities are developing new compliance programs to ensure that the 
government is not overcharged. This shift has occurred for one 
fundamental reason: The risks of getting caught, exposed and subjected 
to substantial penalties have grown tremendously as a direct result of 
the reinvigoration of the government's fraud enforcement caused by the 
1986 amendments.
  This cultural change is very much what Senator Grassley and I hoped 
and expected would develop with the enactment of the 1986 amendments. 
We wanted to encourage, with appropriate incentives, the citizenry to 
the take us the fight against fraud perpetrated against our government. 
We had hoped to forge a public/private partnership to go after those 
who would deliberately overcharge (or underpay) the government. People 
who are insiders within companies and witness fraud, businesses that 
become aware of illegal practices by competitors, individuals who 
through their own investigative efforts turn up information of 
government overcharges (or underpayments) and, equally important, the 
private attorneys and law firms who work with the Justice Department 
and heavily invest their own time, resources, and expertise over many 
years these individuals, companies and attorneys have collectively 
turned the qui tam  provisions of the False Claims Act into the single 
best example of privatization success.
  In the thirteen years since the 1986 amendments were adopted, more 
than cases have been filed. As a result, a substantial body of False 
Claims law has developed.
  I rise today to express the grave concerns that Senator Grassley and 
I have about judicial decisions involving one important provisions of 
the law: the ``public disclosure` bar. We have reviewed with dismay 
opinions of many courts that have misunderstood and therefore, 
misinterpreted what Congress intended when in adopted this provision. 
The courts' interpretations of the ``public disclosure'' bar are often 
in conflict with each other, resulting in great confusion. Worse, taken 
together these decisions many discourage many good cases from being 
filed, threatening to seriously undermine the effectiveness of the Act.
  Because of our concerns about judicial interpretation of the ``public 
disclosure'' bar, we wrote to Attorney General Reno to set forth our 
views in detail about this provisions and the various circuit court 
interpretations. We ask that the Department of Justice, as the 
government agency with primary responsibility for enforcing the False 
Claims Act, be especially vigilant in helping courts correctly 
implement the Congressional policy that underlies the ``public 
disclosure'' bar.
  We also believe that it would be useful for courts to understand what 
we as the principal authors of the law intended in creating the 
``public disclosure` bar.
  By introducing our letter to Attorney General Reno into the 
Congressional Record,  it is our intention to make it available to 
federal courts for guidance and perspective.

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