[Congressional Record Volume 153, Number 135 (Wednesday, September 12, 2007)]
[Senate]
[Pages S11506-S11510]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. GRASSLEY (for himself, Mr. Durbin, Mr. Leahy, Mr. Specter,
and Mr. Whitehouse):
S. 2041. A bill to amend the False Claims Act; to the Committee on
the Judiciary.
Mr. GRASSLEY. Mr. President, for 27 years, I have come to the Senate
floor to discuss legislation that will help the Government run
efficiently and effectively. I have been an outspoken advocate for
whistleblowers, which whistleblowers in good faith bring forth
information about waste, fraud, and abuse of taxpayers' dollars. I have
championed oversight efforts, and I have spent my time in the Senate
asking the tough questions of Government bureaucrats in order to expose
these problems, particularly problems that have been brought to my
attention by patriotic whistleblowers.
One thing I learned from oversight is that no matter how engaged
Congress may be, there are not enough hands to find all the waste,
fraud, and abuse in Government programs. Instead, we have to rely then,
as I have indicated, on those courageous and patriotic individuals who
speak out and blow the whistle, to go to court to collect Government
money that was lost to unscrupulous contractors who are selling false
or fraudulent goods, in the case of 100 years ago, to Union troops
because that is why the False Claims Act came about, and to make sure
that we protect whistleblowers when a program is not working and
taxpayers' dollars are being lost.
These whistleblowers, by sticking their necks out, are individuals
often at risk. They risk everything to fix problems within our
Government because they believe in doing their job the way it was
intended to be done, and they probably do not get the attention of
higher-ups in the bureaucracy. That is why they become whistleblowers
and come to Congress to bring these faults out. Somehow they end up
being as welcome in the bureaucracy as a skunk is at a picnic.
However, pointing out fraud is one thing; getting results, fixing the
problem, and recouping taxpayers' money lost to fraud, waste, and abuse
is quite another thing.
The key to recouping these lost funds is ensuring that we have
effective laws on the books. One such law is the Federal False Claims
Act. I have come to the floor today to remind people about the history
of the False Claims Act, but also to suggest some improvements in that
act so it can be an even more useful tool in the fight against waste,
fraud, abuse, and the protection of whistleblowers.
I have referred to the False Claims Act. This is known as the Lincoln
law because it has some history going back to the Civil War. The
Lincoln law was originally passed by Congress to combat war
profiteering by Government contractors during the Civil War. The False
Claims Act allowed individual citizen whistleblowers to go to court to
collect Government money that was lost to unscrupulous contractors who
were selling false or fraudulent goods to Union troops.
This legal mechanism, known as qui tam, a Latin term, is the key
component to the False Claims Act allowing individual citizens to act
as private attorneys general to help stop fraud and recover lost money.
However, following World War II, the False Claims Act was weakened by
an act of Congress which lowered the penalties limiting the money the
Government could recover from fraud. This remained the state and the
language of the False Claims Act until 1986 when I authored amendments
to the act which restored teeth and breathed new air and new life into
a law that was designed to protect all American taxpayers.
I am happy to report that in the 20 years since I introduced and
Congress passed the 1986 amendment, the Federal Government has used the
False Claims Act to recover over $20 billion from those who defraud
Government. That is $20 billion that would otherwise be lost and gone
forever.
More importantly, this $20 billion serves as a deterrent reminder to
those who wish to steal from the Government. We cannot measure the
deterrent value of this legislation, but I personally feel, and I have
had students of Government tell me, the deterrent value of the False
Claims Act is much greater than even the $20 billion that we can
quantify that has come back to the Federal Treasury.
Today, the False Claims Act faces a situation where it may not be as
effective as intended. Recent decisions by Federal courts have limited
the False Claims Act in a way that was not envisioned when I authored
the 1986 amendments. These court decisions threaten to undermine both
the spirit and intent of the 1986 amendments.
The first case, U.S. Totten v. Bombardier Corporation, held that
false claims presented to Government grantees, in this case employees
at Amtrak, were not actually presented to the Federal Government. As a
result, the Government was precluded from recovering money lost to
fraud and abuse perpetuated against Amtrak.
The second case, Rockwell International Corporation, et al, v. U.S.,
[[Page S11507]]
was decided earlier this year by the U.S. Supreme Court. In this case,
the Court interpreted an area of the False Claims Act, known as the
public disclosure bar, which prohibits a false claims case from moving
forward if the case is based upon publicly disclosed information, such
as a government report, unless the whistleblower filing the case was
the ``original source'' of the information.
Now here, the Supreme Court held that a qui tam whistleblower was
barred from receiving a share of any money recovered unless that
whistleblower was the original source of all claims ultimately settled.
Now, I say to my colleagues that this may not sound like a very
troublesome decision. However, it is, and the impact is that oftentimes
a case is brought by a whistleblower on a certain set of facts and then
expanded by the Department of Justice, which ultimately settles on
other grounds. As a result, this case creates a disincentive for a
whistleblower to bring forth information about fraud, as they may not
get to share in any part of the recovery.
You see, one of the incentives for the whistleblowers is if they
bring a case that brings back money into the Federal Treasury, they get
part of that settlement as an incentive to do this. Quite frankly, a
whistleblower sticks their neck out. By doing the right thing, they are
probably ruining themselves professionally. Let us say that they get
part of the recovery. Well, the Federal Government gets billions of
dollars that we would not have even gotten if we had not had the
information from the whistleblower. That is why the whistleblower is
very important.
Now, there is another case that gives us problems. This third case
that challenges the intent of the False Claims Act is United States DRC
v. Custer Battles, decided a year ago. In that case, a jury found that
a defense contractor in Iraq had defrauded the Government of $10
million. However, the judge overturned the jury verdict, finding that
the money lost was not U.S. taxpayer money but was instead Iraqi money
under the control of the U.S. Government. As a result of this case, the
U.S. Government may not recover for any fraud committed against the
U.S. Government if the funds are not American funds, even if the U.S.
Government has been entrusted with the management of those funds.
These decisions, I can tell you as author of this legislation, are
contrary to the spirit and the intent of the 1986 amendments. Today, I
am joined by Senator Durbin as the lead cosponsor, along with Senator
Leahy and Senator Specter--and in those two individuals I will say that
Senator Leahy is chairman of the Judiciary Committee which has
jurisdiction, and Senator Specter is the former chairman of the
committee and now the Ranking Republican--so I feel by having Senator
Durbin, Senator Leahy, and Senator Specter as cosponsors of this False
Claims Act Correction Act, as powers within the Senate to bring
attention to what the courts have done, this injustice to the False
Claims Act and gutting of the False Claims Act, this act will bring it
back to its original intent.
This legislation will correct judicial interpretations damaging the
False Claims Act. This bill is narrowly tailored to ensure that the
intent of Congress in the 1986 amendments is upheld and nothing more.
The False Claims Act Correction Act will correct these three judicial
interpretations in addition to also making technical and correcting
amendments.
First, the bill will address the Totten decision by removing the
requirement that false claims be directly presented to a government
official, instead tying the liability directly to Government money and
property.
Next, the bill will address the Rockwell decision by requiring the
Attorney General to file a timely motion to dismiss claims that violate
the public disclosure bar. By allowing the Attorney General to present
to the court information about public disclosures upfront in a case,
the bill would eliminate procedural uncertainties that exist now by
allowing public disclosures to be addressed at any time in the case.
The False Claims Act Correction Act also clarifies that nontaxpayer
funds under the trust and administration of the U.S. Government subject
to fraud are actionable under the False Claims Act. Thus, money
directly under the control of the U.S. Government subject to fraud that
are currently outside the scope of the False Claims Act would now be
covered. This will correct the problems that have arisen following the
decision in the Custer Battles case.
Additionally, the bill clarifies a split between the Federal Circuit
Courts of Appeal that currently exists regarding whether a government
employee may file a False Claims Act case. More specifically, the bill
provides that a government employee would be able to bring a False
Claims Act case based upon information learned in the course of their
employment, only when the employee: No. 1, discloses the fraud to their
supervisors; No. 2, discloses the fraud to the inspector general of
that agency; and, No. 3, discloses the fraud to the Attorney General
and then waits 12 months without the Government acting. After these
conditions are met, then, and only then, may a government employee act
as a qui tam whistleblower.
Finally, the bill makes two technical corrections to the False Claims
Act. The first is a technical-correcting amendment that clarifies the
statute of limitations. The second is a technical amendment to the
civil investigative demands that the Department of Justice is already
authorized to issue. These technical corrections will streamline the
procedures for filing as well as prosecuting False Claims Act cases by
both qui tam whistleblowers as well as cases instituted originally by
the Department of Justice.
The False Claims Act Correction Act is a narrowly tailored bill that
seeks to ensure the legislative intent of the 1986 amendments is truly
understood. This is not a Democratic or Republican issue. It is an
American taxpayer issue. I am proud to say this bill has strong
bipartisan support, as I am joined by Senator Durbin as the lead
Democratic cosponsor, and I wish to emphasize Senator Leahy's and
Senator Specter's cosponsorship of this legislation.
I am glad we have a bipartisan coalition ready to work to fix the
False Claims Act with these narrowly tailored corrections, but I
encourage my colleagues not to bow to special interest groups who have
worked to weaken the No. 1 tool for recovering Government dollars lost
to fraud.
I will say at this point that yesterday I had a private discussion
with a Senator who will go unnamed. He said, even as corrective as this
legislation is, and it is only meant to be correcting, that already we
have the pharmaceutical companies out working against this legislation.
So this may not be easy to get through, even though it is sticking with
the original intent. So I don't want to get into a situation such as I
did in 1986, when we wrote a bill that was bipartisan, and it took
about a year to get the various holds off that were put on this. In
those days, we had secret holds. Under the new rules of the Senate, we
are not supposed to have any secret holds anymore.
So if people have complaints about this legislation, I wish to work
it out, but I don't know how anybody can hold up legislation where the
underlying legislation has brought $20 billion that would have
otherwise been lost to fraud back to the Federal Treasury. The American
taxpayers deserve a law that detects, prevents, and recovers money lost
to fraud. The False Claims Act works and has recovered this $20
billion, and that law is 20 years old. But let me say this money didn't
start rolling in until about 6 or 7 years after that 1986 law was
passed.
The False Claims Act Correction Act will provide necessary and
narrowly tailored corrections to ensure that the False Claims Act works
to protect the taxpayers into the future, as I visualized it would in
1986 in spirit as well as in letter. I urge my colleagues to support
this important legislation.
I have had the pleasure of having the Presiding Officer ask to be a
cosponsor of the bill, so I ask unanimous consent that Senator
Whitehouse be added as a cosponsor at this point.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. President, I ask unaniumous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
placed in the Record, as follows:
[[Page S11508]]
S. 2041
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 Correction
Act of 2007''.
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 Government money or property 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 for Government money or property paid or approved;
``(C) conspires to commit any substantive violation set
forth in this section or otherwise to defraud the Government
by getting a false or fraudulent claim for Government money
or property paid or approved;
``(D) has possession, custody, or control of Government
money or property and, intending to defraud the Government,
to retain overpayment, or knowingly to 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;
``(E) 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 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,
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, its
grantee, or administrative beneficiary sustains because of
the act of that person.
``(2) Lesser penalty.--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, its grantee or administrative
beneficiary sustains because of the act of the 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 `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 the United States Government
provides, has provided, or will reimburse to a contractor,
grantee, agent or other recipient to be spent or used on the
Government's behalf or to advance Government programs;
``(C) money or property belonging to any administrative
beneficiary, as defined herein;
``(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
natural person or entity, including any governmental or
quasi-governmental entity, on whose behalf the United States
Government, alone or with others, collects, possesses,
transmits, administers, manages, or acts as custodian of
money or property.'';
(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
by adding at the end thereof 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 qui tam relator that is an employee of the
Federal Government if--
``(i) all the necessary and specific material allegations
contained in such action were derived from an open and active
fraud investigation by the Government; or
``(ii) 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 none of the
following has occurred:
``(I) In a case in which the employing agency has an
inspector general, such person, before bringing the action--
``(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).
``(II) In a case in which the employing agency does not
have an inspector general, such person, before bringing the
action--
``(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).
``(III) Not less than 12 months (and any period of
extension as provided for under subparagraph (B)) have
elapsed since the disclosure of information and notification
under either subclause (I) or (II) were made and the Attorney
General has not filed an action based on such information.
``(B) Prior to the expiration of the 12-month period
described under subparagraph (A)(ii)(III) and upon notice to
the person who has disclosed information and provided notice
under subparagraph (A)(ii) (I) or (II), the Attorney General
may file a motion seeking an extension of such 12-month
period. Such 12-month period may be extended by a court for
not more than an additional 12-month period upon a showing by
the Government that the additional period is necessary for
the Government to decide whether or not to file such action.
Any such motion may be filed in camera and may be supported
by affidavits or other submissions in camera.
``(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 bringing a civil 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 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) If the motion to dismiss under this paragraph is
granted, the matter shall remain under seal.
``(G) No later than 6 months after the date of the
enactment of this paragraph, and every 6 months thereafter,
the Department of Justice shall 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.''.
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, 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 section shall be
construed to limit the ability of the United States to
decline to pursue any claim brought under this subchapter.''.
(b) Dismissal.--Section 3730(e)(4) of title 31, United
States Code, is amended to read as follows:
``(4)(A) Upon timely motion of the Attorney General, a
court shall dismiss an action or claim brought under section
3730(b) if the
[[Page S11509]]
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) In this paragraph:
``(i) The term `public disclosure' includes only
disclosures made on the public record or that have otherwise
been disseminated broadly to the general public.
``(ii) The person bringing the action does not create a
public disclosure by obtaining information from a Freedom of
Information Act request or from information exchanges with
law enforcement and other Government employees if such
information does not otherwise qualify as publicly disclosed.
``(iii) An action or claim is based on a public disclosure
only if the person bringing the action derived his knowledge
of all essential elements of liability of the action or claim
alleged in his complaint from the public disclosure.''.
(c) Qui Tam Awards.--Section 3730(d)(3) of title 31, United
States Code, is amended to read as follows:
``(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 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(a)(1) of title 31, United States Code, is
amended--
(1) in the matter preceding subparagraph (A), by inserting
``, or a designee (for 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
qui tam relator if the Attorney General or designee determine
it is necessary as part of any false claims act
investigation.''.
Mr. DURBIN. Mr. President, I am pleased to join my colleague Senator
Grassley in introducing the False Claims Act Correction Act of 2007.
This bipartisan legislation takes important steps to modernize and
strengthen the Federal False Claims Act and will help protect the
Government and taxpayers from waste, fraud, and abuse of Government
funds.
During the Civil War, President Abraham Lincoln saw the need for a
law that would prevent war profiteers and other unscrupulous Government
contractors from defrauding the Government and the Nation's taxpayers.
Lincoln urged the passage of legislation that would allow the
Government to seek damages and penalties against perpetrators of fraud,
and that would permit whistleblowers with information about false or
fraudulent claims to file qui tam lawsuits on the Government's behalf
in exchange for a share of the recovered funds. In 1863, Congress
heeded Lincoln's call and enacted the Federal False Claims Act, FCA,
which became known as ``Lincoln's Law.''
Lincoln's Law is still in effect today and it is still much-needed.
In recent years, there have been alarming reports of waste, fraud, and
abuse of Government funds in the Iraq war and reconstruction effort, in
the recovery from Hurricane Katrina and other disasters, in military
and homeland security procurement contracts, and in Federal healthcare
programs. We need strong laws that can expose and root out such
fraudulent practices.
The last major update of the FCA took place in 1986, when Senator
Grassley and Congressman Berman sponsored amendments that revitalized
the FCA and its qui tam provisions in response to widespread reports of
defense contractor fraud. Since 1986, the Federal Government and qui
tam relators have worked together to recover over $20 billion in moneys
that would otherwise have been lost to fraud, waste or abuse in
Government programs. The recovery of this enormous sum is a victory for
taxpayers, and a demonstration of the success of the FCA and its qui
tam model.
It has now been 21 years since the enactment of the 1986 FCA
amendments, and during that time changes in the interpretation of the
act and in the nature of Government contracting have threatened to
limit the FCA's effectiveness. In particular, several recent court
decisions have weakened the intent and application of Senator
Grassley's 1986 amendments to the FCA and have limited the FCA's
ability to reach certain types of fraud and abuse involving Government
programs.
The False Claims Act Correction Act seeks to correct these court
decisions and to ensure the FCA's utility as an effective tool against
fraud. It does so in several ways.
First, the False Claims Act Correction Act clarifies the
``presentment requirement'' in the FCA. In 2004, the DC Circuit Court
of Appeals held that liability under the FCA can only be found if the
allegedly fraudulent claim is ``presented to an officer or employee of
the United States Government.'' This interpretation has been used by
courts to dismiss a number of FCA cases where abuses of Federal
Government funds were clearly evident but where the false claims were
submitted to grantees or agents of the Federal Government--such as the
Iraq Coalition Provisional Authority--and not directly to Government
employees. Our legislation would make clear that FCA imposes liability
if a person presents a false or fraudulent claim for Federal Government
money or property, and that the claim need not be directly presented to
a Government employee.
Our legislation also clarifies the applicability of the FCA's
``public disclosure bar.'' The FCA currently allows a relator's FCA
case to be dismissed if the case is based on information that was
publicly available at the time of the filing, unless the relator was
the ``original source'' of the public information. In its 2007 decision
in Rockwell Int'l Corp. et al. v. United States, the Supreme Court held
that the public disclosure bar prevents a relator from recovering money
unless the relator was an original source for all the
[[Page S11510]]
claims that are settled or upon which a verdict is rendered. The
Rockwell holding is troubling because relators often file actions based
on facts which prove to be the tip of the iceberg, and upon further
investigation DOJ discovers more fraud and ends up settling or winning
the case on the grounds of the latter fraud.
The Rockwell court's interpretation of the public disclosure bar
might discourage whistleblowers from filing legitimate FCA cases and
alerting DOJ to fraud. Our legislation would preclude a relator from
recovery under the public disclosure bar only where the relator derived
knowledge of all essential elements of the claim from public
disclosure. Thus, only relators who truly contributed no new
information to the case would be barred.
Among its other provisions, the False Claims Act Correction Act
resolves a split among the Federal circuit courts by allowing a
Government employee to act as a qui tam relator when the employee
learns of fraudulent conduct on the job, provided that the employee has
first taken steps to report the fraud internally. Our legislation also
strengthens the protections in the FCA for whistleblowers, so that
whistleblowers who are Government contractors and agents can receive
the same antiretaliation protection as employees of the company
perpetrating the alleged fraud. Our bill further simplifies the FCA
statute of limitations with a clear 10-year standard for all cases, and
also makes technical changes to enhance DOJ's usage of the civil
investigative demand process in DOJ investigations of potential FCA
violations.
The changes that our legislation would make to the FCA are narrowly
tailored, and are designed to clarify the FCA's scope in keeping with
the intent of the authors of the 1986 FCA amendments. I commend Senator
Grassley, the Senate architect of the 1986 FCA amendments, for his
devotion to ensuring the effective functioning of the FCA, and I am
proud to join him in introducing this legislation to better combat
waste, fraud, and abuse of Government programs.
In sum, the False Claims Act Correction Act will enhance
whistleblowers' ability to shine a light on fraudulent conduct
involving Government funds, and to hold the perpetrators accountable
through legitimate qui tam claims. The bill's reforms will ensure that
the FCA can continue to serve as a viable tool for recovering taxpayer
funds lost to fraud, waste or abuse. The legislation we are introducing
today will strengthen the legacy of Lincoln's Law, and I am pleased to
serve as its lead cosponsor. I urge my colleagues to support its
passage.
Mr. SPECTER. Mr. President, I seek recognition to discuss the False
Claims Act Correction Act of 2007. The False Claims Act was passed by
Congress in 1863 in order to combat war profiteering during the Civil
War. The goal of the law was to encourage individuals to alert the
Government when fraud against the Government was occurring. The statute
does this by providing a portion of the Government's recovery to the
whistleblower. This law is as important today, as it was in 1863,
because we still must combat fraud and abuse of Government programs.
These amendments ensure that the False Claims Act has not been eroded
in scope or application.
I am cosponsoring the bill offered by the distinguished Senator from
Iowa because Congress needs to clarify its intent that there is
liability under the False Claims Act for submitting false claims for
Government funds and property--regardless of whether they are submitted
directly to Government agents or are submitted to others who disburse
Government money or property.
A defendant may not make a preemptive disclosure that operates to bar
the whistleblower or relator from recovering--the only claims that
should be barred are those that are true piggyback claims, where the
relator was not the original source of the information, and the
whistleblower's actions were not the impetus for the recovery.
Government employees may be qui tam relators--whistleblowers--and may
be awarded a portion of the Government's recovery based on false claims
if, when the Government employee has learned of fraudulent conduct on
the job and has reported it up the chain of command, and then reported
it to the Office of Inspector General, still no action has been taken
within 12 months.
Retaliatory action based on protected activity by whistleblowers is
prohibited.
Federal prosecutors who are investigating False Claim Act complaints
filed under seal may share information obtained by Civil Investigative
Demands, CIDs, with relators.
For purposes of the running of the statute of limitations, if the
Government intervenes in a False Claims Act case, the intervention
relates back to the date the whistleblower filed suit.
Taxpayer dollars must not be wasted or fraudulently paid to
unscrupulous contractors.
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