[Congressional Record Volume 155, Number 32 (Tuesday, February 24, 2009)]
[Senate]
[Pages S2424-S2429]
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. 458. A bill to amend the False Claims Act; to the Committee on the 
Judiciary.
  Mr. GRASSLEY. Mr. President, I am here as part of what I am calling 
``Accountability in Government Week.'' I plan to introduce various 
bills this week that will strengthen oversight of Government programs, 
integrity of taxpayer-funded initiatives, and bring sunshine to the 
executive, legislative, and judicial branches of our Government. These 
bills are important and will help all Americans better understand their 
Government in addition to making sure taxpayers' dollars are not lost 
to fraud, waste, and abuse.
  The first bill I am introducing this week, and am introducing today, 
is the False Claims Clarification Act of 2009. I am glad to be joined 
by my original cosponsor, Mr. Durbin, the majority whip, the Senator 
from Illinois, who has worked closely with me in crafting this 
legislation that will update the 1986 amendments to the False Claims 
Act I authored.
  This legislation is similar to a version that was introduced in the 
last Congress that cleared the Judiciary Committee by unanimous voice 
vote. We have made some updates to the bill that was the result of 
sitting down with various interested parties and hearing their 
concerns. We made a commitment last Congress to move that bill through 
regular order to ensure that all interested stakeholders had a say. I 
believe this version of the bill not only clarifies the original intent 
of the 1986 amendments but also makes a number of modifications that 
strengthen the False Claims Act and will help the Government recover 
taxpayers' dollars lost to fraud and abuse for years to come.
  Senator Durbin and I are also joined by other original cosponsors, 
including Senator Leahy, whom you recognize is the chairman of the 
Judiciary Committee, and Senator Specter, its ranking member, and 
Senator Whitehouse, a member of the committee. It is a bipartisan bill 
that is about protecting taxpayers' dollars and strengthening the 
Government's hand in combating fraud.
  A little history: Back in 1986, the Government was in a situation 
that had some parallel to today's economic situation. Government 
military expenditures were a significant portion of the budget, and 
there was ample evidence of fraud and abuse in Government contracts. 
Today, we are facing an economic situation where the Government is now 
on the hook for trillions of dollars in new Government spending in an 
attempt to jump-start our ailing economy. That is compounded by the 
fact that the Treasury Department has taken unprecedented steps to bail 
out financial institutions with hundreds of billions of taxpayers' 
dollars.
  I am concerned this new Government spending has occurred too quickly 
and could be ripe with opportunities for fraud and abuse. I would say 
there are 99 other Senators who can say the same thing. But that is the 
reason this legislation is timely and urgently needed.
  The False Claims Act, which is also known as Lincoln's Law, was 
originally passed by Congress in 1865 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 that were 
selling false or fraudulent goods to Union troops. This legal 
mechanism, known as qui tam--Q-U-I T-A-M, for you Latin lovers--is the 
key component to the False Claims Act, allowing individual citizens to 
act as private

[[Page S2425]]

``attorneys general'' to help unearth 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 this fraud. This remained the case from 
the end of World War II until 1986 with the False Claims Act. That is 
when I authored amendments to that act which restored the teeth and 
breathed new life into a law that was designed to do nothing but to 
protect all American taxpayers.

  Now, since 1986 the Federal Government has recovered $22 billion from 
those who defraud the Government. By working with qui tam 
whistleblowers, the Justice Department has turned Lincoln's law into 
the single most effective tool in the Federal Government's tool box to 
help protect taxpayers' dollars. However, it has been a hard fought 
battle to get the False Claims Act to where it is today as deep-pocket 
Government contractors have spent hundreds of millions of dollars to 
litigate the False Claims Act. As a result, various court 
interpretations have limited the applicability and the reach of the 
False Claims Act, cutting off many worthy cases from ever going 
forward. Some of these cases have been around for quite a while, others 
more recent. Yet the one thing these cases have in common is they 
threaten to undermine both the spirit and the intent of the 1986 
amendments to Lincoln's law called the False Claims Act.
  The first case that created problems for the False Claims Act was the 
Totten case where the DC Circuit Court of Appeals held that false 
claims must be presented directly to the Government--in this case, 
employees at Amtrak, which is a Government grantee--and were not 
actually presented to the Federal Government. As a result, the 
Government was precluded from recovering money lost to fraud and abuse 
perpetrated against Amtrak.
  More recently, the Supreme Court held in Allison Engine Co. v. U.S. 
that for liability to attach a defendant must not only make a false 
statement but must intend to get the claim paid and approved directly 
by the Government based upon that false statement. While this sounds 
straightforward, it creates a huge loophole in the False Claims Act 
because subcontractors who receive Federal money never actually submit 
a claim directly to the Government because they do it through the 
contractors. Instead, they pass the claim to the prime contractor who 
then gives it to the Government. So under the Allison Engine decision, 
it could be virtually impossible to prove a False Claims Act case where 
the subcontractor knowingly ripped off the taxpayers. In fact, a judge 
in my home State of Iowa dismissed a case based solely upon the Allison 
Engine decision, even without a motion from the defendant. This has 
created a significant problem for recovering taxpayers' dollars that 
trickle down to subcontractors, particularly in Medicare and Medicaid 
Programs where subcontractors are frequently utilized.
  Further, this could become a bigger problem if the second tranche of 
TARP money--some people might refer to that as the bailout money--is 
used to purchase distressed assets through a third party broker as 
originally envisioned.
  Another case that is detrimental to the False Claims Act is Rockwell 
International Corporation v. U.S. In that case, the Supreme 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 was based upon publicly disclosed information such 
as a Government report, unless the whistleblower filing the case was 
the ``original source'' of the information. Here, the Supreme Court 
held that a qui tam whistleblower was barred from receiving a share of 
any money recovered unless they were the original source of all claims 
ultimately settled.
  This may not sound like a troublesome decision. However, 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 that 
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 that recovery. That is the 
incentive under false claims: a whistleblower, not a lawyer, not in the 
Justice Department, to get a percentage of what is recovered as an 
incentive to get this information out there and get it prosecuted, 
particularly if the Justice Department is overloaded or maybe doesn't 
want to take the case.
  Now, one last case I will mention is the Custer Battles case decided 
in 2006. In this case, a jury found that a defense contractor in Iraq 
had defrauded the Government of $10 million. However, the judge 
overturned the jury's 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, just as if money is 
somehow not fungible. These decisions, which are by no means an 
exhaustive list, are contrary to the spirit and the intent of the 1986 
amendments. And who should know that? I should know it because I 
authored this legislation.
  This bill we are introducing today--a bipartisan bill by Senator 
Durbin and myself--seeks to clarify the False Claims Act so these 
judicial interpretations that have limited the False Claims Act are 
overruled. It is narrowly tailored--I wish to emphasize ``narrowly 
tailored''--to ensure that the intent of Congress in the 1986 
amendments is upheld, if nothing else.
  The False Claims Clarification Act would correct these negative 
interpretations in addition to making technical and clarifying 
amendments. First, the bill would address the Totten decision by 
removing the requirement that false claims be directly presented to the 
Government officials instead of tying the liability directly to 
Government money and property. It would also correct the Allison Engine 
decision, ensuring that subcontractors who rip off the taxpayers will 
be held accountable.
  The bill would also 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 up front in a case, 
the bill would eliminate procedural uncertainties that exist now by 
allowing public disclosures to be addressed at any time during the 
proceeding.
  The bill also clarifies that nontaxpayer funds under the control of 
the U.S. Government subject to fraud are actionable under the False 
Claims Act. Thus, monies 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 would correct the problems 
that have arisen following the decision of Custer Battles.
  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. It takes a dissenting 
opinion from the Tenth Circuit and codifies that by allowing Government 
employees to bring a False Claims Act case based upon information 
learned in the course of their employment only when the employee: One, 
discloses the fraud to a supervisor; two, discloses the fraud to the 
Inspector General of the agency; three, discloses the fraud to the 
Attorney General and then waits 18 months without Government action.
  Further, it restricts a Government employee from bringing a False 
Claims Act case if they derive information for their case in an 
indictment or information, any ongoing criminal, civil, or 
administrative investigation, or if they are an auditor, investigator, 
or attorney who has a duty--a duty--to investigate fraud. This ensures 
that a Government employee can act as a relator, but only if he or she 
is truly bringing a claim that the Government has refused to 
investigate.
  The bill makes some additional technical corrections that I am not 
going to go into. Finally, the bill includes a new section that will 
require the Attorney General to report to Congress on an annual basis 
regarding the use of the False Claims Act and any settlements made upon 
these sorts of lawsuits. This has two purposes. It allows

[[Page S2426]]

Congress, first, to see if the Justice Department is utilizing the act 
consistent with the spirit and intent; and, secondly, ensures that the 
seal provisions allowing the case to be privately sealed with the court 
are not being abused to the detriment of qui tam relators.
  So the False Claims Act clarification bill is narrowly tailored to 
ensure that the legislative intent of 1986 is truly understood. It will 
bring a level of reason and sanity instead of the current hodgepodge of 
laws across various circuit courts of appeals. This bill is designed to 
protect the American taxpayer from fraud and is timely, given the 
recent actions to shore up the balance sheets of banks and private 
businesses across the country.
  I am glad we have a bipartisan coalition ready to pick up where we 
left off in the last Congress. I believe we made great strides last 
year in working through the concerns of various stakeholders, and I 
encourage my colleagues to join me and Senator Durbin in strengthening 
Lincoln's law so that it can stand up and work for the American 
taxpayers for years to come as it has for the last 22 years, bringing 
about $22 billion back to the Federal Treasury.
  Mr. President, I ask unanimous 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:

                                 S. 458

       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

[[Page S2427]]

     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

[[Page S2428]]

       (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; and
       (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.

  Mr. DURBIN. Mr. President, I am pleased to join my colleague Senator 
Grassley in introducing the False Claims Act Clarification Act of 2009. 
This bipartisan legislation takes important steps to modernize and 
strengthen the federal False Claims Acts, FCA, and will help protect 
the government and taxpayers from waste, fraud and abuse related to 
government funds. Last Congress Senator Grassley and I introduced 
similar legislation, which was passed by voice vote out of the Senate 
Judiciary Committee. I look forward to working with Senator Grassley as 
well as our fellow cosponsors, Senator Leahy, the Chairman of the 
Judiciary Committee; Senator Specter, the Ranking Member of the 
Judiciary Committee; and Senator Whitehouse, to see this important 
legislation passed into law.
  Since it was signed into law by President Lincoln in 1863, the FCA, 
or ``Lincoln's Law,'' has played a key role in enabling the federal 
government and qui tam whistleblowers to prevent unscrupulous 
government contractors from defrauding the nation's taxpayers. In 1986, 
Senator Grassley and Congressman Berman sponsored amendments to the FCA 
and its qui tam provisions that revitalized the effectiveness of the 
FCA as a fraud-fighting tool. Since 1986, the federal government and 
qui tam relators have worked together to recover over $21 billion in 
monies 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.
  Senator Grassley and I first introduced FCA reform legislation in 
September 2007 because several recent court interpretations of the 1986 
FCA amendments had threatened to limit the Act's effectiveness. Our 
legislation was designed to correct erroneous interpretations of the 
FCA's presentment clause in the 2004 D.C. Circuit case U.S. ex rel. 
Totten v. Bombardier Corp., and the FCA's public disclosure bar in the 
2007 Supreme Court case Rockwell International Corp. v. U.S. Our bill 
also sought to make further clarifications to the FCA's scope and 
application in keeping with the intent of the authors of the 1986 FCA 
amendments.
  In the time since we first introduced this bill last Congress, the 
need to strengthen Lincoln's Law has become even more urgent. The 
economic recession has required massive expansion of federal assistance 
to various industries, and this has created an increased opportunity 
for waste, fraud and abuse by recipients of that assistance. As the 
federal government moves ahead with various economic recovery measures, 
it is important that we have effective anti-fraud provisions in place 
to deter and catch those who would abuse public monies and the public 
trust. We owe this to the American taxpayer.
  Also, the False Claims Act Clarification Act of 2009 is further 
needed in light of the Supreme Court's June 2008 decision in Allison 
Engine Co. v. U.S.

[[Page S2429]]

ex rel. Sanders. In Allison Engine, the Supreme Court read the 1986 FCA 
amendments to include a barrier to liability in subcontractor fraud 
cases that Congress did not intend. The Allison Engine Court held that 
in cases involving false claims submitted by a subcontractor to a prime 
contractor for payment involving federal funds, the plaintiff must 
prove that the subcontractor intended for the false statement to be 
used by the prime contractor to get the government to pay its claim. 
Our legislation makes clear that subcontractors are liable for 
knowingly perpetrating fraud involving government funds, regardless of 
whether that fraud was perpetrated directly upon the government or 
indirectly through another contractor. In light of the numerous levels 
of subcontractors used in many government contracting arrangements, 
this statutory fix is necessary to ensure accountability no matter 
where in the contracting chain the fraud takes place.
  The changes that our legislation would make to the FCA are narrowly 
tailored, but will have a significant impact in catching and deterring 
fraud. 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 will continue to work with him to better combat waste, 
fraud and abuse in government programs.
  In sum, the False Claims Act Clarification 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 legislation we are introducing 
today will strengthen the legacy of Lincoln's Law, and I am pleased to 
serve as its lead Democratic cosponsor. I urge my colleagues to support 
its passage.
                                 ______