[Congressional Record Volume 168, Number 2 (Tuesday, January 4, 2022)]
[Senate]
[Pages S17-S19]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
False Claims Act
Mr. GRASSLEY. Mr. President, we study about checks and balances in
government in political science classes.
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Often, people think in terms of the Court, the Supreme Court,
primarily, being a check on the Congress of the United States not doing
constitutional things or things in a constitutional way or maybe
checking a President not doing things that he is constitutionally
empowered to do.
We don't often think of Congress being a check on the judicial branch
of government, but from time to time we pass legislation that says: To
you folks on the Supreme Court making a decision, you didn't make that
decision according to what congressional intent was. So we find
ourselves passing legislation to overturn some Court case that
misinterpreted a statute. At least that is our view that they
misinterpreted a statute or congressional intent.
The last time I remember doing this was maybe a couple, 3 years ago
on a tax bill. It happened that I had at least one person interpreting
our statute correctly on this tax provision. It was Justice Breyer. I
got a little note from Justice Breyer, pointing to his dissent in that
case, and it said: It is an opportunity for you to pass a statute
correcting what, I think, was a misinterpretation by the majority of
that tax provision.
And we got that passed.
So here I am again. I don't know how many times in the last 30 years
I have had to correct Court decisions misinterpreting the False Claims
Act. We are in the process of trying to do that on the subject of
whether or not certain actions of our government are material to that
case actually being able to be prosecuted. I am talking about the False
Claims Act that I and a liberal Member of the House of Representatives
got passed in 1986.
The False Claims Act is the government's most powerful tool in
fighting and deterring fraud. And I say to my fellow colleagues that
any law that has brought in about $65 billion of fraudulently taken
money, that ought to, in itself, prove the worth of this legislation.
On the other hand, the courts interpret it and maybe weaken it, so I
am back here to make an argument for strengthening it but not
strengthening it beyond the original intent of the Congress of the
United States in 1986. I have devoted much of my time in the Senate to
strengthening this law on behalf of the taxpayers.
Last November, the Judiciary Committee voted on a bill that I
sponsored that was very much a bipartisan cosponsorship to further
strengthen the False Claims Act by clarifying what violations are
``material.'' Some of my colleagues expressed concern with my
amendment, even in light of the fact that this legislation has brought
$65 billion of fraudulently taken money back into the Federal Treasury.
Most of those concerns by my colleagues were based on debunked,
recycled talking points from lobbyists that sound a lot like the ones
that I have been hearing since 1986--the purpose of the legislation.
Most of the time, they have come from businesses that profit the most
from defrauding the government.
When I authored the False Claims Act amendments in 1986, I did it
because fraud against the Federal Government was out of control,
especially in the defense sector. At the time, the Justice Department
estimated that we were losing somewhere between 1 percent to 10 percent
of the Federal budget to fraud. Most importantly, I saw that fraud put
lives at risk, including those of our military, those of our law
enforcement, and even of our veterans. So I am going to speak about
some of this fraud that put lives at risk.
Recent court misinterpretations--and these are the misinterpretations
that I have talked about already. Recent court misinterpretations have,
once again, like several times in the last 25 years, hurt the
government's ability to hold these fraudsters accountable by the courts
that have made those decisions not following properly legislative
intent.
Some courts now say that if the government keeps paying a claim
despite some knowledge of potential fraud, then the violation is not
material. Now, that is not common sense. If the government knows of
fraud--now, think of this: If the government actually knows of fraud
but keeps paying for that fraud, then that fraud can't be prosecuted
under the False Claims Act.
That doesn't make sense to hard workers on Main Street in the
Midwest. It doesn't meet the commonsense test for the government to
protect fraudsters. This is wrong, and I want to show you some
instances of where it is dangerous.
Today, I want to bring examples to you about real cases with real
life experiences, cases where, had this flawed interpretation applied,
the results would have been absurd and tragic.
First, in 2009, a major defense contractor settled a False Claims Act
case with the Federal Government for $325 million after allegations
arose that they provided faulty parts for spy satellites. Due to the
faulty parts, several satellites started to malfunction. One of them
was on an important mission over the Middle East during a time of war.
Evidence showed that the contractor knew about the malfunctions but
hid--hid--these modifications from the government. But even if the
government had some idea about fraud, it couldn't stop payment because
the contractor was the only company that could manufacture and support
these satellites. Had this case been brought today, a court could
incorrectly find that the violation was not material.
This ought to be unacceptable, and it is. This kind of fraud can hurt
our troops and damage our national security.
Second example: Fraud hurts our law enforcement officers here at
home. In 2018, the Justice Department settled a fraud claim brought by
a whistleblower against a manufacturer of bulletproof vests. According
to public records, the manufacturer knew the vests would actually
degrade and degrade very quickly under normal heat and humidity. The
manufacturer tried to cover its tracks by publishing misleading data.
Those actions delayed the government's efforts to determine the true
extent of the damage to these bulletproof vests. After years of
investigation, a National Institute of Justice study found that more
than 50 percent of the used vests could not stop a bullet--a very life-
threatening issue.
In this case, the manufacturer argued that since the government kept
paying for the vests, the fact that they didn't work was immaterial.
Thankfully, the judge had common sense enough to see past such
ridiculous arguments. In other words, common sense prevailed in that
particular courtroom.
Now, remember, the actions of these fraudsters put our law
enforcement personnel's lives at risk. Now, we had a brave
whistleblower. So thanks to that brave whistleblower who uncovered this
fraud, the money recovered from the settlement was used to purchase new
bulletproof vests.
Third example and last example: Fraud hurts our veterans and
undermines the Federal programs Congress created to support them and
their families.
Another case involved fraud in home loans insured by the VA. The goal
of these loans is to keep veterans in their homes. So, as most veterans
know, VA loans prohibit lenders from charging veterans hidden fees. In
this instance, a mortgage lender was illegally charging our veterans
fees for VA-insured loans.
But the government never ceased payment because doing so would hurt
the program and the veterans it was meant to help--not to mention that
once a loan guarantee is approved, the VA is prohibited by law from
declining payments.
Despite this, the district court applied the bogus new interpretation
of materiality. The court dismissed the case. In other words, the
fraudsters got away with it, and the court dismissed, saying that the
government's continued payment meant the fraud was not material. So the
government is allowing a program to go on, pay money out, even if they
know there is fraud.
So let me underscore the obvious. I am telling you, Congress didn't
intend for courts to find that fleecing veterans for profit is
immaterial. The legislation that has come out of the Judiciary
Committee will fix this nonsense. And I hope some Republicans--because
most of the opposition in the Judiciary Committee came from
Republicans. Democrats understand that this bill must pass, but, for
some reason, Republicans are willing to accept this nonsense about
immateriality.
So that is the purpose of this legislation. It clarifies that the
government's
[[Page S19]]
decision to continue paying a claim despite knowledge of fraud is not
dispositive if other reasons exist for the continued payment--these
simple reasons like everybody expected our government ought to do: to
continue protecting our troops, to continue helping our law enforcement
officers be safe in their job, and to make sure that a veteran doesn't
get taken as a sucker to give away a lot of money that would be
illegally taken.
So, as shown by the examples I just gave you, examples I highlighted
this very day, the government's decision to continue paying a claim by
itself doesn't prove materiality.
You may ask: Why did the government continue the payments? Well, that
is pretty much simple common sense too--because you want these programs
to function the way they should function.
My amendment will guarantee that the government can hold fraudsters
accountable even when the government has to continue payment for a
product or a service.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. MORAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Kansas.