Panel prepares to move bill to bolster False Claims Act
Move would have significant effect on federal contractors, whistleblowers and trial lawyers.
The Senate Judiciary Committee is set to advance a bill that makes changes to the False Claims Act that would have significant effect on federal contractors, whistleblowers and trial lawyers.
The committee has scheduled a hearing Wednesday on the measure, which would overrule a series of federal decisions that the bill's backers say has narrowed the scope of the original 1986 act beyond Congress' intent.
Introduced by Majority Whip Richard Durbin, D-Ill., and Sen. Charles Grassley, R-Iowa, who sponsored the 1986 act in the Senate, and backed by Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., and ranking member Arlen Specter, R-Pa., the bill is likely to move quickly out of committee, Senate aides said, though amendments are possible.
A markup is scheduled for Thursday, but may be pushed back a week.
Under the False Claims Act, a whistleblower can file "qui tam" claims against a federal contractor for defrauding the government. The Justice Department then must decide whether to join the case. Whistleblowers share a portion of recovered claims, a big financial incentive to expose fraud.
From 1987-2005, recoveries under the act totaled $15 billion, with whistleblowers getting settlements worth $1.6 billion, according to GAO.
But Grassley and House Judiciary Courts Subcommittee Chairman Howard Berman, D-Calif., who backed the original bill in the House, argue the law is being gutted by federal court rulings limiting the circumstances in which whistleblowers can collect claims.
The new bill, and a companion measure sponsored by Berman, makes four main changes to the act. Taking aim at a 2004 D.C. Circuit Court of Appeals decision, it eliminates a requirement that false claims must be presented to a government employee. It loosens a requirement strengthened last year by the Supreme Court that says only claimants who are the original source of whistle-blower charges can recover money.
The bill also clarifies, due to concerns raised by the U.S. District Court for the Eastern District of Virginia, that false claims dealing with non-U.S. government funds under the control of the government can be recovered under the act. In addition, the bill addresses a disagreement among the courts by stating that federal employees can act as qui tam whistleblowers when they have reported fraud up the chain of command and no action occurred for one year.
"Our bill works to make sure recent court decisions won't weaken the government's ability to recover taxpayer dollars lost to fraud," Grassley said in a statement.
The measure is being monitored by federal contracting trade groups concerned about expanding the law. President of the Coalition for Government Procurement Larry Allen said he opposed allowing claims not presented to a federal employee. Allen said he also opposed any effort to allow people who did not originally blow the whistle to sue under the act.
"The overwhelming majority of these things are filed by people who want to make a buck," Allen said.
The American Association for Justice, which represents trial lawyers, is lobbying Judiciary Committee staff for passage of the bill without significant amendments, said Maren McBride, a policy advocate for AAJ.
The attention to the bill comes as the Supreme Court considers a case that could have further effect on the False Claims Act. In oral hearing Tuesday, several Justices were reluctant to extend the law to cover cases brought by employees of government subcontractors and other indirect recipients of federal funds, the Associated Press reported.