In response to recent federal court decisions limiting federal False Claims Act (FCA) liability, Sen. Grassley, joined by other legislators, has filed two bills with the goal of expanding the scope of the FCA. According to Sen. Grassley, the False Claims Act Clarification Act of 2009 (S. 458) "is needed to correct recent decisions by various federal courts that have limited the scope and application of the FCA through interpretations that are contrary to the original congressional intent of the 1986 amendments to the statute." The legislation is similar to that which Sen. Grassley sponsored last session and would expand the definition of "claim" to include "any request or demand…for money or property…whether or not the United States has title to the money or property, that is presented to an officer, employee or agent of the United States; or is made to a contractor, grantee, or other recipient if the United States Government provides or has provided any portion of the money or property requested or demanded; or will reimburse such contractor, grantee, or other recipient for any portion of the money or property."
Similarly, the Fraud Enforcement and Recovery Act of 2009 (S. 386) introduced by Sens. Patrick J. Leahy (D-Vt.) and Grassley to improve enforcement of mortgage fraud, securities fraud, financial institution fraud and other frauds related to federal programs, proposes to change the language in 31 U.S.C. 3729(a) of the FCA to eliminate terminology that has been construed to limit FCA violations to actual knowledge that the claims will be paid by government. In United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004), the court found that "under the plain language of Section 3729(a)(1) claims must be presented to an officer or employee of the government" for FCA liability to attach. Similarly, in Allison Engine Co. v. United States ex rel. Sanders, 128 S.Ct. 2123 (2008), the U.S. Supreme Court held that to be liable under the FCA for false statements or conspiracy, the defendant must have made the statement with the intent of getting a false claim paid or approved by the government itself and not merely by an intermediate entity that would be paying the claim with government funds. See the June 12, 2008, issue of the Health Law Update.
As such, these bills would undo the limiting interpretation of the scope of the FCA by the courts and clarify that subcontractors submitting false claims are covered under the FCA without regard to whether they deal directly with the government. Additionally, the False Claims Act Clarification Act of 2009 addresses several contested provisions of the FCA. The legislation would narrow the circumstances under which the public disclosure bar can be invoked, make clear certain whistleblower protections afforded by the FCA and allow for government employees to act as qui tam relators in limited circumstances when they have reported activities to their supervisor and the Inspector General of the affected agency or the Attorney General and no action is taken for at least 18 months.