On May 20, 2009, President Obama signed into law the Fraud Enforcement and Recovery Act of 2009 (FERA), Pub. L. 111-21, S. 386. The stated purpose behind FERA is to "investigate and prosecute the kinds of financial frauds that have so severely undermined our financial markets." Sen. Rep. No. 111-10 (2009). FERA strives to attain this objective by 1) amending pivotal antifraud legislation, most notably the Fair Claims Act (FCA); 2) creating a Financial Crisis Inquiry Commission "to examine the causes, domestic and global, of the current financial and economic crisis in the United States"; and 3) authorizing substantial funding for enforcement of the antifraud statutes. 31 U.S.C. § 3729.
FERA was in part a legislative response to the United States Supreme Court's ruling in Allison Engine Co. v. United States, which significantly weakened the efficacy of the FCA. 128 S. Ct. 2123 (2008). In Allison Engine, the Court found that the FCA would apply only if the defendant intended that the false record would be used to get the government to pay the claim. Therefore, the defendant must have intended for the government itself to pay the claim. After the FERA amendments, liability may attach if a person makes a statement that has "a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property." 31 U.S.C. § 3729 (b)(4). Defendants can no longer argue lack of intent to defraud the United States.
FCA now also applies to false claims for government funds whether or not the property is presented to a governmental official. In United States ex rel Totten v. Bombardier Corp., the court of appeals held that the FCA does not impose liability on someone who presents a false claim to a non-governmental entity. 380 F.3d 488, 490, 502 (D.C. Cir. 2004). Under the new law, there is no such requirement. The only requirement for a claim to fall within the purview of the newly amended FCA is that "the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest, and 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 which is requested or demanded." 31 U.S.C. § 3729(b)(2)(A)(ii). For example, FCA liability now extends to "false claims submitted to State administered Medicaid programs." Sen. Rep. No. 111-10 (2009).
Text of FERA: http://www.opencongress.org/bill/111-s386/text
