Today, the Senate Judiciary Committee held a hearing on the sweeping proposals to
amend the False Claims Act that were introduced in S. 2041, the False Claims Act
Corrections Act of 2007. See FraudMail Alert No. 07-09-12. As expected, after
introductory statements by Chairman Leahy and Senator Specter, most of the
questions put to the panelists were from Senator Grassley, who also chaired the bulk
of the hearing. Two of the panelists, Tina Gonter and John Clark, represented the
favorable views of relators on the decidedly pro-relator amendments in the bill. John
Boese spoke for the U.S. Chamber of Commerce and the U.S. Chamber Institute for
Legal Reform in opposition to the bill. The witness for the Government was Michael
Hertz of DOJ, who supported several of the bill's less dramatic changes but opposed
the major changes in their current form.

Mr. Hertz testified that DOJ supported the bill's provisions on liability for conspiracy
and overpayments, waiver, lengthening the statute of limitations to ten years, relationback,
and changes in DOJ's CID authority. He stated, however, that the Justice
Department had not urged the proposed changes and it did not see a need for them
on the presentment requirement, the public disclosure bar, or allowing government
employees to be relators. He elaborated by stating that DOJ believed that the Totten
decision was wrong, but that the principle involved in Totten was of limited application
in FCA litigation, and, in any event, it had not interfered with the government's FCA
suits. He encouraged the Committee to wait to hear from the Supreme Court on the
presentment issue in Allison Engine before proposing a final legislative fix on that
issue. See FraudMail Alert No. 08-02-26. He also stated that he did not know if the
bill's changes to the public disclosure bar would increase government recoveries. His
most vigorous disagreement was reserved for the provisions allowing government employees to turn information acquired in their government work into qui tam
allegations, which, he indicated could only be addressed by deleting these provisions
and barring government employees from bringing qui tam cases. Mr. Hertz referred
repeatedly to the DOJ letter of February 21, 2008, expressing DOJ's opposition to
S. 2041 but proposing far-reaching amendments of its own.

Tina Gonter gave a personal account of her experiences as a whistleblower and relator
in the Hunt Valve suit. Her testimony included details such as her dismissal from her
job as a quality control manager at Hunt, wearing a wire to gather evidence pertaining
to her allegations, having to sell her house and move in the process of her qui tam
suit, and the payment that she and the government received in a $13 million
settlement with the defendants. Mr. Clark from San Antonio, Texas testified on the
favorable views of the relators' bar on the proposals.

As the final witness, John Boese testified in opposition to the bill. His testimony was
less warmly received than that of the other witnesses. He pointed out that the drafters
of the bill and the Committee seemed to be concerned only with the guilty, while he
was concerned with how the bill treats the innocent defendant in a qui tam case. He
was entirely in agreement with the government that encouraging government
employees to become qui tam relators for private gain was a breach in the public's
trust in the independence and integrity of its government. He criticized the new
definitions of "government money" and "administrative beneficiary" that were
overbroad to the point of absurdity, and would lead to qui tam suits involving any
recipient of money that the government touches in some way. He agreed with Mr.
Hertz that Congress should wait to see what the Supreme Court decides in Allison
Engine before making any drastic change in the law based on Totten II. He also
criticized eliminating the public disclosure/original source bar because it would
reduce the government's recoveries and allow recoveries by qui tam relators who are
not true whistleblowers since their allegations could be based on public information.

The written testimony is available on the Judiciary Committee website.

The DOJ letter of February 21 is available on the Fried Frank website.