The Fraud Enforcement and Recovery Act of 2009 (S. 386), introduced by Sen. Patrick J. Leahy (D-Vt.) to improve enforcement against mortgage fraud, securities fraud, financial institution fraud and other frauds related to federal programs also includes several amendments to the federal False Claims Act (FCA) to address what Congress views as the court's misinterpretation of the intent of the FCA. The bill has passed the House and Senate overwhelmingly. The Senate and the House versions now are in the reconciliation process.

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.] The bill proposes to eliminate terminology that has been construed to limit FCA violations to actual knowledge that the claims will be paid by the government. [See theMarch 19, 2009, issue of the Health Law Update.] The amendment to section 3729(a)(1), if enacted, will be retroactive to June 7, 2008, two days before the Supreme Court's Allison Engine decision. In addition, the bill rejects the court's limiting interpretation of the FCA in United States ex rel. Totten v. Bombardier Corp. , 380 F.3d 488 (D.C. Cir. 2004). In Totten, 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. The bill redefines the term "claim" to clarify that subcontractors submitting false claims are covered under the FCA without regard to whether they deal directly with the government. The passage of this bill, as amended, would provide the government with broader enforcement powers under the FCA.