Alaska Employment Law

False Claims Act Correction Act of 2007 Introduced by Senators Grassley, Durbin, Leahy, and Specter

Important legislation designed to protect taxpayers from fraudulent government contractors was introduced September 12th in the Senate by Senate Judiciary Chairman Patrick Leahy (D-VT), Ranking member Arlen Specter (R-PA), longtime whistleblower champion Charles Grassley (R-IA), and Judiciary Committee member Dick Durbin (D-IL). The bill is intended to correct loopholes in the False Claims Act, a law that permits private citizens to file suit against contractors who defraud the federal government.

The False Claims Act has been the most effective anti–fraud law in American history, having recovered over $20 billion dollars in ill-gained taxpayer dollars over the past 20 years.

National Whistleblower Center President Stephen M. Kohn hailed the introduction of the bill:

The majority of all civil fraud recoveries in the US are based on whistleblower disclosures. Because of the effectiveness of the False Claims Act, powerful corporate interests have aggressively attacked the law in court, creating loopholes which have undermined the law and cost the taxpayers billions of dollars. The False Claims Act Correction Act is badly needed legislation to stop the hemorrhaging of the public treasury by unscrupulous beltway bandits.

The Legislation corrects the following defects in the current law:

• Corrects FCA by removing the requirement that false claims be presented to a government employee. This section corrects longstanding problems which prevented taxpayer recoveries on false claims regarding government money or property. This correction ensures that any government money lost to fraud, waste, or abuse can be recovered using the FCA regardless of whether the individual making the false claim directly represents such a claim to a government employee.

• Reverses the Supreme Court decision in Rockwell Int’l Corp. et al. v. United States, 127 S.Ct. 1397 (2007), which dramatically limited the FCA by restricting legitimate qui tam relators who often bring fraud to the attention of DOJ with information DOJ expands and ultimately settles on other grounds.

• Clarifies that false or fraudulent claims against non-U.S. Government funds under the trust and control of the U.S. Government are subject to recovery under the FCA. This clarification would ensure funds administered by the U.S. Government on behalf of third party nations or other entities are protected from fraud, waste, or abuse by extending FCA liability to those funds.

• Clarifies a split between Circuit Courts of Appeal as to when a government employee may act as a qui tam relator under the FCA. This clarification would explicitly state in statute the original legislative intent of the 1986 amendments to the FCA allowing government employees to act as qui tam relators in limited circumstances when they have reported activities up the chain of command, to the Inspector General, to the Attorney General, and only if no action was taken after 12 months.

See also this post from the Whistleblower Lawyer Blog.