-9999

Floor Speech

BREAK IN TRANSCRIPT

Mr. GRASSLEY. Mr. President, we study about checks and balances in government in political science classes. Often, people think in terms of the Court, the Supreme Court, primarily, being a check on the Congress of the United States not doing constitutional things or things in a constitutional way or maybe checking a President not doing things that he is constitutionally empowered to do.

We don't often think of Congress being a check on the judicial branch of government, but from time to time we pass legislation that says: To you folks on the Supreme Court making a decision, you didn't make that decision according to what congressional intent was. So we find ourselves passing legislation to overturn some Court case that misinterpreted a statute. At least that is our view that they misinterpreted a statute or congressional intent.

The last time I remember doing this was maybe a couple, 3 years ago on a tax bill. It happened that I had at least one person interpreting our statute correctly on this tax provision. It was Justice Breyer. I got a little note from Justice Breyer, pointing to his dissent in that case, and it said: It is an opportunity for you to pass a statute correcting what, I think, was a misinterpretation by the majority of that tax provision.

And we got that passed.

So here I am again. I don't know how many times in the last 30 years I have had to correct Court decisions misinterpreting the False Claims Act. We are in the process of trying to do that on the subject of whether or not certain actions of our government are material to that case actually being able to be prosecuted. I am talking about the False Claims Act that I and a liberal Member of the House of Representatives got passed in 1986.

The False Claims Act is the government's most powerful tool in fighting and deterring fraud. And I say to my fellow colleagues that any law that has brought in about $65 billion of fraudulently taken money, that ought to, in itself, prove the worth of this legislation.

On the other hand, the courts interpret it and maybe weaken it, so I am back here to make an argument for strengthening it but not strengthening it beyond the original intent of the Congress of the United States in 1986. I have devoted much of my time in the Senate to strengthening this law on behalf of the taxpayers.

Last November, the Judiciary Committee voted on a bill that I sponsored that was very much a bipartisan cosponsorship to further strengthen the False Claims Act by clarifying what violations are ``material.'' Some of my colleagues expressed concern with my amendment, even in light of the fact that this legislation has brought $65 billion of fraudulently taken money back into the Federal Treasury. Most of those concerns by my colleagues were based on debunked, recycled talking points from lobbyists that sound a lot like the ones that I have been hearing since 1986--the purpose of the legislation. Most of the time, they have come from businesses that profit the most from defrauding the government.

When I authored the False Claims Act amendments in 1986, I did it because fraud against the Federal Government was out of control, especially in the defense sector. At the time, the Justice Department estimated that we were losing somewhere between 1 percent to 10 percent of the Federal budget to fraud. Most importantly, I saw that fraud put lives at risk, including those of our military, those of our law enforcement, and even of our veterans. So I am going to speak about some of this fraud that put lives at risk.

Recent court misinterpretations--and these are the misinterpretations that I have talked about already. Recent court misinterpretations have, once again, like several times in the last 25 years, hurt the government's ability to hold these fraudsters accountable by the courts that have made those decisions not following properly legislative intent.

Some courts now say that if the government keeps paying a claim despite some knowledge of potential fraud, then the violation is not material. Now, that is not common sense. If the government knows of fraud--now, think of this: If the government actually knows of fraud but keeps paying for that fraud, then that fraud can't be prosecuted under the False Claims Act.

That doesn't make sense to hard workers on Main Street in the Midwest. It doesn't meet the commonsense test for the government to protect fraudsters. This is wrong, and I want to show you some instances of where it is dangerous.

Today, I want to bring examples to you about real cases with real life experiences, cases where, had this flawed interpretation applied, the results would have been absurd and tragic.

First, in 2009, a major defense contractor settled a False Claims Act case with the Federal Government for $325 million after allegations arose that they provided faulty parts for spy satellites. Due to the faulty parts, several satellites started to malfunction. One of them was on an important mission over the Middle East during a time of war.

Evidence showed that the contractor knew about the malfunctions but hid--hid--these modifications from the government. But even if the government had some idea about fraud, it couldn't stop payment because the contractor was the only company that could manufacture and support these satellites. Had this case been brought today, a court could incorrectly find that the violation was not material.

This ought to be unacceptable, and it is. This kind of fraud can hurt our troops and damage our national security.

Second example: Fraud hurts our law enforcement officers here at home. In 2018, the Justice Department settled a fraud claim brought by a whistleblower against a manufacturer of bulletproof vests. According to public records, the manufacturer knew the vests would actually degrade and degrade very quickly under normal heat and humidity. The manufacturer tried to cover its tracks by publishing misleading data.

Those actions delayed the government's efforts to determine the true extent of the damage to these bulletproof vests. After years of investigation, a National Institute of Justice study found that more than 50 percent of the used vests could not stop a bullet--a very life- threatening issue.

In this case, the manufacturer argued that since the government kept paying for the vests, the fact that they didn't work was immaterial. Thankfully, the judge had common sense enough to see past such ridiculous arguments. In other words, common sense prevailed in that particular courtroom.

Now, remember, the actions of these fraudsters put our law enforcement personnel's lives at risk. Now, we had a brave whistleblower. So thanks to that brave whistleblower who uncovered this fraud, the money recovered from the settlement was used to purchase new bulletproof vests.

Third example and last example: Fraud hurts our veterans and undermines the Federal programs Congress created to support them and their families.

Another case involved fraud in home loans insured by the VA. The goal of these loans is to keep veterans in their homes. So, as most veterans know, VA loans prohibit lenders from charging veterans hidden fees. In this instance, a mortgage lender was illegally charging our veterans fees for VA-insured loans.

But the government never ceased payment because doing so would hurt the program and the veterans it was meant to help--not to mention that once a loan guarantee is approved, the VA is prohibited by law from declining payments.

Despite this, the district court applied the bogus new interpretation of materiality. The court dismissed the case. In other words, the fraudsters got away with it, and the court dismissed, saying that the government's continued payment meant the fraud was not material. So the government is allowing a program to go on, pay money out, even if they know there is fraud.

So let me underscore the obvious. I am telling you, Congress didn't intend for courts to find that fleecing veterans for profit is immaterial. The legislation that has come out of the Judiciary Committee will fix this nonsense. And I hope some Republicans--because most of the opposition in the Judiciary Committee came from Republicans. Democrats understand that this bill must pass, but, for some reason, Republicans are willing to accept this nonsense about immateriality.

So that is the purpose of this legislation. It clarifies that the government's decision to continue paying a claim despite knowledge of fraud is not dispositive if other reasons exist for the continued payment--these simple reasons like everybody expected our government ought to do: to continue protecting our troops, to continue helping our law enforcement officers be safe in their job, and to make sure that a veteran doesn't get taken as a sucker to give away a lot of money that would be illegally taken.

So, as shown by the examples I just gave you, examples I highlighted this very day, the government's decision to continue paying a claim by itself doesn't prove materiality.

You may ask: Why did the government continue the payments? Well, that is pretty much simple common sense too--because you want these programs to function the way they should function.

My amendment will guarantee that the government can hold fraudsters accountable even when the government has to continue payment for a product or a service.

BREAK IN TRANSCRIPT

Source