Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - September 12, 2007)

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Mr. DURBIN. Mr. President, I am pleased to join my colleague Senator Grassley in introducing the False Claims Act Correction Act of 2007. This bipartisan legislation takes important steps to modernize and strengthen the Federal False Claims Act and will help protect the Government and taxpayers from waste, fraud, and abuse of Government funds.

During the Civil War, President Abraham Lincoln saw the need for a law that would prevent war profiteers and other unscrupulous Government contractors from defrauding the Government and the Nation's taxpayers. Lincoln urged the passage of legislation that would allow the Government to seek damages and penalties against perpetrators of fraud, and that would permit whistleblowers with information about false or fraudulent claims to file qui tam lawsuits on the Government's behalf in exchange for a share of the recovered funds. In 1863, Congress heeded Lincoln's call and enacted the Federal False Claims Act, FCA, which became known as ``Lincoln's Law.''

Lincoln's Law is still in effect today and it is still much-needed. In recent years, there have been alarming reports of waste, fraud, and abuse of Government funds in the Iraq war and reconstruction effort, in the recovery from Hurricane Katrina and other disasters, in military and homeland security procurement contracts, and in Federal healthcare programs. We need strong laws that can expose and root out such fraudulent practices.

The last major update of the FCA took place in 1986, when Senator Grassley and Congressman Berman sponsored amendments that revitalized the FCA and its qui tam provisions in response to widespread reports of defense contractor fraud. Since 1986, the Federal Government and qui tam relators have worked together to recover over $20 billion in moneys that would otherwise have been lost to fraud, waste or abuse in Government programs. The recovery of this enormous sum is a victory for taxpayers, and a demonstration of the success of the FCA and its qui tam model.

It has now been 21 years since the enactment of the 1986 FCA amendments, and during that time changes in the interpretation of the act and in the nature of Government contracting have threatened to limit the FCA's effectiveness. In particular, several recent court decisions have weakened the intent and application of Senator Grassley's 1986 amendments to the FCA and have limited the FCA's ability to reach certain types of fraud and abuse involving Government programs.

The False Claims Act Correction Act seeks to correct these court decisions and to ensure the FCA's utility as an effective tool against fraud. It does so in several ways.

First, the False Claims Act Correction Act clarifies the ``presentment requirement'' in the FCA. In 2004, the DC Circuit Court of Appeals held that liability under the FCA can only be found if the allegedly fraudulent claim is ``presented to an officer or employee of the United States Government.'' This interpretation has been used by courts to dismiss a number of FCA cases where abuses of Federal Government funds were clearly evident but where the false claims were submitted to grantees or agents of the Federal Government--such as the Iraq Coalition Provisional Authority--and not directly to Government employees. Our legislation would make clear that FCA imposes liability if a person presents a false or fraudulent claim for Federal Government money or property, and that the claim need not be directly presented to a Government employee.

Our legislation also clarifies the applicability of the FCA's ``public disclosure bar.'' The FCA currently allows a relator's FCA case to be dismissed if the case is based on information that was publicly available at the time of the filing, unless the relator was the ``original source'' of the public information. In its 2007 decision in Rockwell Int'l Corp. et al. v. United States, the Supreme Court held that the public disclosure bar prevents a relator from recovering money unless the relator was an original source for all the claims that are settled or upon which a verdict is rendered. The Rockwell holding is troubling because relators often file actions based on facts which prove to be the tip of the iceberg, and upon further investigation DOJ discovers more fraud and ends up settling or winning the case on the grounds of the latter fraud.

The Rockwell court's interpretation of the public disclosure bar might discourage whistleblowers from filing legitimate FCA cases and alerting DOJ to fraud. Our legislation would preclude a relator from recovery under the public disclosure bar only where the relator derived knowledge of all essential elements of the claim from public disclosure. Thus, only relators who truly contributed no new information to the case would be barred.

Among its other provisions, the False Claims Act Correction Act resolves a split among the Federal circuit courts by allowing a Government employee to act as a qui tam relator when the employee learns of fraudulent conduct on the job, provided that the employee has first taken steps to report the fraud internally. Our legislation also strengthens the protections in the FCA for whistleblowers, so that whistleblowers who are Government contractors and agents can receive the same antiretaliation protection as employees of the company perpetrating the alleged fraud. Our bill further simplifies the FCA statute of limitations with a clear 10-year standard for all cases, and also makes technical changes to enhance DOJ's usage of the civil investigative demand process in DOJ investigations of potential FCA violations.

The changes that our legislation would make to the FCA are narrowly tailored, and are designed to clarify the FCA's scope in keeping with the intent of the authors of the 1986 FCA amendments. I commend Senator Grassley, the Senate architect of the 1986 FCA amendments, for his devotion to ensuring the effective functioning of the FCA, and I am proud to join him in introducing this legislation to better combat waste, fraud, and abuse of Government programs.

In sum, the False Claims Act Correction Act will enhance whistleblowers' ability to shine a light on fraudulent conduct involving Government funds, and to hold the perpetrators accountable through legitimate qui tam claims. The bill's reforms will ensure that the FCA can continue to serve as a viable tool for recovering taxpayer funds lost to fraud, waste or abuse. The legislation we are introducing today will strengthen the legacy of Lincoln's Law, and I am pleased to serve as its lead cosponsor. I urge my colleagues to support its passage.

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