False Claims Act: Senator Grassley Proposes Sweeping Amendments To The False Claims Act Favorable To Plaintiffs' Bar

On the Senate floor on September 12th, Senator Grassley introduced sweeping amendments to the civil False Claims Act ("FCA") which will significantly increase liability under the FCA by eliminating long-standing defenses.† The bill also guarantees increased payments to private qui tam relators and their attorneys.† The proposed amendments, entitled the "False Claims Act Corrections Act of 2007," are co-sponsored by Senators Durbin, Leahy, Specter, and Whitehouse.† Senator Grassley explained that the proposed amendments are designed to "correct" judicial decisionsóone by the Supreme Court and one by Chief Judge John Roberts when he sat on the D.C. Circuit Court of Appealsóand to bring the FCA in line with "congressional intent" from 1986.† That is both an understatement and a misstatement.† The actual language of the bill submitted to the Senate is a virtual rewrite of the False Claims Act that significantly changes both the substantive and the procedural provisions of the statute and would greatly expand liability for large and small businesses, not-for-profit institutions and individuals.† The proposed amendments would also significantly increase the amounts paid to whistleblowers and the plaintiffs' bar whether or not they bring new information regarding fraud to the government.†

Major Revisions In The Bill

In the process of "overturning" these court decisions, the proposed amendments amend the FCA in the following ways.† The bill:

Greatly expands the sources of money that can be the subject of FCA claims which (if read literally) would apply the Act to fraud committed against Social Security recipients or Federal employees;

Virtually and practically eliminates the jurisdictional defense of "public disclosure/original source" which was adopted by Congress in 1986 to reward true whistleblowers and avoid parasitic qui tam lawsuits;

Increases the statue of limitations in most cases from six (6) to ten (10) years, nearly doubling the liability period;

Extends the statute of limitations further by reversing a recent Second Circuit decision to allow stale government claims to "relate back" to the date a qui tam case is originally filed under seal;

Expands the conspiracy section to apply to "reverse" false claims;

Adds an almost incomprehensible provision prohibiting "waiver or release" of an FCA claim;

Expands the "wrongful discharge" provision now found in 31 USC ß 3730(h) to virtually any person or government contractor who claims adverse...