False Claims Act Redline Breaks Down Amendments To The Act

Every experienced False Claims Act “FCA” practitioner fights with fraudsters over what the words of this complicated law mean. Actual, perceived, or invented lack of clarity in the original 1986 public disclosure bar “led to extensive litigation and to circuit splits concerning the meaning of the words ‘based upon,’ ‘public disclosure,’ ‘allegations or transactions,’ ‘original source,’ ‘direct and independent knowledge’ and ‘information.’” [1. United States ex rel. Findley v. FPC Boron Employees’ Club, 105 F.3d 675, 681 (D.C. Cir. 1997), abrogated in part by Rockwell Int’l Corp. v. United States ex rel. Stone, 549 U.S. 457, 467 (2007) (adopting conflicting interpretation of “information”) (as recognized in United States ex rel. Davis v. Dist. of Columbia, 773 F. Supp. 2d 21, 33 n.8 (D.D.C. 2011)).] This battle is ongoing. Incredibly, even knowing which version of the FCA applies to different aspects of your case can be a challenge.

In James B. Helmer, Jr., False Claims Act: Whistleblower Litigation, Appx. 1.B (6th ed. B.N.A. 2012) – the book we wrote 20 years ago to help whistleblowers fight and win their cases, and have been updating ever since—we published a redline of the 2009 and 2010 amendments to the False Claims Act that makes sorting through these recent changes a little easier:

Read or download a copy of the False Claims Act Redline.

The 1986 Amendments to the FCA enjoyed more than two decades of increasing success fighting fraud and returning billions to the taxpayer. At the same time, interpretation of the act by some courts weakened the FCA in ways its authors never intended. This unwelcome tinkering with the Act became too much for Congress to bear following the U.S. Supreme Court’s decision in Allison Engine Co. v. United States ex rel. Sanders [2. Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008). See, e.g., 155 CONG. REC. E1295, 1296 (May 18, 2009) (statement of Rep. Berman): In sum, Congress intended the (FCA) to protect all Government funds and property, without qualification or limitation. However, over the years, some courts have incorrectly grafted limitations to the reach of the Act, leaving billions of dollars vulnerable to fraud. Most recently, in June 2008, the Supreme Court ruled in the Allison Engine decision that, absent the “Government itself” inking the check or approving a false claim, the Act does not impose liability for false claims on Government funds disbursed for a Government purpose by a Government contractor or other recipient of Government funds, even if such fraud damages the Government or its programs. Because so many inherently governmental functions are carried out by government contractors these days, including contracting and program management functions, this ruling severely limits the reach of the law. The primary impetus for the current corrective legislation is to reverse these unacceptable limitations and restore the (FCA) to its original status as the protector of all Government funds or property.], a case litigated for 19½ years from start to finish by the attorneys at Helmer, Martins, Rice & Popham.

In response to the Supreme Court’s judicial amendment of the FCA in Sanders, Congress enacted the Fraud Enforcement and Recovery Act (FERA)[3. Pub. L. No. 111-21, 123 Stat. 1617 (2009) (signed into law by President Obama on May 20, 2009).]. ¬Section 4 of FERA—“Clarifications to the False Claims Act to Reflect the Original Intent of the Law”—amended the FCA to correct erroneous judicial interpretations of the Act and to preserve Congress’ original intent [4. Pub. L. No. 111-21, §4, 123 Stat. at 1621; S. REP. NO. 111-10, at 10 (2009).]. These changes are discussed in detail in Chapter 2 of James B. Helmer, Jr., False Claims Act: Whistleblower Litigation (6th ed. B.N.A. 2012).

Another amendment to the False Claims Act came on March 23, 2010, when President Obama signed into law the Patient Protection and Affordable Care Act (PPACA)[5. Pub. L. No. 111 148, 124 Stat. 119 (2010).]. Significant changes to the FCA’s public disclosure bar and original source exception were buried in this massive health care reform bill[6. Pub. L. No. 111 148, §10104(j)(2), 124 Stat. 119, 901–02.].

Congress made further changes to the whistleblower protection provisions of 31 U.S.C. §3730(h) in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act[7. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, §1079A(c), 124 Stat. 1376 (2010). The Dodd-Frank Act went into effect on July 22, 2010.]. Dodd-Frank slightly increased the breadth of the definition of individuals whose whistleblowing activity triggers protection for an “employee, contractor, or agent” and clarified that the statute of limitations for an action under Section 3730(h) is three years.

While our redline identifies these three amendments to the False Claims Act as they have been written in the United States Code, whistleblower lawyers battle with defense attorneys every day over how courts should interpret this complex statute. This battle includes whether some of these False Claims Act amendments are retroactive—whether they apply to fraud that happened before the law was amended.

Our False Claims Act redline can tell you what the law says and when it was changed, but remember that only experienced False Claims Act counsel and careful research can tell you which version to apply, and how the FCA has been interpreted by the courts.

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