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42–809 PDF 2008

S. HRG. 110–412

THE FALSE CLAIMS ACT CORRECTION ACT

(S. 2041): STRENGTHENING THE GOVERNMENT’S

MOST EFFECTIVE TOOL AGAINST FRAUD FOR

THE 21ST CENTURY

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

FEBRUARY 27, 2008

Serial No. J–110–76

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

SHELDON WHITEHOUSE, Rhode Island 

ARLEN SPECTER, Pennsylvania 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

JOHN CORNYN, Texas 

SAM BROWNBACK, Kansas 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

STEPHANIE A. MIDDLETON, Republican Staff Director 

NICHOLAS A. ROSSI, Republican Chief Counsel 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1

prepared statement .......................................................................................... 203

Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 3

WITNESSES 

Boese, John T., Partner, Fried, Frank, Harris, Shriver & Jacobson LLP, 

Washington, D.C. ................................................................................................. 23

Clark, John E., Of Counsel, Goode, Casseb, Jones, Riklin, Choate & Watson, 

P.C., San Antonio, Texas ..................................................................................... 21

Gonter, Tina M., Jacksonville, Florida .................................................................. 19

Hertz, Michael F., Deputy Assistant Attorney General, Civil Division, Department of Justice, Washington, D.C. ..................................................................... 6

QUESTIONS AND ANSWERS 

Responses of John Boese to questions submitted by Senator Specter ................ 40

Responses of John Clark to questions submitted by Senator Specter ................. 52

Responses of Michael Hertz to questions submitted by Senator Specter ........... 54

SUBMISSIONS FOR THE RECORD 

Benczkowski, Brian A., Principal Deputy Assistant Attorney General, Department of Justice, Washington, D.C., statement and attachment ...................... 57

Boese, John T., Partner, Fried, Frank, Harris, Shriver & Jacobson LLP, 

Washington, D.C., statement .............................................................................. 75

Brickman, Jim, Real Estate Developer and Investor, Texas, statement ............ 115

Bucy, Pamela H., Bainbridge Professor of Law, University of Alabama School 

of Law, Tuscaloosa, Alabama, statement ........................................................... 119

Clark, John E., Of Counsel, Goode, Casseb, Jones, Riklin, Choate & Watson, 

P.C., San Antonio, Texas, statement .................................................................. 136

Gonter, Tina M., Jacksonville, Florida, statement ............................................... 167

Hertz, Michael F., Deputy Assistant Attorney General, Civil Division, Department of Justice, Washington, D.C., statement .................................................. 186

Kohn, Stephen M., President, National Whistleblower Center, Washington, 

D.C., statement and attachment ......................................................................... 196

(1)

THE FALSE CLAIMS ACT CORRECTION ACT (S. 

2041): STRENGTHENING THE GOVERNMENT’S MOST EFFECTIVE TOOL AGAINST 

FRAUD FOR THE 21ST CENTURY 

WEDNESDAY, FEBRUARY 27, 2008

U.S. SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, D.C. 

The Committee met, Pursuant to notice, at 10:05 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Durbin, Specter, and Grassley. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. 

SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. Nearly a century and a half ago, President 

Lincoln pushed through the False Claims Act. He wanted to stop 

the rampant fraud and war profiteering we saw during the Civil 

War. It is fitting that we hold this hearing on legislation to 

strengthen ‘‘Lincoln’s law’’ the same month we celebrate President 

Lincoln’s birth. 

We are in the midst of war, and we are facing reports of billions 

lost to fraud and waste in Iraq and Afghanistan. And so we are 

considering important new improvements to the False Claims 

Act—not only to punish and deter those who seek to defraud our 

Nation, but also, importantly, to recover billions in taxpayer dollars 

that were stolen from the public trust. 

In recent years, the False Claims Act has become the Government’s most effective tool against fraud. Since 1986, it has been 

used to recover more than $20 billion lost to fraud, half of that just 

in the past 5 years. It has been used to punish contractors selling 

defective body armor to our police, to recover hundreds of millions 

from oil and gas companies bilking the Government on valuable 

leases on Federal land, to punish health care and drug companies 

for defrauding billions from Medicaid and Medicare, and to uncover 

massive fraud by insurance companies illegally shifting their losses 

from Hurricane Katrina to the Federal Government. 

But these recent successes do not tell the full story. The False 

Claims Act has yet to fulfill its true potential for combating fraud. 

In 1986, Senator Grassley led the effort to reinvigorate the False 

Claims Act by amending the law to encourage citizens to report 

fraud against the Government. I want to take this moment to publicly commend Senator Grassley for doing that. 

2

Senator GRASSLEY. Thank you, Mr. Chairman. 

Chairman LEAHY. It was one of the most important pieces of legislation passed during that time. 

Senator GRASSLEY. Thank you. 

Chairman LEAHY. Since then, citizen whistleblowers have become the greatest source for uncovering complex frauds against the 

Government. Their cases now account for about 70 percent of all 

the money recovered under the False Claims Act. Yet opponents of 

the False Claims Act, those who defend the major defense contractors and big drug companies, have worked hard to undermine the 

original intent of these amendments. A series of recent court decisions have placed new, technical impediments on false claims 

cases, and these court cases threaten to weaken the law. Not only 

would they weaken the law, they would undo the successes of these 

past few years. 

So we are considering bipartisan legislation—the False Claims 

Act Correction Act of 2007—that is going to correct these judicial 

interpretation problems and strengthen the False Claims Act for 

the 21st century. In doing so, I will recognize the longstanding 

leadership of my friend Senator Chuck Grassley. He introduced 

this bill recently in order to restore the original intent of the 1986 

amendments. He has worked tirelessly over the years in defense of 

the False Claims Act, and I am proud to join with him, as well as 

Senator Specter, of course, and Senator Durbin and Senator 

Whitehouse, in support of this bill. I look forward to working with 

these Senators and the Committee to make the False Claims Act 

even more effective and to provide important, new protections for 

the citizen whistleblowers, who are so vital to uncovering these 

frauds. 

So we will ask some important questions of the Justice Department about its failure to dedicate sufficient lawyers and investigators to pursue these fraud cases. The Justice Department has a 

backlog of more than 1,000 false claims cases. Now, assuming no 

new cases were brought, at the current pace that would take 10 

years to resolve. That is assuming no new cases. Now, when one 

considers that a recent study found that for every dollar spent enforcing the law in health care cases, the Government recovered $15 

on behalf of the American taxpayers, there is no excuse for failing 

to pursue these cases aggressively. That is a pretty good investment. 

In light of the politicization of the Justice Department, many 

wonder whether it has resisted pursuing certain false claims cases 

for political reasons—most notably those involving contracting 

fraud related to the war in Iraq and Afghanistan. Over the past 5 

years, the Justice Department has participated in more than 600 

false claims settlements nationwide and recovered more than $10 

billion. And I commend them for that. But during that same time, 

the Justice Department participated in only five settlements involving contracting fraud in Iraq and Afghanistan, recovered a 

mere $16 million—less than two tenths of 1 percent of the overall 

total. We certainly know from the press that there has been a lot 

more fraud than that. And since 2002, our Government has spent 

nearly $500 billion on the wars in Iraq and Afghanistan, and billions of taxpayers’ dollars have been lost to fraud, waste, and 

3

abuse. They ought to be recovering that, not protecting favorite 

contractors or politically connected people who are bilking the taxpayers. The False Claims Act was designed to attack such rampant 

war profiteering. It was necessary during the Civil War, and it is 

necessary today. 

The administration has apparently decided that pursuing unscrupulous defense contractors would be embarrassing, and aggressively pursuing these frauds is not their priority. 

We will hear from a courageous citizen whistleblower, Tina 

Gonter, who will tell us how she used the False Claims Act not 

only to hold our Nation’s largest defense contractors to account, but 

also to keep the Justice Department honest. She risked her job, she 

was retaliated against, but she took on the powerful and the 

moneyed defense contractors anyway. It is people like that who 

Senator Grassley and I and others want to protect when they raise 

these issues. The whistleblowers should be recognized as ‘‘citizen 

soldiers,’’ as President Lincoln called them when the False Claims 

Act was first passed so many years ago. Her story demonstrates 

how the False Claims Act works for all Americans and why the 

new protections for citizen whistleblowers in the bill we consider 

today are necessary to encourage them to come forward and tell 

their stories. So I hope all Senators will join us to honor the legacy 

of Lincoln’s law and take action now to strengthen and improve the 

False Claims Act for the next century. 

Before I yield to Senator Specter, I should note that because of 

our duties on the Appropriations Committee, we both will have to 

leave, and I have asked Senator Grassley when we leave if he 

would chair this hearing, and he has graciously offered to do so, 

and I appreciate that. 

[The prepared statement of Senator Leahy appears as a submission for the record.] 

Senator Specter? 

STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM 

THE STATE OF PENNSYLVANIA 

Senator SPECTER. Thank you, Mr. Chairman. 

The subject of the False Claims Act is a very important one. I 

was fascinated by the subject in law school, and the criminal law 

textbook had the Supreme Court decision of ex rel. Marcus v. Hess, a 1942 decision, and it motivated me to do extensive research and 

write an article for the law review, law journal on private prosecutions. And over the years, I have followed this Act, and it has enormous potential to collect money for the Federal Government, but 

only if people are encouraged to follow that. 

I was disappointed to see the decision of the Supreme Court of 

the United States in the Rockwell International Corporation case, 

which said that if the factual basis for recovery or conviction was 

not what the whistleblower had started with, there could not be a 

recovery. 

Well, the texture of a case frequently changes during the course 

of discovery and litigation. And if the whistleblower is going to find 

that his claim can be dislodged that easily, he is not going to be 

inclined to follow it. Also, the Totten case, where the relator whistleblower was denied recovery because it was Amtrak, not the GovVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
4

ernment but a grantee. And grantees get most of the money or a 

great deal of the money from the Government. 

And then in the Custer Battles case, to deny a claim because it 

was the Coalition Provisional Authority in Iraq, an international 

entity that got so much of the money from the United States, those 

are really Federal dollars, and there really ought to be a way to 

encourage this kind of action. But private action and citizen action 

is really the cornerstone of initiative, and it has been very successful on treble damage cases and many, many other lines. 

I am sorry that my schedule precludes my staying. It is a very 

distinguished list of witness. Mr. Hertz has a phenomenal record, 

30 years in the Federal Government. As I see him sitting at the 

witness table with packs of materials on each side, I am going to 

be fascinated to see how he can handle it in 5 minutes. 

Chairman LEAHY. Trust me, Mr. Hertz knows what is in—I know 

Mr. Hertz. He knows what is in every bit of that material, too. 

Senator SPECTER. That is a lot of material, but that is an occupational hazard, which Senator Grassley does not have. Senator 

Grassley brings to this Committee a fresh view. He is not encumbered with a law degree. 

[Laughter.] 

Senator SPECTER. He is a very, very practical man. And as I said 

on the floor 1 day, when I got carried away, Senator Grassley is 

in the mold of Harry Truman. I hope President Truman did not 

mind my making that reference. But Senator Grassley brings a 

unique practicality to his work here. And I have a special fondness 

for Senator Grassley. I have still got a little time, so I am going 

to use it to reminisce a bit. 

Senator Grassley and I were elected in 1980 together. We came 

with a total of 16 Republican Senators, and two Senators were 

elected as Democrats. One was Senator Chris Dodd of Connecticut. 

I saw Chris this morning. We were reminiscing about how 50 percent of his class has remained and only 12.5 percent of the Republican class, 2 out of 16. And the only thing that has really befallen 

Senator Grassley of a problemsome nature during his distinguished 

career is that with some frequency he has been mistaken for me. 

[Laughter.] 

Senator SPECTER. And that is grounds for a defamation suit. But 

Senator Grassley does not like dealing with lawyers, so he has 

never brought the suit. But he was after Attorney General William 

French Smith, so, Mr. Hertz, if he is tough on you today, he goes 

after Attorneys General as well. 

One day I was at the White House, in 1984, and Attorney General Smith said, ‘‘Why are you after me?’’ And I finally realized 

that he thought I was Chuck Grassley. 

[Laughter.] 

Senator SPECTER. Senator Grassley tells a story—well, you tell 

the story about what happened, people remonstrated you for your 

terrible questioning of Professor Anita Hill. 

Senator GRASSLEY. Yes, and, you know, the practice then when 

we had Anita Hill and other people before the Committee at the 

Thomas hearing, there were two Republicans and two Democrats 

that were scheduled to ask questions. None of the rest of us asked 

questions. That was a bipartisan agreement at that time. And so 

5

he was asking the questions for the Republicans. We each made a 

statement for maybe 2 or 3 minutes, is all our participation. But 

for the next 6 months, because he asked such tough questions of 

the witnesses, everybody would come up to me and say, ‘‘I don’t see 

how you could have been so mean to those witnesses.’’

[Laughter.] 

Senator GRASSLEY. And I was innocent. I did not ask a single 

question, nor did most of the other Republicans. 

Senator SPECTER. One addendum to that. In 1999, 8 years after 

those hearings were over, Senator Grassley and Justice Thomas 

were having breakfast in the Senate dining room. And I walked 

over to the two of them sitting there, and I said, ‘‘Justice Thomas, 

I want to tell you two things. I want to tell you how hard it was 

for me to get Grassley to vote for you.’’ They both about fell off 

their chairs, this diehard Republican. ‘‘And one other thing I want 

to tell you, Justice Thomas. You know all those questions I asked 

Professor Hill? Grassley fed them to me.’’

[Laughter.] 

Senator SPECTER. But on the subject, this is—

Chairman LEAHY. And what was his answer? 

Senator SPECTER. He laughed. Justice Thomas has a laugh which 

originates in the lower part of his abdomen. He really explodes 

with his laugh. But those were complex hearings, really historic 

hearings. 

Senator Leahy and I have been around, as has Senator Grassley, 

to participate in a lot of historic hearings, and this is a very important one. And I will work hard with Senator Grassley and Senator 

Leahy to see if we cannot get this legislation. And we are amenable 

to your suggestions, Mr. Hertz, as to where you think it ought to 

go, as long as we can get the bill passed. 

Senator GRASSLEY. Senator Leahy, if I could delay my opening 

statement, because I would like to make sure as Chairman of the 

Committee, I think it is very important to the legitimacy of my legislation if you would ask your questions before you go? 

Chairman LEAHY. I will, and I appreciate that. 

Mr. Hertz, if you would stand, please, to be sworn. Do you solemnly swear that the testimony you will give in this matter will 

be the truth, the whole truth, and nothing but the truth, so help 

you God? 

Mr. HERTZ. I do. 

Chairman LEAHY. Thank you. 

Michael Hertz is the Deputy Assistant Attorney General for the 

Commercial Litigation Branch of the Civil Division at the Department of Justice. He served continuously with the Department for 

over 30 years. Beginning in 1975 when he joined the Civil Division’s appellate staff, he supervised and litigated False Claims Act 

cases extensively during his long and distinguished career. And I 

might note that through the years, in both Republican and Democratic administrations, I have noted that it is the career people in 

the Department of Justice that are the most important aspect of 

that Department. I remember how appealing I found them when I 

was a young law student—I actually did value getting my law degree—when the then-Attorney General was basically asking me if 

I would come out of law school and join the Department of Justice. 

6

I remember that Attorney General. I was very impressed with my 

meeting with him, and telling me how in the professional division 

they did not allow politics to influence them. I had some interest 

in the Criminal Division. He said even the President of the United 

States—he told the President of the United States he could not 

interfere with a criminal investigation. And I thanked Attorney 

General Robert Kennedy for telling me that, and it turned out, as 

history showed, that when a strong supporter of his brother was 

involved with a criminal matter, they prosecuted him. And that is, 

of course, the way it should be. 

Mr. Hertz during his service with the Department has received 

numerous awards, including the Stanley D. Rose Memorial Award. 

That is the Civil Division’s highest ranking award. He received 

that in 2002. He has his bachelor’s degree from Rensselaer, a law 

degree from Northwestern University School of Law. Please, Mr. 

Hertz, go ahead. 

STATEMENT OF MICHAEL HERTZ, DEPUTY ASSISTANT ATTORNEY GENERAL, CIVIL DIVISION, DEPARTMENT OF JUSTICE, 

WASHINGTON, D.C. 

Mr. HERTZ. Mr. Chairman, Senator Grassley, I want to thank the 

Committee for inviting me to testify and present the views of the 

Department of Justice on Senate bill 2041. I also appreciate having 

this opportunity to review with you the Department’s experience 

with qui tam actions since the 1986 amendments. 

The Department of Justice is committed to the vigorous enforcement of the laws against those who perpetrate fraud to obtain 

money from the Government. Since the False Claims Act was 

amended and liberalized in 1986, over $20 billion has been recovered on behalf of taxpayers by the Department with more than $5 

billion of that amount in just the past 2 years. The qui tam provisions of the False Claims Act statute, which the Department continues to vigorously support, have augmented our resources to address fraud in connection with Government programs and to recover some losses to the Federal fisc that would not have otherwise 

been identified. Since the qui tam provisions of the False Claims 

Act were amended, there have been more than 5,800 suits filed 

with the Department through fiscal year 2007. It is significant to 

note that of the $20 billion recovered under the False Claims Act 

since 1986, $12.6 billion has been the result of qui tam actions, and 

the Department has paid awards to qui tam relators of $2 billion. 

We believe that the success of the Act’s qui tam provisions are 

in large part due to the efforts of both whistleblowers, whom we 

acknowledge bring these cases often at great personal sacrifice, and 

the highly professional, skilled and dedicated Government attorneys, agents, auditors, who, with the encouragement of the Department, work with relators and their attorneys to fully implement 

the public-private partnership contemplated by the 1986 amendments. 

As I have said, the Department is of the view that the False 

Claims Act is effective and working very well. Accordingly, we have 

not independently urged or seen a pressing need for major amendments at this time. As our views letter and appendix reflect, however, the Department has considered the bill carefully and is symVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
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pathetic and can support many of the proposed changes to the 

False Claims Act, although in a number of instances we proposed 

alternative language to accomplish essentially the same purpose. 

For example, we have argued that the presentment and Federal 

funds limitations imposed by the courts in the Totten decision and 

the Custer Battles decision were incorrectly imposed, and we have 

filed amicus briefs arguing that both cases were wrongly decided. 

To the extent that S. 2041 proposes to redress those holdings, we 

have provided comments for an effective and simple way to do so. 

Similarly, we support the goals embodied by the provisions of S. 

2041 that: one, clarify the conspiracy provisions apply to all substantive bases of liability; two, make actionable under the False 

Claims Act the requirement to return overpayments; three, prohibit the unwitting waiver of claims by relators; four, provide a single 10-year statute of limitations under the False Claims Act; five, 

make clear that under the False Claims Act amended allegations 

filed by the United States relate back to the date of the original 

complaint by the relator; and, six, streamline and make effective 

the False Claims Act civil investigative demands. 

Notwithstanding these areas of mutual agreement, and principally because of S. 2041’s specific proposals with respect to the 

right of Government employees to serve as relators, and the public 

disclosure bar, as well as the preference for the alternative language we have proposed, the Department cannot support the bill 

as currently drafted. 

The Department is opposed to an explicit legislative recognition 

of the right of Government employees to serve as relators and obtain qui tam awards. Each Federal employee has an existing duty 

to report fraud, waste, and abuse. Adding a financial incentive to 

file qui tam suits conflicts with this duty and has the potential to 

undermine both the employee’s loyalty to the Government and the 

public’s confidence in the fairness and impartiality of the Government’s decisions. This is particularly true for those Government 

employees such as auditors, investigators, contracting officials, and 

attorneys who are paid salaries by the taxpayers to identify and 

root out fraud and who, under S. 2041, would not be barred from 

filing suits using information they learned in carrying out those duties. 

We are also concerned that in an effort to correct the current 

public disclosure bar, the proposed legislation will unduly narrow 

it. One of the guiding principles of the False Claims Act was that 

it was intended to provide the Government with information about 

fraud it otherwise would not have discovered. As currently drafted, 

the proposed narrowing restrictions would enable rewards to be 

claimed by plaintiffs with no firsthand knowledge of fraud and who 

do not add information beyond what is in the public domain, as 

well as plaintiffs in a broad range of cases where the Government 

is already taking action. 

While the Department could support aspects of the bill’s proposal 

that eliminate the jurisdictional nature of the public disclosure bar 

and that permit only the Attorney General, and not defendants, to 

seek dismissal of relators on this ground, it could only do so if the 

bar reflects the concerns we have outlined. In our view, the public 

disclosure bar would have to be revised to permit dismissal of a qui 

8

tam action by the Government if it is already pursuing the matter 

unless the relator provides new information that would enhance 

the Government’s recovery or the Government’s investigation is 

based on information voluntarily provided by the relator. 

The Department wishes to acknowledge the efforts of Senators 

Grassley, Leahy, Specter, and Durbin and their staffs for the 

thoughtful work that has gone into S. 2041. Although as currently 

proposed the Department cannot support the bill, we remain willing to work with the Committee to address our concerns and ensure that the False Claims Act remains the vital anti-fraud weapon 

that it is today. 

I look forward to your questions. Thank you. 

Chairman LEAHY. Well, thank you, Mr. Hertz. You know, I am 

somewhat concerned on the part that you do disagree with, and I 

appreciate the fact that the Department agrees with a number of 

the sections. And I take it you feel the Rockwell decision was 

wrongly decided. Is that correct? 

Mr. HERTZ. That is correct. The Government filed an amicus urging that the relator in that case be allowed to retain the award. 

Chairman LEAHY. I agree with that. But you understand that 

under our bill—and I understand what you said about employees 

already have—Government employees have a duty to report fraud 

or abuse, and we will all agree on that. The concern I have had—

and I know Senator Grassley and others have had—is that many 

times when that is reported, it is reported to the detriment of the 

career of the person doing the reporting. And our bill says that if 

they discover a fraud, they have to report it to their superiors or 

to the Inspector General of the Department. And they are not allowed to sue if action is taken. But the only time they can sue is 

if a year goes by and no action has been taken. Then they can sue. 

Do you really find that unreasonable? 

Mr. HERTZ. Mr. Chairman, we appreciate the efforts that the provisions of the bill attempt to put restrictions on Government employees, and we recognize that there are some policy choices to be 

made here. But at the end of the day, we are left with a couple of 

factors that cause us to say that Government employees should not 

be allowed to file suit even in the circumstances you outline. 

First and foremost is, at the end of the day, after the Government employee follows all the procedures in the bill and files a lawsuit, you will still have the situation where the Government employee has a personal financial interest in the matter that he 

worked on as a Government employee. This is something that is 

contrary to ethics regs and ethics statutes. 

Chairman LEAHY. I understand that, but we have a certain 

amount of frustration. If somebody finds something and they report 

it to the Inspector General, they report it to the Secretary or whoever it might be, and nothing happens—and that has been a situation—what do you do? I mean, you read all these cases about Iraq 

and Afghanistan. We have spent $500 billion there. You read in the 

press there seem to be well—documented cases of fraud and waste. 

There has been, if I am correct by my notes here, five False Claims 

Act settlements through the Justice Department, $16 million in 

cases involving fraud in Iraq and Afghanistan. The AG says there 

9

are 230 false claim cases involving defense procurement fraud 

under seal at the Justice Department. 

My concern is that political decisions can be made to stop these 

claims from going forward or that if you have a Government employee—usually, the first one who can see fraud and waste, you 

know, the trucks get a flat tire, and they just leave the trucks behind, the huge amounts of money that Halliburton was spending 

on hotels and things like this. They are the ones who are going to 

see it. And if nothing is done on it, does it just get covered up? 

Mr. HERTZ. I think we are talking about potentially two different 

issues. One—

Chairman LEAHY. Tell me why. 

Mr. HERTZ. Well, we are talking about, one, cases in Iraq. If you 

look at the qui tam cases that have come out from under seal involving Iraq, they have not involved Government employee relators. And we are working the cases that have been filed in connection with the war in Iraq. 

Chairman LEAHY. Well, you mentioned those under seal. How 

many have been under seal for more than 2 years? 

Mr. HERTZ. In Iraq? 

Chairman LEAHY. In Iraq and Afghanistan. 

Mr. HERTZ. Well, I do not know. There have been a total of approximately 45 cases involving Iraq and Afghanistan, and about 15 

of them are out from under seal. Some we have declined, some we 

have intervened, some we have settled. One of the things that we 

have done, we did—you know, unfortunately, these cases are complicated, and they take time. 

Chairman LEAHY. Well, let me ask it another way: Defense procurement cases—and this involves everywhere, not necessarily just 

Iraq and Afghanistan—the AG says there are 230 under seal. How 

many of those under seal involve either Iraq or Afghanistan? 

Mr. HERTZ. It should be about 30 of those. 

Chairman LEAHY. OK. That is what I wanted to make sure I understood. And how many of those have been under seal for more 

than 2 years? 

Mr. HERTZ. Well, you know, I do not know the answer to that, 

but most of the cases that have come in regarding Iraq have come 

in in the last 3 years. If you look at the total number of cases that 

are still under seal, most of those have come in in the last 3 years. 

We know that it takes a long time to work these cases. There 

doesn’t seem to be any significant difference in the period of time 

before the Government makes an intervention decision in the cases 

involving Iraq and the other cases, the pharmaceutical cases that 

we have, other areas. 

Chairman LEAHY. If I might just ask one last question—I have 

gone over my time, but you have about 1,000 backlogged now. Have 

you ever seen a backlog this—you have got institutional memory 

that most people do not have. Have you ever seen a backlog this 

big? 

Mr. HERTZ. You know, I have not really looked at the numbers 

that way. We are trying—they come in at the rate of about 350 a 

year. Whether the—

Chairman LEAHY. And the Justice Department is settling about 

100 a year. 

10

Mr. HERTZ. The qui tam—right, but we decline an awful lot of 

cases. You know, we decline and do not proceed with 75 to 80 percent of the cases. 

Chairman LEAHY. I understand. 

Mr. HERTZ. Most of those cases actually end up not producing 

any recovery for the Government. Whether we are disposing more 

than the 350 that come in per year, I would have to go back and 

look at that. So I do not know whether the backlog has built over 

the last few years or has started going down. 

Chairman LEAHY. I tell you what. My time is up. I am going to 

ask my staff—I have got a number of questions, and they are 

aware of them—to sit down and work with you on questions of 

whether we need more staffing. And if you could be good enough 

to respond to those, please. 

Mr. HERTZ. I would be happy to respond to the questions. 

Chairman LEAHY. Thank you. And Senator Durbin has come in, 

but as before, I am going to be leaving for this other Committee 

meeting, and I am going to turn it over to Senator Grassley to 

chair this. 

Senator GRASSLEY. [Presiding.] Thank you. I would like to defer 

to Senator Durbin because I know a Leader has limited time. No, 

please go ahead. Please go ahead. 

Senator DURBIN. Thank you very much. 

Senator GRASSLEY. Because I may have the whole meeting to 

myself. So you go ahead. 

[Laughter.] 

Senator DURBIN. Thank you, Senator Grassley and Senator 

Leahy. Senator Leahy, thank you for this hearing. And Senator 

Grassley has been an extraordinary champion of this issue for as 

long as I have served in the Senate, probably before. I think it is 

an extraordinary opportunity to try to ferret out fraud and waste 

of taxpayers’ dollars, and I am a little bit honored and taken by 

the fact that it started under a President from the State of Illinois. 

Let me just ask you this, if I might, basic questions, Mr. Hertz. 

I take it that the Department does not agree with the fundamental 

goal of this legislation, which is to try to make certain that taxpayers’ funds are not wasted, that we do not defraud people who 

are supposedly serving in good faith, trying to serve their Government. Is that true? 

Mr. HERTZ. No, I do not think that it is true that we disagree 

with the fundamental purposes of the legislation. I think our—as 

I have said, we are actually sympathetic with many of the provisions that they are trying to accomplish. I have also said that some 

of the issues, for example, like Totten and Custer Battles, are actually still in the courts. We do not have final judicial resolution—

Senator DURBIN. Well, we try to resolve the Totten issue. Do you 

have any problem with our resolution of that? 

Mr. HERTZ. I think we propose a different way to fix it. We have 

said that Totten was wrongly decided. 

Senator DURBIN. OK. 

Mr. HERTZ. And we disagree with, you know, the ruling and 

think the principle should be otherwise. 

Senator DURBIN. So let’s go to the next question. The question 

is: What about rank-and-file Government employees who see fraud, 

11

report it to the supervisor, the Inspector General, and nothing happens? What if the employee’s supervisors do nothing to correct or 

even investigate the fraud? Should we do something to incentivize 

those employees to keep working to bring that fraud to light? 

Mr. HERTZ. I think we already have incentivized those employees. I think if they run into resistance within their chain of command, they should have the right and go to the Inspector General 

of that agency, or even come directly to the Department of Justice. 

The Department of Justice, I would suggest, has actually a fairly 

good record when it gets cases that come to us in the qui tam context. As I said, we intervene in about 20 to 25 percent of the cases. 

Virtually all of those end up in a recovery for the Government. And 

the 75 to 80 percent of the cases that we decide not to go forward 

with, there are much more limited recoveries. That is what history 

shows us. 

So I think that these employees have a place to go. Given that 

and given what we would say are the potential conflicts of that employee using information that comes to him in his Government capacity for a personal financial gain, which could essentially cause 

the public to really distrust people who are doing regulating—people in the Government who are regulating or contracting with or 

investigating or auditing third parties. If they can use that information to file their own qui tam lawsuit, even accepting the fact 

that their supervisors have rejected going forward with a fraud 

case, I think that calls—the public could have a perception problem 

that the Government is acting fairly in those circumstances. 

Senator DURBIN. I just wanted to check my notes here and try 

to—I have some information here, and I do not know if Senator 

Grassley has it, that since 1986 the Federal Government and qui 

tam relators have worked together to recover $20 billion in Government money. So, clearly, there is some value to the current system. 

Mr. HERTZ. Oh, absolutely. 

Senator DURBIN. And my question to you is: If the ordinary process, the due process of Government does not result in an investigation, your position is it should end at that point. 

Mr. HERTZ. No. We accept and we have long accepted that when 

a relator who is not a Government employee files a case, even if 

the Government decides not to go forward, that relator should be 

allowed to go forward. 

Senator DURBIN. Why restrict it to just non-Government employees? 

Mr. HERTZ. Because the non-Government employee does not have 

the restrictions on them not to use public information for their own 

personal gain. 

Senator DURBIN. And the non-Government employee is less likely 

to have the information to pursue a claim. 

Mr. HERTZ. Actually, we would suggest otherwise. The non-Government employee who is in the corporation is likely to have firsthand knowledge of the fraud. The Government employee is likely 

to only have secondhand or derivative knowledge, things that were 

reported to him. 

Senator DURBIN. Well, I do not know how we can generalize in 

this situation and say that you would exclude Government employees. But I take it that just as a fundamental principle, you are opVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
12

posed to the idea of a Government employee recovering any money 

personally as a result of a fraud on our Government 

Mr. HERTZ. As a result of using information they learned as a 

Government employee, and using information they learned performing their Government duties as a regulator, investigator, auditor, using that information for their personal gain, correct. 

Senator DURBIN. Having served on the Intelligence Committee 

where they classify everything that is not moving, including the 

coffee pot, I am concerned here, because I know that if you want 

to break out and get something done significantly, there are many 

ways within Government to stop you. And these people who have 

pursued regular governmental due process without good results 

have as last recourse the option as a Government employee of taking these to court and getting it resolved. And my fear is that at 

the end of the day, if we follow your lead and follow your suggestion, we are going to close off a lot of opportunities to stop the 

fraud on the taxpayers. That seems to me like a greater public 

good than the possible notion that a Federal employee who does 

the right thing, blows the whistle, and gets the right result may 

end up with some money in their pocket. 

Mr. HERTZ. As I said, these are policy questions that we come 

down on a different side. Our experience shows that those Government employees that have filed qui tam suits for the most part 

have not gone to the Inspector General first, have not come to the 

Department of Justice. And as I said, when we get cases, when we 

in the Civil Division, the career employees who work these cases, 

who have dedicated their professional lives to bringing these cases, 

we have a pretty good track record of bringing the meritorious 

ones, and the ones that do not get brought—although there have 

been exceptions, there have been recoveries in cases where the 

Government has declined. I do not want to suggest otherwise. We 

think that is a relatively small price to pay, to give up those potential suits, considering the harm to public perception of allowing a 

Government employee to use information they learn in their official 

capacity. 

Senator DURBIN. I would just conclude by saying I think the 

American public would be less scandalized by the notion that a 

Federal employee might end up with 10 percent or 20 percent of 

the outcome and find millions, if not billions of dollars being saved 

from being defrauded. 

Mr. HERTZ. Well, as I said, you know, if there is millions or billions of dollars being defrauded and it is reported to the Department of Justice, the Department of Justice is going to bring that 

case on behalf of—

Senator DURBIN. It should bring this case, but it does not always 

bring the case. 

Mr. HERTZ. Well, again, we do not really have any experience of 

cases being brought by Federal employees to the Department of 

Justice that were not brought. 

Senator DURBIN. Never. 

Mr. HERTZ. In terms of meritorious cases? 

Senator DURBIN. Never. 

Mr. HERTZ. Well, because what I am suggesting is the Government employee cases that have been brought have not previously 

13

been brought to the Department of Justice before those cases were 

filed. 

Senator DURBIN. Never. So there has never been a meritorious 

case brought to the Department for investigation that you have not 

followed through? 

Mr. HERTZ. No. I am saying Government employees—the experience that exists today with Government employees filing qui tam 

suits, none of those, to my recollection, were brought to the Department of Justice before the Government employee filed that suit. 

Senator DURBIN. Senator Grassley, back to you. 

Senator GRASSLEY. Senator Durbin, we do have some circuit 

courts that say a Government employee ought to be able to do it. 

We have other circuits that say they could not. And we ought to 

solve this, and that is the purpose of having the issue you raise in 

the legislation, so we can—and then I could also—later on I will 

bring up that in 1990, 4 years after the law was passed, I gave several testimonies to different committees of Congress that the intent 

of the original legislation was that Government employees ought to 

be relators. 

Mr. Hertz, I am going to ask—I cannot ask you all the questions 

I would like to ask you, so you will have to answer a lot of them 

in writing that we will submit to you and to the Department. So 

I will go with just a few of the questions. 

I have a longstanding belief that the 1986 amendments did not 

preclude Federal Government employees from acting as qui tam relators. For instances, in 1990, I testified in the House that Government employees should be allowed to file qui tam suits if they first 

make a good-faith effort to report the fraud within proper channels. 

My rationale is that if a Government employee reports the fraud 

and supervisors sit on it because they do not want egg on their 

face, there needs to be a way to address the loss to the American 

taxpayers. Allowing Government employees to act as relators is yet 

another check that we can have on bureaucracy that may be too 

big and too unenthusiastic about stopping fraud. 

However, we should put reasonable steps in place to ensure that 

these employees are not just sitting on the job building a qui tam 

case. Section 3 of the bill includes requirements that a Government 

employee must overcome, such as reporting to supervisors, the Inspector General, and then to the Attorney General. Then after that, 

there has to be a whole year that has to elapse, inaction on the 

part of the Government. It would seem to me that 1 year is long 

enough for the Government to make a decision if they are going to 

get involved or not be involved, and if they decide not to get involved, then the qui tam ought to proceed. These are procedural 

hurdles that are not even required now under the case in the Eleventh Circuit. 

I understand the Department strongly opposes this section, but 

what should a Government employee who uncovers fraud do if he 

reports it up the chain and then there is nothing to stop it? 

Mr. HERTZ. Senator Grassley, as I said, we appreciate the efforts 

that the bill makes to put some restrictions on this. It deals with 

some of the concerns that we have with regard to Government employees. But in the end, it does not deal and we do not see how 

it can deal with what we see as the fundamental problem of a GovVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
14

ernment employee who, after he has followed all these procedures, 

files a lawsuit using information that came to him in his governmental capacity for his personal gain. That is just a principle that 

comes out of congressional statutes. It comes out of regulations. It 

is something we drill all executive branch employees in terms of 

training every year. For us, that is just a principle that really allowing these lawsuits would violate. 

In addition, as I said—I might read something. In 1943, the Supreme Court decided Marcus v. Hess—Senator Specter referred to 

it—and this was the case that led to the amendments in 1943 when 

the Supreme Court had decided that a relator who had actually 

just copied public information could bring a lawsuit, Congress 

wanted to change that. Justice Jackson dissented from that decision. The dissent eventually became the law, and although that 

case did not involve a Government employee, the issue apparently 

came up. He pointed out and he said to permit law enforcement officials to ‘‘use information gleaned in their investigation to sue as 

informers for their own profit would make the law a downright vicious and corrupting one.’’ He went on to say, ‘‘If we were to add 

motives of personal avarice to other prompters of official zeal, the 

time might come when the scandals of law enforcement would exceed the scandals of its violation.’’

It was clear under the 1943 amendments—and it was actually 

debated on the floor, at least in one of the Houses—that Government employees would not be able to file qui tam cases. In 1986, 

there appears not to have been any public discussion of it in the 

legislative history. The change of the legislative bar had, we think, 

the unintended effect of potentially allowing Government employees, and as I have said, we think that that is really a policy that 

should not stand. 

Senator GRASSLEY. Well, my next question was going to be if 

there was any sort of suggestions you could make, but I think I 

have just heard from you that there is really no middle ground between the position that Senator Durbin and I have in our bill and 

what you have just stated as the position of the Department. Or 

do you think there might be some middle ground? 

Mr. HERTZ. I have not been able to think of any. We certainly 

would be willing to try to think of it. But as I said, at the end of 

the day, when all those procedures you put in the bill are followed, 

you still have the situation of the Government employee using Government information to file a lawsuit from which he personally can 

potentially benefit. 

Senator GRASSLEY. Well, you know, the questions raised by you 

and then by the quotes that you gave that it might promote corruption on the part of Government employees to personally profit, but 

do not forget we are trying to stop other people from corrupting the 

public process and the public purse. And it seems to me if we have 

a heck of a lot more people doing business with the Government 

than we have Government employees, there is greater possibility 

for corruption on the outside that a Government employee might 

know something about than there is corruption from a few whistleblowers. 

Mr. HERTZ. Right, and as we said, we would encourage Government employees who run into a stone wall within their agency to 

15

go to the Inspector General, come directly to the Department of 

Justice. 

Senator GRASSLEY. That is what we do, and we just ask the Department of Justice to make a decision in 1 year. Otherwise, they 

can proceed. 

Would you oppose future Government relators if the Eleventh 

Circuit allowed them to proceed? 

Mr. HERTZ. You are quite correct, there are at least two courts 

of appeals that have suggested that Government employees under 

the existing law, where there is not otherwise a public disclosure, 

can proceed—the Eleventh Circuit and the Tenth Circuit. We do 

not think that really all the courts have spoken on that. Even the 

Tenth Circuit has suggested that there may be arguments that the 

Government could make that a Government employee would hold 

any recovery that they had in constructive trust for the United 

States. 

So I think in terms of where we are sort of in terms of judicial 

decisions, we would like the opportunity to keep litigating the Government’s positions prior to having an explicit legislative recognition of the right of a Government employee to file a qui tam lawsuit. 

Senator GRASSLEY. OK. Now, I know you mentioned that there 

was no legislative history on this issue, but I want to assure you, 

even though you disagree with me, I was there, and I want to 

make it very clear to you. And I think I made this clear in some 

of my testimony that I gave to Congress later on after 1986 that 

we intentionally meant to overturn the 1943 amendments to the 

False Claims Act when we changed it in 1986. That was our intent. 

Now, you might disagree with that intent. 

Mr. HERTZ. Oh, I agree that the intent was to overturn the 1943 

amendments in certain regards. Obviously, the bar on the Government having knowledge about information barring a qui tam relator, what I suggested was we did not see anything in the legislative 

history dealing with the specific question of Government employee 

relators. 

Senator GRASSLEY. OK. Let me go on to the Totten decision. 

There the D.C. Circuit raised the notion that Section 3729(a)(1) included a requirement that claims be presented directly to a Government employee. While this may be a legitimate reading, the 

court further added that in reading Section 3729(a) implies that 

the presentment requirement be read into subsections (a)(2) and 

(a)(3). 

This was not the intent of Congress in 1986. The D.C. Circuit 

even concluded that subsection (a)(2) has ‘‘no express requirements 

of presentment.’’ However, just yesterday, the Supreme Court 

heard oral arguments in a case where the petitioners seek this result. I wrote a brief opposing this view, and I know the Department 

did as well. I have learned not to hold my breath when it comes 

to the False Claims Act cases before the Court, so Section 1 of S. 

2041 would correct this problem. 

Looking at the Department of Justice views letter, the Department, in a fairly convoluted way, seems to support fixing the presentment requirement, but not the way that Section 1 is drafted. 

What is the problem with trying to have the False Claims Act liVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
16

ability to all Government money and property, as Section 1 currently does? 

Mr. HERTZ. Well, what we suggested in our appendix to our 

views letters is we thought there was a simpler way to accomplish 

that. We were concerned that uses of phrases in 2041, such as an 

‘‘administrative beneficiary,’’ which is a brand new phrase incorporated into the False Claims Act, would give the courts an opportunity to interpret terms and we are not exactly sure how they 

would interpret it. 

We also thought that the simplest fix with regard to the decision 

with regard to Totten is to remove the word ‘‘presentment’’ from 

(a)(1) because that word in (a)(1) allowed then-Judge Roberts to say 

that (a)(2) should be parallel to it. So we think we have a more 

simplified way to do this using terms that are less likely to be ambiguous or where people could argue that they are ambiguous and 

have an unintended interpretation by the Court. 

Senator GRASSLEY. Can I at least say that even though there are 

different ways to approach it, you do not disagree with what we are 

trying to accomplish? 

Mr. HERTZ. I mean, we agree that Totten is wrongly decided. We 

agree that the principle in Totten should not be a principle under 

the False Claims Act. I think the only thing I would suggest is at 

this point in time, since we do not know what the Supreme Court 

is going to do in Allison Engine, and we could get some language 

that might—it is hard to—as you say, hard to predict. We might 

actually want to see what that decision looks like before we had, 

you know, a final fix on the Totten problem. 

Senator GRASSLEY. Senator Durbin, I am glad to go back to you 

since I went over my time. 

[No response.] 

Senator GRASSLEY. OK. Then to followup, in the views letters, 

the Department states, ‘‘It does not advocate and would not support application of the False Claims Act to all acts of fraud directed 

at an entity that receives money from the United States.’’ Do you 

believe that my bill would apply the False Claims Act to all acts 

of fraud directed at any entity that receives money from the United 

States? And if so, why? 

Mr. HERTZ. No, I do not believe that your bill does that. I think 

we just wanted to make clear that we do think there are limits, 

and we think there are limits in your bill as well. 

Senator GRASSLEY. OK. I appreciate your testimony. I wanted to 

ask your views on the view letter. In the cover letter, the Department states that, ‘‘There is no pressing need for major amendments’’ to the False Claims Act. Further, the letter states that the 

administration cannot support the bill ‘‘as currently drafted.’’ However, after reading the appendix filing and the amicus brief alongside the Department of Justice in the Supreme Court, and after 

hearing from the line attorneys in the Department of Justice, I believe that there is a lot in this bill that the Department of Justice 

does support. Further, I think there are provisions that the Department of Justice needs to effectively enforce the False Claims Act. 

If you had to name one legislative fix that is needed, what would 

be the top choice and why? 

17

Mr. HERTZ. If there was only going to be one, I think I would opt 

for a relatively simple fix involving the CID provisions, because it 

is relatively straightforward, it would probably have the most effect 

on a day-to-day basis for our line attorneys who are actually investigating these cases, the ability to essentially subpoena witnesses 

and compel depositions without having to go through the cumbersome procedure of having to get approval from the Attorney 

General. We would think that this particular change would be relatively straightforward and should not engender a lot of controversy. And as I said, I think it would probably have the most 

immediate effect. 

Senator GRASSLEY. OK. Another question along the same line. 

How far apart do you think that my bill is from the suggestions 

for edit that you have made for presentment and public disclosure? 

And do you think that we could reach an agreement on that section? 

Mr. HERTZ. Well, again, I think we—you know, as I said, we appreciate the work that you and your staff have done. It obviously 

represents a lot of work. It is currently a complicated statute with 

lots of court interpretations. You know, it takes some careful 

thought to think about how language should be structured to get 

the results that we intend. We tried to come up with our best shot 

at trying to fix what we think are the same problems and achieve 

the same goals that you were going for, and I think really we 

would be at the stage where we would sit down and talk with your 

staff, because I am sure they probably may have noticed things in 

our proposals that they might think do not work as well as we 

might think. 

Senator GRASSLEY. If we were to make the changes to the public 

disclosure bar of presentment, do you think it would increase the 

chances of Government fraud recovery? 

Mr. HERTZ. I am not sure which changes you are referring to. 

Senator GRASSLEY. Let me repeat and then I will have my staff—

if it is not clear, I will have my staff clarify. If we were to make 

the changes to the public disclosure bar or presentment, do you 

think it will increase the chances of Government fraud recoveries? 

Mr. HERTZ. There are two questions: presentment and public disclosure. You know, to be candid, we have had pretty good luck 

since the Totten decision in essentially limiting that decision and 

finding other avenues under the existing language of the False 

Claims Act to go after frauds. So I am not sure at this point in time 

I could say that there are a lot of cases that could not be brought 

because of the Totten decision. That would be something that would 

probably play out over time. 

With regard to the public disclosure bar, as I think we have outlined, we do have some disagreements with the proposal in S. 2041. 

And so I think under our version, you know, I do not know the answer whether it would increase or decrease the number of qui tam 

cases. 

Senator GRASSLEY. OK. Mr. Hertz, I think the rest of my questions will have to be submitted in writing. Does Senator Durbin 

have any more questions? 

[No response.] 

Senator GRASSLEY. OK. Thank you very much. 

18

Mr. HERTZ. Thank you, Senator. 

[The prepared statement of Mr. Hertz appears as a submission 

for the record.] 

Senator GRASSLEY. Could I have the next panel come, every one 

of you come at the same time? And maybe before you sit down, 

each of you, it is a tradition in this Committee to swear people, so 

I would ask you to hold your—well, I will wait until you get to the 

table. 

Thank you all. Would you—this is what I am not customarily 

doing because we do not do this in the Finance Committee. Do you 

affirm that the testimony you are about to give before the Committee will be the truth, the whole truth, and nothing but the 

truth, so help you God? 

Ms. GONTER. I do. 

Judge CLARK. I do. 

Mr. BOESE. I do. 

Senator GRASSLEY. Thank you. I want to introduce each of you 

before you testify. We have Tina Gonter. From 1982 to 1996, she 

worked as a nuclear mechanical systems inspector for the Department of Defense and was assigned to the Quality Assurance Department, Norfolk Navy Shipyard, Plymouth, Virginia. In 1999, she 

moved to Ohio and began work for Hunt Valve Company as military quality assurance manager. She filed a qui tam case under the 

False Claims Act along with her husband against the Hunt Valve 

Company in April 2001. The case settled in 2005. Their investigation exposed serious fraud perpetrated against the U.S. Navy. She 

now lives with her husband in Jacksonville, Florida. I think her 

story is a truly amazing example of how the False Claims Act 

works. 

Judge Clark focuses his current practice on representation of relators in qui tam litigation under Federal false claims and corresponding State laws. Judge Clark is of counsel, San Antonio law 

firm of Goode, Casseb, Jones, Riklin, Choate & Watson. From 1969 

to 1977, he worked for the Department of Justice; served as U.S. 

Attorney, Western District of Texas, 1975 to 1977. Judge Clark was 

appointed and served as Justice, Texas Court of Appeals, Fourth 

Circuit, 1981 to 1982. Judge Clark served as a member and Chairman of several commissions, advisory boards, including Texas Ethics Commission, received a bachelor degree from Lamar University, 

and his law degree, University of Texas. 

John Boese is a partner at the Washington law firm Fried, 

Frank, Harris, Shriver & Jacobson. Mr. Boese has represented defendants in numerous false claims cases brought by qui tam relators and Department of Justice over 25 years now. Prior to joining 

Fried, Frank in 1977, he was a trial attorney with the Civil Division, U.S. Department of Justice. He is an author of a book called 

‘‘Civil False Claims and Qui Tam Actions,’’ a two-volume discussion 

of civil False Claims Act and qui tam enforcement at the Federal 

and State level. He lectures frequently, private and public groups, 

on civil fraud issues and co-chairs the Biennial American Bar Association National Institute of Civil False Claims Act and Qui Tam 

Enforcement. Mr. Boese received a bachelor’s degree, Washington 

University, and law degree, St. Louis University. 

19

And then we had another witness that is sick and could not 

come, and that was Professor Pamela Bucy. 

I am going to start in the order we gave, and we will have each 

of you testify for your 10 minutes—am I right, 10 minutes that was 

allotted? Or 5 minutes. Yes, 5 minutes. Your whole testimony that 

would be obviously longer will be printed in the record, so we will 

start with you, Ms. Gonter. 

STATEMENT OF TINA M. GONTER, JACKSONVILLE, FLORIDA 

Ms. GONTER. It is an honor to be here. Just to correct just a little 

note in the introduction. 

Senator GRASSLEY. Maybe pull your—whatever sort of correction 

you want to make, you can make. 

Ms. GONTER. OK. 

Senator GRASSLEY. Go ahead. 

Ms. GONTER. I was not a nuclear mechanical systems inspector 

from 1982 to 1996. I started off as a metals inspector in radiography. So I just wanted to make sure that that was clear. 

Senator GRASSLEY. Sure. We stand corrected. And don’t be nervous. This may be your first time before the U.S. Congress. We put 

our pants on a leg at a time just like everybody else. 

[Laughter.] 

Senator GRASSLEY. Just feel comfortable. 

Ms. GONTER. Mr. Chairman and members of the Committee, my 

name is Tina Gonter, and I was a relator in a False Claims Act 

suit from 2001 to 2006. I reported fraud committed by military defense contractors Northrop Grumman and EB, who delivered nuclear submarines to the Navy. I worked for their subcontractor, 

Hunt Valve, who supplied valves for submarines. My background 

as a quality assurance specialist prepared me for my position at 

Hunt. 

For many years, I worked for Norfolk Naval Shipyard as a nuclear mechanical ship systems inspector. During my time at the 

shipyard, I received extensive and comprehensive training in quality control requirements. 

In November of 2000, I was hired on as quality manager at Hunt 

Valve in Salem, Ohio, where my husband had already recently 

started working. Hunt was the major supplier of valves and valve 

parts to the U.S. Navy and its shipbuilding prime contractors, including Level I/SUBSAFE valves. These valves have critical applications on the submarines and surface ships and, thus, have extremely high standards and requirements for all aspects of their 

development. 

Within a few days of starting at Hunt, I began to suspect that 

they were committing fraud. I witnessed the complete disregard for 

quality control standards. My first course of action was to initiate 

cause and corrective action and try to resolve the violations. This, 

however, quickly resulted in upper management directing me to 

only concern myself with my office and the paperwork I was required to review. 

After many, many confrontations, and being ignored by my boss 

and others, I decided I needed outside help. After lots of calls to 

try to find someone to help me, I connected with qui tam lawyers 

Rich Morgan and Jennifer Verkamp. They quickly involved DCIS 

20

agents Jay Strauch and Mike Hampp. During our first meeting 

with the agents, they expressed concern that if my allegations 

could be proved, the impact to the Department of Defense was serious. They brought a tape recorder to the first meeting, and they 

asked if I would start taping what was transpiring at Hunt. I 

agreed, and I wore a tape recorder under my clothes for many 

months as I gathered information for the Government. 

This lasted until August of 2001. It resulted in 8,000 pages of 

transcripts. I was scared and anxious every day, but honestly, I 

was more scared of not taping because of the seriousness of what 

was taking place. I knew that I had to do everything I could to 

prove that what I was telling them was really happening. 

The tape backed up what I had been reporting and revealed the 

unthinkable extent of fraud and violations. The people involved 

were completely aware of what they were doing, and this included 

not just the people at Hunt but the prime contractors as well. The 

tapes showed that EB source inspectors and upper management 

were fully aware of what was going on at Hunt. I assisted the Government as much as I could from the inside until I was fired in August of 2001. I believe that Hunt’s employees suspected that I was 

recording conversations, and they certainly knew that I believed 

their conduct violated the law and their contract requirements. I 

was told that I was costing too much to correct the deficiencies, and 

they said that they were making an extreme personnel cutback. 

However, I was the only one that was fired. 

On September the 17th of 2001, 6 days after 9/11, the Defense 

Department, with the help of the NRC and NCIS and DOE, 

swarmed Hunt Valve with a search warrant and more than 40 

agents. They seized over a million pages of evidence and all computer files. Fearing for our safety, my husband resigned from Hunt, 

and we made plans to move. We went from a combined income of 

$106,000 a year to nothing overnight. We sold our property at a 

substantial loss in order to have money to live on. We moved to Columbus, Ohio, where the DCIS agents were based in order to assist 

them in making sense of the huge volume of records seized. 

After some time, my husband obtained work, and I spent the 

next 2 years reviewing files and transcripts with the assistance of 

my lawyers’ paralegal, Mary Jones. We reviewed the documents 

seized from Hunt in tandem with John Carruthers and Bob Hardin 

from DCAA. They showed, among other things, that more than half 

of Hunt’s certifications were falsified and that Hunt’s welding personnel were improperly and illegally qualified and that material 

control was not properly documented or maintained. 

The Justice Department decided not to intervene in our case 

against General Dynamics and Northrop Grumman. This decision 

was never explained to us. However, much later, we were present 

when the judge was told that if the Navy recovered moneys from 

General Dynamics and Northrop Grumman, they would add more 

money to future contract bids and the Navy would just end up paying them back. 

Because of the qui tam provisions of the False Claims Act, we 

were able to go forward on our own. The shipyards were represented by Mr. Boese’s firm, I believe, and other huge Washington 

firms—I am sorry, that is, Boese. The civil case eventually settled, 

21

with the help of Honorable Daniel Polster, who held multiple sessions with all parties. There was also a criminal case, which resulted in Hunt’s quality manager and the vice president both 

pleading guilty to fraud and going to Federal prison for more than 

2 years each. 

Senator Grassley, I realize I have gone over my time, but I would 

like to request just another couple minutes. 

Senator GRASSLEY. Please go ahead, and I will give each of the 

other witnesses equal time. 

Ms. GONTER. Thank you. 

My most sincere goal in all of this was to enhance the safety of 

our Navy men and women aboard the submarine and surface ships. 

I believe this happened. I pray that Hunt Valve under new management is doing better at supplying conforming valves. Sadly, I 

know the reality is that there are many other Hunts out there, and 

there are many other men and women who have found themselves 

in situations like this, like ours. 

I am so grateful for the False Claims Act, which gives ordinary 

people like me a voice to try to correct these crimes. I also hope 

that you do everything you can to make it better, to help people 

like me not just come forward but to see it through to the end. I 

think it is critically important that this corrections act covers subcontractors like Hunt, not just direct Government contractors. 

Hunt’s fraud was not known to the Government, and there is no 

reason the statute of limitations should be a defense in a situation 

like this. And while there should never be an issue of whether 

someone like me is an original source of information, the law 

should be clear that relators can use what they learn in the course 

of the Government investigation without putting their lawsuit at 

risk. Finally, I cannot overstate the importance of comprehensive 

retaliation protections. 

It is a great honor to be here today. But it does not compare to 

the honor of using the False Claims Act to stop Hunt Valve in its 

tracks. I urge you to do everything you can to help. 

Thank you. 

[The prepared statement of Ms. Gonter appears as a submission 

for the record.] 

Senator GRASSLEY. And thank you very much. 

Proceed, Judge Clark. 

STATEMENT OF HON. JOHN E. CLARK, OF COUNSEL, GOODE, 

CASSEB, JONES, RIKLIN, CHOATE & WATSON, P.C., SAN ANTONIO, TEXAS 

Judge CLARK. Mr. Chairman, Senator Durbin, thank you for allowing me to comment on this bill. 

Relators’ counsel are glad to see that this bill addresses a lot of 

the concerns that we have had for improving the False Claims Act 

and making it work the way Congress intended. We have also read 

the comments of the Department of Justice, and we think a lot of 

their suggestions will strengthen and improve the bill. We look forward to working with the Department to help Congress make the 

Government’s primary remedy against fraud even more effective. 

I have been a lawyer for nearly 47 years. For the last 15 years 

I have represented whistleblowers under the False Claims Act and 

22

some State counterparts. Earlier in my career, like many attorneys 

who represent whistleblowers today, I was a Federal prosecutor, 

first at the Department of Justice and then in Texas. I prosecuted 

white-collar crime, and I continued to do that when President Ford 

appointed me United States Attorney for the Western District of 

Texas. 

I am not a plaintiff’s lawyer. I do not represent plaintiffs in negligence cases. I am not what the press refers to as a ‘‘trial lawyer.’’ 

These cases are not about negligence or good-faith mistakes or confusion about regulations. These cases are about knowingly defrauding the United States. And these cases allow me to feel that I am 

still making at least a small contribution to law enforcement, because that is what this is. 

Now, hearing Ms. Gonter’s story reminds me once again that it 

is because of courageous persons like her that I am still representing whistleblowers long past the time when the calendar suggests I should have retired. What she did and what she endured 

points up why whistleblowers are so important to the Government. 

Now, her story is more dramatic than most, but every whistleblower has to understand that his or her life may get turned upside 

down, and the stress can last for years while the case is under seal. 

And they will not be able to explain why they had to make a midlife career change or what is happening to them and why they are 

having financial problems. 

The personal stresses of being a whistleblower drive some qui 

tam plaintiffs into bankruptcy, psychological counseling, and divorce courts, and I have seen it happen. I have to explain those disincentives to prospective whistleblowers when they come to see me 

so that they and I can decide if they have the courage and the 

strength and the staying power to even start down that road. But 

I also have to explain some legal disincentives to them. Some are 

obstacles that courts have created by misinterpreting the statute, 

and others have to do with some unforeseen consequences of some 

of the 1986 amendments. And those obstacles trump all the others 

because they can kill even the most meritorious case for inconsequential or misguided reasons. 

It is disappointing how often I have to explain those legal road 

blocks to prospective whistleblowers in the context of telling them 

why their claim will not succeed and I will not pursue it for them. 

This bill addresses a lot of those judicial misinterpretations and 

unforeseen consequences, and I am glad to see the changes. I have 

given my written comments explaining the reasons. I would like to 

comment briefly, though, on two particularly important issues: 

First, the presentment issue, the Totten case and Custer Battles

decisions. We know from the Department of Justice’s testimony 

they share our concern about the Totten decision, and they have 

suggested some alternative language to improve the way the bill 

addresses those decisions. As I sit here today, I am not certain that 

their proposed language would ensure the desired result, but that 

is for technical reasons that lawyers and law professors can debate 

about. It has to do with the precise wording chosen, not with the 

intent, because our intent and their intent is the same. We are trying to ensure the result that we all want. 

23

As to the public disclosure bar, Mr. Chairman, it appears to me 

that after listening to the Department of Justice and reading their 

comments and their appendix, we in the relators bar and the Department of Justice are very close to being on common ground. One 

of the most troublesome aspects of the public disclosure bar is its 

availability to defendants as a jurisdictional defense, regardless of 

the defendant’s culpability. We strongly agree with the premise of 

the bill that it should be the Government’s sole prerogative to seek 

dismissal of a qui tam action on public disclosure grounds. The 

Government is uniquely in a position to know whether it considers 

the whistleblower somebody it wants to be protected from or values 

him as an ally whose assistance and resources will help prosecute 

the case. We deplore the tendency of some courts to interpret the 

current public disclosure bar far too broadly. That has caused a lot 

of problems. 

Now, we have some questions about how the Department of Justice and the courts would interpret some of the terms and conditions that the Government has suggested as grounds on which the 

Government could seek a dismissal under public disclosure if they 

had the sole discretion. But we are very optimistic that we in the 

relators bar can work with the Department of Justice to reach 

agreement on some common ground that we could recommend to 

change the language. But the primary thing is taking the public 

disclosure bar out of the hands of defendants as a jurisdictional defense, when it has nothing whatever to do with their culpability, 

it is purely technical when it comes to the relator. 

Thank you, Mr. Chairman. 

[The prepared statement of Judge Clark appears as a submission 

for the record.] 

Senator GRASSLEY. Thank you, Judge Clark. 

Now Mr. Boese. 

STATEMENT OF JOHN T. BOESE, PARTNER, FRIED, FRANK, 

HARRIS, SHRIVER & JACOBSON LLP, WASHINGTON, D.C. 

Mr. BOESE. Senator Grassley, Senator Durbin, and members of 

the Committee, I appreciate the opportunity to testify today on behalf of the U.S. Chamber of Commerce and the U.S. Chamber Institute for Legal Reform in opposition to S. 2041. For the last 25 

years, I have had the privilege of defending False Claims Act cases 

against large and small companies in health care, oil and gas, technology and defense, as well as colleges and universities, airports, 

churches, and local government agencies—precisely the diverse 

group of defendants that this bill so deeply affects. 

My legal treatise, ‘‘Civil False Claims and Qui Tam Actions,’’ has 

been the leading authority cited by academics in Federal courts for 

almost 15 years. 

The Chamber fully supports the Department of Justice’s efforts 

to recover from those who cheat the Government, and we recognize 

the importance of an appropriate use of the False Claims Act in 

those efforts. 

As I listened to you and Senator Specter and Chairman Leahy 

and Senator Durbin speak this morning, I think the difference between us, Senator, is that you are concerned about the guilty under 

the False Claims Act, and I am concerned about the innocent. And 

24

I am concerned about the abuse of qui tam enforcement by the private plaintiffs bar against innocent defendants in qui tam cases. 

The Chamber opposes 2041 because we believe it will not assist 

the Government in its fraud-fighting efforts and will not result in 

increased moneys being returned to the Treasury. 

Instead, the bill will breach the legitimate expectation of American businesses and institutions who honestly do the Government’s 

work that their Government will treat them fairly, and this bill 

does not. 

I want to first dispel a common misperception that these amendments are necessary for private attorneys to combat major fraud by 

big corporate interests because those big corporate interests outgun 

DOJ attorneys. In my experience, the exact opposite is true, and 

the statistics bear that out. Of the $20 billion recovered under the 

False Claims Act between the 1986 amendments and 2007, far less 

than 2 percent—really 1.4 percent—was recovered in qui tam cases 

handled by private counsel where the DOJ did not take over the 

case and prosecute it. These amendments, which are intended to 

encourage qui tam enforcement really without DOJ, benefit only 

those qui tam plaintiffs and their lawyers, and not the U.S. taxpayer. 

I have also read the DOJ letter that we received on Friday. We 

have a number of comments about that that I hope we will be able 

to address in our answer. 

With that, I will now quickly address the most egregious impacts 

of 2041. 

First, this bill would dramatically expand the scope of the Act to 

cover many private contracts and transactions. Although I believe 

completely unintended, the bill’s broad definitions of the terms 

‘‘Government money’’ and ‘‘administrative beneficiary’’ will, for example, bring within the scope of the False Claims Act disputes between Federal employees and their hairdressers and their 

landscapers if they are paid with the Federal employee’s salary. It 

will usurp State contract and tort law if either party receives Federal money in any way or form, and every product liability case will 

become a False Claims Act case if the product is bought by a Social 

Security recipient with their Social Security check. 

This amendment is an unjustified reaction to a handful of decisions which came to the unremarkable conclusion that the False 

Claims Act should only apply if the Federal Treasury has been 

cheated. The Act was never designed to make a Federal case out 

of every transaction involving money that the Federal Government 

has touched in any way. 

Second, the 1986 amendments struck a delicate balance to allow 

true whistleblowers to come forward and be rewarded while preventing parasitic qui tam suits by plaintiffs who file qui tam cases 

based on public information. By effectively eliminating the public 

disclosure and original source defense, the bill will force American 

businesses and institutions to defend themselves against qui tam 

plaintiffs who are not true whistleblowers. And it will allow individuals to use public information to take 25 percent of Government 

recoveries simply because they are the first to file a qui tam case. 

Third, S. 2041 will effectively encourage Federal employees, including Federal auditors and investigators, to use the private inforVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
25

mation they obtain as Federal employees to enrich themselves by 

filing qui tam suits. The so-called safeguards included in the bill 

are impractical and illusory. One cannot imagine a better way of 

destroying the trust and confidence Americans have in their Government and in their Government employees. In our view, S. 2041 

reflects bad policy and bad law. There is simply no reasons to treat 

so unfairly the businesses and institutions who deal with the Government in good faith. 

Thank you for this opportunity to present my views. I am happy 

to take any questions the Committee may have. 

[The prepared statement of Mr. Boese appears as a submission 

for the record.] 

Senator GRASSLEY. Senator Durbin, I would like to turn to you 

because I am sure—then I could continue, if you are the only one 

that is going to be here, and if you only want one turn, and then 

I would continue right on through my questions. 

Senator DURBIN. Mr. Boese—am I pronouncing your name correctly? 

Mr. BOESE. Boese, Your Honor. It rhymes with ‘‘crazy.’’

Senator DURBIN. Pardon me? 

Mr. BOESE. It rhymes with ‘‘crazy.’’

[Laughter.] 

Senator DURBIN. Right. And for the record, I am not a ‘‘Your 

Honor.’’

Mr. BOESE. That is where I spend most of my time, Senator. I 

spend it in court. 

Senator DURBIN. So do I understand your testimony that you 

think our changing the law would mean that if someone brought 

an action against a company for selling a defective product and, in 

fact, a Social Security recipient had bought that defective product, 

you think that is covered by our law? 

Mr. BOESE. Yes, sir, I do. 

Senator DURBIN. I think you are way off base. I have no idea 

what you are talking about. 

Mr. BOESE. Well, Senator, I can explain it very simply. We—

Senator DURBIN. Please do, because I am a Senator. 

Mr. BOESE. And we can supplement that. We can supplement 

that. And, in fact, in our written statement beginning on page 9—

or 10 of our written statement, we go into very significant detail 

about the definitions of ‘‘Government money or property’’ and ‘‘administrative beneficiary.’’ What those really say is, if you read 

those amendments, especially subsections (b) and (c) of those 

amendments, it broadens the definition of who is an administrative 

beneficiary. If you wanted to include—I mean, we can talk about 

the Coalition Provisional Authority because I argued the Custer 

Battles case. I am happy to talk about that case. But if you want 

to extend it to some institutions, I can understand that and we can 

deal with that. But what you have really said is that anyone who 

receives money for a Federal purpose. 

Now, if you are going to give money to a Social Security beneficiary, the purpose is to support them. You—

Senator DURBIN. So anything the Social Security beneficiary 

spends money on then comes within the purview of qui tam, as you 

read it? 

26

Mr. BOESE. If you pass this bill as it is written, yes, I believe 

that is—

Senator DURBIN. That is the most tortured logic I have ever 

heard in this Committee. I congratulate you for it. But I think you 

are completely off base. 

Mr. BOESE. Senator—

Senator DURBIN. You are a great advocate, I am sure. I can tell. 

And I am sure that you have been very successful in your profession. And I have a confession. I used to be one, a real trial lawyer, 

before I got to be a Senator and a Congressman. So my hat is off 

to you. But I think you are off base, and we will take a look at it. 

Certainly it is not our intent, and what you have said—I believe 

Senator Grassley would agree with me—has never been our intent. 

Ms. Gonter, if I can ask you the situation here, you have heard 

Mr. Boese suggest that the abuses that might take place if we 

allow the current system to continue. Now, and you also heard the 

earlier testimony from the Department of Justice about what they 

think you should have done with your discovery of the fraud on the 

Government. 

First, the fraud that you found involved in your work for the 

Government, could this have endangered human life? 

Ms. GONTER. It is my belief that—

Senator DURBIN. You have to push the button on your microphone to be heard. 

Ms. GONTER. The light is on. I am just not close enough. 

Senator DURBIN. OK. 

Ms. GONTER. It is my belief that, yes, this could have cost lives. 

Senator DURBIN. And was there an ordinary process that you 

could follow to disclose this fraud and to try to do something about 

it within your workplace? 

Ms. GONTER. I approached the quality control manager, who was 

a lateral position, who was doing the multitude of the fraud, and 

then went to our boss, who was the vice president of the company. 

Not only was this happening while I was there, it is under—I understand that it had been going on for approximately 10 years from 

looking at the paperwork, if not longer. 

Senator DURBIN. And I take it from your testimony that that did 

not result in any action being taken to stop this fraud. 

Ms. GONTER. Absolutely not. I was ostracized from meetings. I 

was then pretty much taken out of my position. 

Senator DURBIN. So you followed what you understood to be the 

ordinary chain of command, the ordinary rules—

Ms. GONTER. Absolutely. 

Senator DURBIN.—to try to disclose this fraud that you had 

found, with no results. 

Ms. GONTER. No results. 

Senator DURBIN. And your only recourse at that point was either 

to quit, accept it and be part of it, or do something about it. Is that, 

as you saw it, the only choice? 

Ms. GONTER. There was no choice. I had to do something. 

Senator DURBIN. And so you chose to wear a tape recorder and 

to record 8,000 pages of testimony or transcript conversation. 

Ms. GONTER. Approximately 8,000. Yes, sir. 

27

Senator DURBIN. Yes. Mr. Hertz earlier was dismissive of your 

role in this type of thing, saying, you know, the Government has 

a way of taking care of these things. Was there anything that—you 

were employed by a private contractor, I believe, at this time. Is 

that correct? 

Ms. GONTER. That is correct. 

Senator DURBIN. Was there anything that you could have turned 

to, anything outside of your company, for example, where you think 

you might have turned to the Government for help? 

Ms. GONTER. Not that I know of. Just from working with Norfolk 

Navy Shipyard, we knew that there had to be some type of avenue 

to report something like this. We knew we had to let someone 

know. We got on the phone and just started calling everybody that 

we could think of, and we were directed toward—through the Government, actually. I cannot even remember the guy’s name. But he 

gave us Rick Morgan’s name. 

Senator DURBIN. And this is a private attorney—Mr. Morgan? 

Ms. GONTER. Yes. 

Senator DURBIN. OK. And that is what resulted in the qui tam 

suit. 

Ms. GONTER. Yes, sir. 

Senator DURBIN. Tell me the outcome of that suit again. When 

it was all over, was your claim substantiated? Did they agree with 

you that there had been a defrauding of the Government? 

Ms. GONTER. It was settled for $12 million. Almost $3 million. 

Senator DURBIN. How much? 

Ms. GONTER. It was 12-point something, almost $13 million. 

Senator DURBIN. Almost $13 million. 

Ms. GONTER. Yes, sir. 

Senator DURBIN. It was found that they had defrauded the Government of that amount. Is that correct? 

Ms. GONTER. That was the settlement agreement. 

Senator DURBIN. Settlement. 

Ms. GONTER. I do not know that they admitted to anything. 

Senator DURBIN. All right. Judge Clark, as you cautioned us 

ahead of time, you are not a plaintiffs’ lawyer, so I will not accuse 

you of that. 

[Laughter.] 

Judge CLARK. It is not a bad word. 

Senator DURBIN. I did not think so. I made a living at it. 

Judge CLARK. But I am on the other side of that bar, as a rule. 

Senator DURBIN. I understand. And so you have heard Mr. Boese 

talk about the abuses of this process. Would you like to comment 

on his interpretation or his evaluation of the Grassley-Durbin bill? 

Judge CLARK. Well, some of Mr. Boese’s comments strike me as 

fantasy when he talks about the broad interpretation that could be 

given. I also take a little offense at the notion that there are a lot 

of abusive relators’ representatives filing these lawsuits. I know 

personally, I guess, most of the, perhaps 200 or 300 lawyers around 

the country who are primarily involved in this kind of litigation. 

And I do not know a finer group of people or a more responsible 

group of people. They choose their cases carefully and always try 

to choose cases that the Government will like and intervene in. 

28

Senator DURBIN. Can you relate to me the complexity of these 

cases, if they are undertaken? 

Judge CLARK. They are very complex, and it is a tough road to 

go down, not only for the relator, like Ms. Gonter, to make that decision, but for the lawyer to make that decision, because these 

cases typically involve complex facts, facts that have been concealed sometimes for years in the corporate records or some employer’s records, facts that are hard to get to. The defendants oftentimes are represented by law firms that have 700 or 800 or 1,000 

partners and maybe twice that many paralegals, and so you are 

embarking on a serious battle if you take one on. 

Senator DURBIN. Ms. Gonter’s testimony suggests that she was 

involved in this for years, as I remember. Is that commonplace in 

this type of litigation? 

Judge CLARK. It is. Some of these cases remain under seal for 

many years. I filed one lawsuit in 1998 for a relator who was in 

his late 70’s at the time. It was finally resolved almost literally on 

New Year’s Eve—yes, New Year’s Eve 2004. And I had to remind 

the court at one time, when the thing was dragging along and settlement negotiations were prolonged, that Charles Dickens used to 

write about cases in the English chancery courts that parties got 

born into and died out of. And my now 83-year-old relator was concerned whether he was going to survive this case. These cases can 

take a long time. It is not at all uncommon for one to remain under 

seal for 3, 4, 5 years. 

Senator DURBIN. Well, I think that is an important part of the 

record, Senator Grassley, because testimony from Mr. Boese on behalf of the Chamber of Commerce may lead one to believe that this 

is an ambulance chase that ends very quickly. But it sounds to me 

like it is a lawsuit that can involve a lot of emotional commitment 

and a lot of time against the odds, against formidable representation on the other side, and lawsuits of long duration. I do not know 

many attorneys that would sign up for a lawsuit like that unless 

they really believed that they had a chance for recovery, a legitimate claim. That has been my experience. You will not keep your 

law office open very long if you make too many miscalculations in 

that type of lawsuit. 

Judge CLARK. You will not. I am the only one in my law firm 

who devotes most of his time to this kind of lawsuit. Everybody 

else is trying to do things that produce a regular stream of income. 

Senator DURBIN. Thank you, Senator Grassley. 

Senator GRASSLEY. Senator Durbin, it should not surprise you 

that we have business taking the same point of view, because for 

4 years after we passed this legislation, the defense industry tried 

to gut it, various amendments on appropriation bills, et cetera. We 

stopped that. When they did not have the credibility to get the job 

done, they turned to the hospitals of America for a couple years, 

trying to gut it. They finally gave up. So the last 15 years, we have 

not had to defend it through the appropriation process and riders 

trying to gut it and all that. But there are still people that do not 

want this legislation to function the way it was intended. 

Senator DURBIN. Well, they should have known better than to 

take on an Iowa corn farmer. 

[Laughter.] 

29

Senator GRASSLEY. Thank you. Thank you. Are you done? OK. 

I have questions of everybody, but I am going to start with Ms. 

Gonter. First of all, I need to thank you for testifying, and I have 

been a person that has found whistleblowers to be courageous people. I find very few of them that come to me that do not have a 

great deal of credibility and lead us to a lot of skeletons being buried in the bureaucracy or within corporations that need to be exposed and we have been able to expose them. And I also agree with 

what has been testified to already that for the most part whistleblowers ruin themselves professionally as a result of their patriotic 

efforts. And so, obviously, I come from the standpoint that not 

every whistleblower might be right, but so many are right that we 

owe that class of people a debt of gratitude. 

Whistleblowers are strong-willed people, obviously. So what was 

it like to be a whistleblower wearing a wire undercover without 

your co-workers knowing what you were really doing and some 

hardships connected with that? 

Ms. GONTER. Well, first off, it was scary. Mostly being afraid that 

you were going to be discovered. There was times where I had to 

go to the ladies’ restroom in a stall and change the tapes out, 

which you could imagine would make a little bit of racket, unusual 

racket in a stall that people would probably wonder about. 

There was one incident when I was actually in the office, and the 

tape started malfunctioning. I do not know, somehow it went into 

like a reverse mode and started clicking relatively loud in my shirt. 

So I just started talking loudly and tried to back out of the room. 

It was uncomfortable. It was scary, and especially in the beginning. But toward the end, I kind of felt like it was my security 

blanket. And I do not know if I am allowed to do this, but if there 

is a whistleblower out there and if you can do that, I would recommend it, because it really shows that what is going on is happening, that you are not putting words into other people’s mouths. 

But it was scary. 

Senator GRASSLEY. I do not know whether you answered a question like this for Senator Durbin or not, but do you believe that 

your firing was directly related to your work when you tried to correct the quality at Hunt Valve? 

Ms. GONTER. Yes, sir, I do. 

Senator GRASSLEY. Do you have any advice for others who know 

of fraud or are contemplating blowing the whistle? And I think you 

just in your previous statement gave them encouragement. Do you 

have any further advice for whistleblowers? 

Ms. GONTER. If you are thinking about blowing the whistle, the 

first obligation is to go through your chain of command. That is not 

a question. That is your obligation. You go through the chain of 

command. And I think that anyone, any respectable person in their 

field, whatever it is, knows that that is the appropriate avenue. 

If it is serious enough and your heart just tells you that this is 

so unacceptable that you cannot deal with it, it is no longer a 

choice. It is not a choice of whether, you know, I do this or I do 

not. You have to do it. Who else is going to do it? If it is that important to you, then you have to make that move. You have to contact people that are going to listen to you. 

30

In my case, it was not a choice because we were talking about 

our sailors’ lives. 

Senator GRASSLEY. Judge Clark, yesterday the Supreme Court 

addressed the Totten decision in the Allison Engine case. I have 

long stated that I believe the Totten decision was incorrectly decided 

and that it is contrary to the intent of my amendments in 1986. 

As a member of the Committee on Finance, I wear another hat 

because we have so much jurisdiction over Federal Medicare and 

Medicaid programs. I am concerned with the impact of the Totten

decision and its progeny may have on health care fraud cases. 

As you have litigated a number of Medicare- and Medicaid—related false claim cases, what is your opinion of the impact that 

Totten has had on health care-related false claim cases? 

Judge CLARK. Senator, I am very concerned about that because 

one court in Texas has recently indicated that he thinks the Federal Government does not have standing to make a claim for Medicaid fraud. And that is partly as a result of the Totten decision. 

So it is a source of considerable concern. 

Senator GRASSLEY. Is the Totten decision being used as a defense 

to the false claims liability in health care fraud cases? Is that what 

you just told me? 

Judge CLARK. That is the indication that I got. This is not a case 

of mine, but one that another party is pursuing—well, the State of 

Texas is pursuing it. 

Senator GRASSLEY. I assume you have read a lot of legislative 

history about the 1986 amendments. Do they contradict the Totten

decision? 

Judge CLARK. Well, yes—

Senator GRASSLEY. You understand? 

Judge CLARK. I think so. I think clearly the intention of Congress 

is contravened by the Totten decision. The statute was intended to 

reach the kind of thing that Totten says it does not, in my opinion. 

Senator GRASSLEY. In the views letter submitted by the Department, they propose different language to correct the presentment 

problem of Totten. For instance, they suggest that we keep the language in subsection 3729(a)(2) that references ‘‘payment or approval by the Government’’ and suggest modifications in subsection 

3729(a)(1) to include the (a)(2) language instead of the presentment 

language. They also propose expanding subsection (c) defining the 

word ‘‘claim.’’

In your view, will this proposal from the Department of Justice 

adequately address the Totten problem? 

Judge CLARK. Senator, I am not sure that it does. I have some 

concern about certain terms, like the prepositional phrase ‘‘for payment or approval by the Government.’’ But these are some things 

that I would like to personally talk to representatives of the Department of Justice about because I think they and I as a relators 

counsel are aiming to do the same thing, and that is, to ensure that 

we cure the problem. 

Senator GRASSLEY. OK. I want to ask Mr. Boese a question, but 

I would like to have you listen, Mr. Clark. I may want you to comment on it. And, again, I get back, Mr. Boese, to the Supreme 

Court oral arguments yesterday on Allison Engine. In that case, 

similar but unrelated to Ms. Gonter’s case, a defense contractor is 

31

accused of jeopardizing the lives of Navy sailors by building defective battleship generators. The contractor argued that it is not liable under the False Claims Act simply because a U.S. Government 

employee had not personally approved or paid its invoices. Because 

some courts have supported this application of the law which is 

contrary to the intent of Congress in 1986, I authored the legislation to clarify that point. 

Mr. Boese, do you argue that we should keep this presentment 

requirement in the Act, thereby only attaching liability to those 

claims that are actually presented by a Government employee or 

official? Mr. Boese, since you make that argument, why shouldn’t 

we protect all Government funds, not just those funds directly paid 

or approved by Government employees? 

Mr. BOESE. Senator Grassley, I was at the oral argument yesterday, and—because I filed an amicus brief, as you did, in—I filed 

it in support of the defendant in that case. I was at the oral argument, and I was particularly drawn to Justice Breyer’s concern. 

Now, no one could really talk about—you know, he seemed to have 

come to the argument originally, frankly adverse to the Government contractor viewpoint. But during the course of the Solicitor 

General’s argument—and the Department of Justice argued in 

favor of the defendant in that case. In the course of listening to the 

theory of the Justice Department, Justice Breyer realized something that I think is very important to this entire argument, which 

is, when you talk about Government money because of Government 

contracts, Government grants, and Government programs, Government money is endemic in the American economy. There is virtually no entity that would not have some Government money. And 

if a fraud on an entity—Justice Breyer asked, if a fraud on an entity which received some Government money becomes a violation of 

the False Claims Act, there is no end to the statute. It has no limits, and it can be enforced either by the Justice Department, but 

much more likely by qui tam relators. And I am sorry, I think Senator Durbin misunderstood me. I did not accuse all qui tam relators of being ambulance chasers. But one must understand that because of the treble damages and enormous penalties that are available under this statute, the ability of getting rich very quickly attracts some cases that should never be brought. 

Returning back to your question, Senator, about the Totten case, 

what the Supreme Court currently has before it—and I would 

strongly urge the Committee to see what the Supreme Court says, 

because I think the judgments that are going to be issued and the 

explanations that are going to be given are going to explain this 

issue, which I also discussed with Senator Durbin: If you basically 

make a false claim to any person or entity who receives Federal 

money, if that is your definition, then you are expanding the False 

Claims Act far beyond its roots. The roots of the False Claims Act 

are that we are out to remedy fraud on the Federal Government. 

Now, that fraud on the Federal Government can take many 

forms. I personally have no basis for arguing—I would never argue 

that fraud on Medicaid or Medicare does not come within the scope 

of the False Claims Act because of the Totten decision. In fact, I 

wrote at the time of the Totten decision that I thought it was a decision of very limited applicability to entities like Amtrak and the 

32

Coalition Provisional Authority. That is less than one-tenth of 1 

percent of all False Claims Act cases. 

And what we are doing in S. 2041 is overturning and potentially 

expanding the False Claims Act beyond its entire—beyond its roots 

to every aspect of the American economy simply to fix two almost 

unique cases that the Supreme Court may fix for us. 

Senator GRASSLEY. Mr. Clark, I would like to have you either 

have a rebuttal or a commentary on that from your experience of 

what Mr. Boese just said. 

Judge CLARK. Senator, I think it is important to note that there 

is a big difference between the Government spending money and 

the Government putting money in somebody’s hand, like a grantee, 

to spend the money for the Government, as directed by the Government. I do not see anything in the bill that suggests to me that it 

was intended to reach controversies between private parties or, for 

goodness sake, to reach something purchased by a Social Security 

recipient. 

I think the intent was, it appears to me, to protect the Government’s money when it puts it in somebody else’s hands to spend as 

directed pursuant to a program or to protect Government money or 

money that the Government is holding in trust, so to speak, for 

somebody else. 

I guess I would turn the question around a bit and say, If someone tries fraudulently to get their hands on money that came from 

the United States pursuant to a program, why shouldn’t they be 

penalized for trying to do that? 

Senator GRASSLEY. OK. I am going to have another series of 

questions that involve all three of you. I want to go back to Ms. 

Gonter. 

Your testimony highlighted many of the reasons why I drafted 

the qui tam provisions of the False Claims Act in 1986. Most notably, I am pleased to hear that you were able to continue your case 

against the contractors, the shipbuilders, even though the Department of Justice declined to intervene. You stated the reason that 

they declined was never given to you, so I have to ask you: Why 

do you believe the Department of Justice declined to intervene 

against the shipbuilders? 

Ms. GONTER. My personal view is that there are only, you know, 

a few shipbuilders, you know, yards that actually can build submarines. They know that they have the contracts with them, and 

it was said. It was said that they were going to have to make up 

that money in future contracts. Whatever they paid, they would 

have to make up in future contracts. I believe they are in bed with 

them. 

Senator GRASSLEY. Well, at least there were rumors flying 

around about that being the reason. 

Ms. GONTER. Yes, there were. 

Senator GRASSLEY. I mean, you had heard—

Ms. GONTER. I had heard. 

Senator GRASSLEY.—people comment that way. 

Ms. GONTER. Yes, sir. 

Senator GRASSLEY. Yes. What was the judge’s reaction when he 

learned that the Department of Justice would not intervene along 

with you? 

33

Ms. GONTER. I believe from looking at his expression on his face 

that he was surprised. 

Senator GRASSLEY. Do you think that it would have been sufficient to let the prime contractors off the hook because the subcontractor paid a settlement? 

Ms. GONTER. Oh, absolutely not. The prime contractors were just 

as guilty, if not more so. It was their responsibility to make—whoever they give out their subcontracts to, that they follow those requirements. And they did not do that. They have to contract with 

people that are going to meet the requirements, and they absolutely did not do that. 

The source inspector that was onsite, a representative of EB, 

knew exactly what was going on there. He did not stop it, at times 

even contributed to it. He was on tape in as much—and his resolution—I asked him for help, actually. And his resolution to me was 

to take a stick of dynamite and blow the place up. That was not 

a joke. 

Senator GRASSLEY. OK. 

Ms. GONTER. I mean, he may have been exaggerating about the 

stick of dynamite, but, you know, he was serious about how bad it 

was. 

Senator GRASSLEY. OK. Mr. Clark, the public disclosure bar is an 

area of great debate in the false claims community. In 1986, we 

sought to undo the overly burdensome Government knowledge bar 

and replace it with something more workable. The compromise that 

we developed was the public disclosure bar, which limited False 

Claims Act cases based upon public information unless the relator 

was the original source. 

As your testimony shows, the courts have litigated this section 

of the False Claims Act to death, and to the detriment of good-faith 

relators and American taxpayers. Further, these interpretations, 

including those in Rockwell, created a disincentive for relators. Our 

bill amends the public disclosure bar and removes this jurisdictional challenge from the hands of opportunistic defendants and 

puts it in the hands of the Justice Department, the party that the 

bar was originally intended to benefit. 

So to what extent has the public disclosure bar become a strategic tool utilized by defendants to shape the relationship between 

the Department and the relator? And do you have any examples? 

Judge CLARK. Well, the public disclosure bar is used by defendants to a large extent. It is one of their favorite defenses. They assert it every time they get a chance. 

I have spent a lot of time answering public disclosure bar motions in cases, motions that really had no basis and were filed by 

somebody who either did not understand what the public disclosure 

bar meant, or they were trying to confuse the court. There was a 

recent case out of Atlanta in which a district court wrote an opinion and said, in denying a public disclosure bar motion to dismiss, 

this looks to have been done to create delay. 

But when the defendant can use it as a jurisdictional bar, that 

is a great irony because the whole purpose of the public disclosure 

bar was to encourage relators to come forward and to protect the 

Government from having to share rewards with relators who really 

did not do anything except copy something out of the newspaper. 

34

So when it becomes a jurisdictional bar that has nothing to do with 

what the defendant did, that is a real irony. It has created a lot 

of mischief. It is probably the most litigated provision of the current False Claims Act. 

Senator GRASSLEY. OK. To what extent has the public disclosure 

bar become a problem with relators rushing to file false claims 

cases without a complete record only to protect their claim from becoming public? 

Judge CLARK. The relator, of course, always needs to be concerned about being the first to file, but for a couple of reasons, the 

relator also wants to be sure that he has got the facts right, because you do not want to file pleadings in a Federal court that are 

not well founded in fact because you can get sanctioned for doing 

that. So you want to be sure you are right, but you want to be sure 

you are first. 

I have dissuaded prospective relators from filing Freedom of Information Act requests, for example, because of the court decisions 

that have said that when the Government responds to a Freedom 

of Information Act request by sending you the document that you 

ask for, that that is an administrative report. I think that is a far 

extension of the statute, but that is what some courts have said. 

Senator GRASSLEY. Mr. Boese, kind of along the same lines, I 

want to ask a question, and then I want to state something you assert in your testimony, and then a final question. So I would like 

to have you answer them both at the same time. 

Isn’t the Government in the best position to determine whether 

a relator is bringing a parasitic qui tam lawsuit? You assert in 

your testimony that the public disclosure bar is normally only applied when the Government does not intervene. Yet in the Rockwell

case, decided by the Supreme Court last year, the relator was not 

thrown out by the bar until after the Government intervened and 

a successful trial verdict was reached. This case seems to refute 

that argument as well as demonstrate a clear deviation from the 

congressional intent in the 1986 amendments. Wouldn’t you agree 

that when the Court interprets a statute inconsistent with the intent of Congress, it is appropriate for Congress to pass corrective 

legislation? 

Mr. BOESE. Senator, I will start with the Rockwell case because 

I think it is interesting. It was also an anomaly. I have been doing 

work on the False Claims Act under the 1986 amendments since 

1986. I was doing this work 5 years before that. I have almost—

I think one time I have filed a public disclosure/original source motion in a case in which the Government had intervened, and then 

only because it was such an outrage and I knew that I was going 

to get hit for attorney’s fees, and I won that motion. 

When the Government intervenes in a qui tam case, public disclosure and original source become irrelevant. Our major goal is to 

resolve the issues with the Government. And, remember, the Government only intervenes in 20 percent of these cases, and 99 percent of the recoveries under the False Claims Act cases are in cases 

in which the Government intervenes. So my concern is, once the 

Government intervenes, resolving that case with the Government. 

And if at that point in time I have to pay attorney’s fees, that is 

the price of doing business. Once I filed a public disclosure. RockVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
35

well was simply an anomaly. Rockwell had raised that defense in 

the very beginning and had asserted it throughout. The relator, 

nevertheless, spent almost $10 million—they were only liable for 

about $3 million in damages. The attorney’S fees were $10 million, 

and that is the reason that case—that case is not a reason in order 

to pass this legislation because in 99.9 percent of the cases in 

which the Government intervenes, which is where you get 99 percent of the recoveries, this is not an issue. 

Public disclosure and original source, in all candor, Senator, is 

used by courts to get rid of meritless cases—meritless cases that 

the Government does not intervene in. The courts have significant 

discretion as to how they define public disclosure and how they define original source. And in my experience—and this is a very practical experience—courts have used public disclosure and original 

source, as well as one other defense, in order to dismiss meritless 

cases. This is not an issue on cases where there is real fraud. This 

is not an issue in a case like Ms. Gonter’s case. It is not an issue 

there because the Government comes in and that is where your recoveries are. 

Senator GRASSLEY. Well, you surely have to admit that Ms. 

Gonter’s case is an example of a serious fraud that proceeded without the Justice Department’s help. 

Mr. BOESE. I would not agree with that, Senator. A couple of 

things about that case—

Senator GRASSLEY. You would not agree? 

Mr. BOESE. I would not agree with your statement. And with full 

disclosure, my firm represented one of the shipyards in that case, 

so I know the case a little bit better, but it was not my case. 

The Government, as Ms. Gonter says—and she is a courageous 

relator. I believe that she is exactly the way this law should work, 

because when she brought her allegations to the attention of the 

Government, they sprang to action. The investigators sprang to action. They put a wire on her. They started to investigate this matter. And the system worked the way it did. 

The Justice Department did intervene against whom they believed to be the wrongdoer, which was Hunt Valve. They did not 

intervene against the two shipbuilders. I do not know why. They 

know why. You can ask Mr. Hertz why they did not do it. But the 

real wrongdoer here was Hunt Valve, not the shipbuilders. 

Eventually, the shipbuilders settled that case because they had 

contract claims. The very fact that they had an inadequate supplier 

like Hunt Valve subjected them to significant contract damages—

not False Claims Act damages but contract damages. 

Senator GRASSLEY. I would like to ask one last question, and I 

am going to start with you, Mr. Boese, and then I might ask Mr. 

Clark to listen and probably have some rebuttal. No court has 

ruled that there is a per se ban against Government employee relators. However, most courts have held that a Government employee 

cannot qualify for the original source exception when there has 

been a prior public disclosure, as under the false claims public disclosure bar. 

Given this confusing legal backdrop, the proposed amendments 

seek to clarify how the act applies to Federal employees who discover fraud during the course of their employment. The bill proVerDate 0ct 09 2002 14:49 Jun 18, 2008 Jkt 042809 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\42809.TXT SJUD1 PsN: CMORC
36

vides the Government the authority to move to dismiss the action 

of any Federal employee who brings a qui tam action under the Act 

without first meeting certain requirements. These requirements 

provide the Government fair notice and opportunity to investigate. 

Only after reporting the claims to supervisors, the Inspector General, and/or the Attorney General can the employee file a qui tam. 

In Ms. Gonter’s case, she was not a Government employee, but 

as her testimony shows, the Government was reluctant to pursue 

the fraud by the prime contractor due to their future contracts with 

the Government. Had she been a Government employee, how would 

that fraud have been recovered? The False Claims Act is an important safety valve then for uncovering fraud when a governmental 

agency has been unwilling or unable to prosecute. 

Isn’t a defined set of procedures for Government employees to follow before becoming a relator better than the current and ad hoc 

system of the circuit-to-circuit seesaw that we are involved in? 

Mr. BOESE. Senator, first of all, I agree with you that some set 

of rules was better than nothing. However, I would echo the statements by Mr. Hertz on behalf of the Justice Department and, I 

might add, Professor Pam Bucy, who submitted a written testimony but was not able to be here, saying that allowing Government employees to bring qui tam cases is not just bad policy, it is 

toxic. We spend a fair amount of time in our written report on 

pages 21 through 27 talking about all the problems that occur. I 

would specifically refer the Committee to review the discussion of 

the POGO case on page 25, where a Government employee who 

was actually interpreting regulations that were the subject of a 

False Claims Act suit, of a separate qui tam suit, that same employee was receiving 10 percent of the results of whatever the qui 

tam relator received. 

Now, the Justice Department sued both the relator and the employee in Federal court under the Ethics in Government Act and 

just earlier this month got a result. But when you allow a Government employee to bring a qui tam suit, then all the deference that 

should be due an employee’s decision because they are independent—in other words, we give deference to a Government employee’s interpretation of the law because they are independent. 

Once we allow them to bring qui tam cases to benefit themselves 

personally, we are essentially taking that deference away from 

them because they will not be acting for the good of the public. 

They are going to be acting for the good of themselves. 

The problem I have with the procedure you set forth is that in 

many ways it is the worst of all possible worlds. It is the situation 

where an IRS agent or another agent audits an individual or a 

company and then uses that information to put money in their own 

pocket. That is what this bill allows, and that is why we are so opposed to it. 

Senator GRASSLEY. As I suggested, Judge Clark, what do you 

think, whether or not Congress ought to clarify the playing field so 

that there is not this mismatch and also circuit discrepancy that 

we have on whether or not an employee can be a qui tam relator? 

Judge CLARK. I have not had the experience myself of being approached by a Government employee to be a whistleblower, but 

then we do not have nearly as many of those in San Antonio as 

37

there are in Washington. But I guess the bottom line for me is I 

would hate to see a fraud against the Government go unredressed 

simply because the person who knows about it and is trying to 

blow the whistle about it is a Government employee. 

If I might, I would like to add two very brief comments addressing a couple of things that Mr. Boese said, if you would indulge me 

in that. 

First, as to whether public disclosure bar motions are filed in intervened cases, they are not irrelevant at all. I have answered public disclosure motions in intervened cases because defendants 

would love to knock out a relator who is sitting there side by side 

with the United States and has brought resources to the battle 

with the relator. So, yes, they file them in intervened cases. 

And as to the statistic about 1.4 percent, or whatever it is, of recoveries coming in declined cases and that 80 percent of them are 

declined because they are meritless, in the first place there are 

many reasons cases are declined. I have had the Government tell 

me, when a court unseals a case before the Government is ready 

to intervene, ‘‘Will you carry the ball until we can finish our investigation and get in?’’ And that happens. Not only that, there have 

been substantial recoveries that are in the column that says intervened cases that were intervened in right at the last minute for 

settlement. 

Just a couple of examples. The Merck case that was in the headlines just recently, that was a $670 million settlement. Now, most 

of that, $400 million plus, was in one case that the Government did 

intervene in; the balance of that settlement came from a declined 

case that the attorney from New Orleans litigated without the Government, right until the time to settle. 

The same thing happened in the Gabelli case. That was $130 

million. That was settled on the eve of trial. The Government intervened very close to the time of trial. 

The Amerigroup case, $144 million plus penalties, was intervened in very close to going to trial. 

The Northrop case, $62 million, that was litigated by the relator 

and his counsel for 10 years, and it was intervened in just before 

it was settled. 

The Alderson case, the Columbia-HCA case, that is another one. 

I do not know the amount of that one, but that one was litigated 

by the relator and their counsel for years. There was an intervention, I believe, but it came right at the end as the case was being 

brought to fruition. 

So the statistic that says all this money comes out of intervened 

cases includes those cases that are intervened in very late after the 

relator has litigated that case sometimes for years. 

Senator GRASSLEY. Did you have something you wanted to say, 

Mr. Boese? 

Mr. BOESE. Well, I believe the Alderson case was the ColumbiaHCA case. I believe the ultimate recoveries there were $1.4 billion. 

As one of the early attorneys for Columbia-HCA in that case, I can 

tell you that the Government was in it very early and very often. 

They had seven teams of attorneys working on that case. That was 

not a case of un—intervene. 

38

And with regard to most of the others that he referred to, some 

of which I am familiar with and some of which I am not, many of 

those were done by State Attorneys General who were acting under 

their State qui tam laws. I do not consider that to be a qui tam 

case. I believe that to be a State operating under its own qui tam 

laws and bringing the Government along with it. 

Senator GRASSLEY. I am going to close now, but I have a summation because I was not able to give an opening statement. But before I do that, I am going to ask, without dissent, that my opening 

statement be printed in the record as if read. 

And I also have a request here from Senator Cornyn that a statement that he has be placed in the record because he was not able 

to come. 

I thank you all very much for your testimony. It has been very 

worthwhile testimony. 

After this testimony, I do believe that there is agreement that 

the False Claims Act can be strengthened with some provisions of 

2041. Further, while not endorsing the bill in the current form, I 

have found from the testimony this morning, the views letter also 

from the Justice Department, to be very encouraging. I am committed to ensuring that the Department has the necessary tools to 

enforce laws against those who seek to defraud. S. 2041 contains 

some provisions that will help the Department of Justice in efforts 

to root out that fraud. And I am going to work with the Department to see if we can get some consensus. 

I would like to note that the False Claims Act works because of 

courageous whistleblowers. I speak often about honoring whistleblowers, and no less you, Ms. Gonter. As the Department’s testimony shows, qui tam whistleblowers are at the heart of false 

claims actions, accounting for nearly 63 percent of all recoveries. 

You and your husband and the lengths that you went to to ensure 

that our sailors aboard our Navy submarines are safe have to be 

honored and acknowledged. This is the real power of whistleblowers to expose complex fraud schemes from the inside and then 

push the Government to not sit on its laurels but recover fraud 

that was lost. 

I will admit that I struggle to see why the Department decided 

to not intervene in Ms. Gonter’s case despite the volumes of evidence she uncovered while working from the inside. That said, the 

qui tam provisions worked, and Ms. Gonter saved the taxpayers 

over $13 million, and commendation for that cannot be too great. 

With approximately 1,000 qui tam cases under seal, waiting 

intervention, I can only guess that there are hundreds if not thousands of whistleblowers just like Ms. Gonter waiting to tell their 

story. While this large number is testament to the False Claims 

Act, it is also a reminder that fraud never sleeps and that we need 

to keep fighting to protect taxpayers’ dollars. S. 2041 will help 

strengthen the False Claims Act for the next 20 years and help 

courageous individuals in the future, like Ms. Gonter has shown us 

today, to continue to bring fraud to light. 

I especially take note of Chairman Leahy’s interest in this, more 

importantly for bringing the attention that he did through this 

hearing and also for his participation in it. And I also note that the 

statements of all Senators other than those that I have already 

39

mentioned will be received by unanimous consent and to remind 

each of you who are witnesses, besides my own questions that I 

may submit—or will submit, that maybe members who could not 

be here would also have questions, that we would ask you to submit, and so the record would remain open for 7 days for that purpose. 

Thank you all very much. 

[Whereupon, at 12:15 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.]

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