69–010 

Calendar No. 910 

110TH CONGRESS REPORT " ! SENATE 2d Session 110–507 

THE FALSE CLAIMS ACT CORRECTION ACT OF 2008 

SEPTEMBER 25 (legislative day, SEPTEMBER 17), 2008.—Ordered to be printed 

Mr. LEAHY, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany S. 2041] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on the Judiciary, to which was referred the bill 

(S. 2041), to amend the False Claims Act, having considered the 

same, reports favorably thereon, with amendment, and recommends that the bill, do pass. 

CONTENTS 

Page 

I. Background and Purpose of the False Claims Act Correction Act ............ 1 

II. History of the Bill and Committee Consideration ....................................... 9 

III. Section-by-Section Summary of the Bill ...................................................... 15 

IV. Congressional Budget Office Cost Estimate ................................................ 30 

V. Regulatory Impact Evaluation ...................................................................... 32 

VI. Conclusion ...................................................................................................... 32 

VII. Changes to Existing Law Made by the Bill, as Reported ........................... 32 

I. BACKGROUND AND PURPOSE OF THE FALSE CLAIMS ACT

CORRECTION ACT OF 2008 

A. BACKGROUND

In 1863, President Abraham Lincoln proposed legislation designed to protect the United States Treasury from fraud and abuse 

in Civil War defense contracts. This legislation, the False Claims 

Act (FCA), was adopted by Congress late that year and signed into 

law by President Lincoln. The FCA that was originally enacted provided both civil and criminal penalties against individuals who 

were found to ‘‘knowingly have submitted a false claim to the GovVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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1S. Rep. No. 99–345, 99th Cong., 2d Sess. (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5273 

(hereinafter ‘‘S. Rep. No. 99–345’’). 2 Id. 

3 Id. 

4The term qui tam is shorthand for qui tam pro domino rege quam pro se ipso in hac parte 

sequitur, which means ‘‘who pursues this action on our Lord the King’s behalf as well as his 

own.’’ See Rockwell Int’l Corp., v. United States, 549 U.S. llll, 127 S.Ct. 1397, 1403 n.2 

(2007). 5See S. Rep. No. 99–345, supra note 1, at 5275. 

6 Id. at 5275 (citing United States v. Griswold, 30 Fed. Rep. 762 (Cir. Ct., D. Ore. 1887)). 7See Marcus, 317 U.S. at 545. 

8See S. Rep. No. 1708, 77th Cong., 2d Sess. (1942) (reprinting Attorney General Biddle’s letter 

to Congress requesting modifications to the FCA). 9For further background see S. Rep. No. 99–345, supra note 1, at 5276. 

10See False Claims Amendments Act of 1986, P.L. 99–562, 100 Stat. 3154, 3157 (codified as 

amended at 31 U.S.C. § 3730(e)(4)(b) (2000)). 

ernment.’’ 1 These penalties included double damages for ‘‘any false 

claims for money or property upon the United States’’ 2 or for any 

individual ‘‘who submit[s] false information in support of claims.’’ 3

On top of double damages, the FCA passed in 1863 also imposed 

a $2,000 civil penalty per false claim. 

The heart of the 1863 Act was an authorization for private individuals, known as qui tam 4 relators, to file FCA cases on behalf 

of the Federal Government. If an individual private relator successfully prosecuted a case to final judgment under the FCA, they were 

awarded one-half of the damages recovered. The FCA also awarded 

a successful relator with reimbursement for all costs to prosecute 

the case.5

The 1863 Act did not authorize the Government to intervene 

once a suit was commenced under the FCA by a private relator. In 

fact, as this Committee previously noted, ‘‘[a] relator’s interest in 

the action was viewed, at least in one instance, as a property right 

which could not be divested by the United States if it attempted 

to settle the dispute with the defendant.’’ 6 Further, under the 1863 

Act, nothing precluded qui tam actions from being pursued by a relator regardless of the source of the relator’s information. The 1863 

Act remained on the books virtually unchanged until World War II. 

In the early 1940s, a number of qui tam cases were filed in response to the increased Government procurement during World 

War II. One case, United States ex rel Marcus v. Hess, 317 U.S. 537 

(1943), raised the question of whether qui tam relators were filing 

FCA cases based solely upon information obtained in the criminal 

indictments brought by the Government. In Marcus, the Government argued that a civil action filed by an informant with knowledge of the criminal complaint created a situation where a relator 

was filing a qui tam action without any new information. The 

Court found that such suits could proceed and accomplish the goals 

of the Act recovering more money than is allowed under criminal 

penalties.7 This decision prompted then-Attorney General Francis 

Biddle to request 8 a repeal of the qui tam provisions. This repeal 

passed in the House, but when amended in the Senate, the qui tam 

provisions were reinstated with modifications.9

The Senate legislation limited jurisdiction of the courts by barring qui tam suits based upon information that was in possession 

of the Government unless the relator was an original source of that 

information.10 However, the final conference report adopted a 

modified version of this jurisdictional bar and did so without explanation. The final language ‘‘dropped the clause regarding original 

sources of allegations’’ and left a jurisdictional bar if the GovernVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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11See S. Rep. No. 99–345, supra note 1, at 5277. 12 57 Stat. 608, codified as amended at 31 U.S.C. § 232–235 (1976). See also United States v. Pittman, 151 F.2d 851, 853–54 (5th Cir. 1945) (discussing 1943 amendments to the FCA). 13 Id. 14 Id. 15See S. Rep. No. 99–345, supra note 1, at 5277 (citing United States ex rel Lapin v. Int’l 

Bus. Machs. Corp., 490 F.Supp 244 (D. Hi. 1980)). 16See United States ex rel., Wisconsin v. Dean, 729 F.2d 1100 (7th Cir. 1984). 17 Elleta Sangrey Callahan & Terry Morehead Dworkin, Do Good and Get Rich: Financial Incentives for Whistleblowing and the False Claims Act, 37 Vill. L. Rev. 273, 318 (1992). 18General Accounting Office, Fraud in Gov’t Programs: How Extensive is It?—How Can it Be 

Controlled ii (1981) (hereinafter ‘‘GAO Report’’). 19S. Rep. No. 99–345, supra note 1, at 5268 (1986) (citing GAO Report). 20 Id. at 5268. 21 Id. 

ment had prior knowledge.11 This ‘‘government knowledge bar’’ deprived courts of jurisdiction over qui tam actions ‘‘based upon evidence or information in the possession of the United States, or any 

agency or officer or employee thereof, at the time such suit was 

brought.’’ 12

The conference report also had other amendments to the FCA. 

The 1943 amendments authorized the Department of Justice to 

take over cases initiated by relators and required relators to submit all of their supporting evidence to the Department of Justice 

at the time they filed a complaint. The Department of Justice was 

then given 60 days to decide if they would intervene in the suit and 

take control of the case. If the Department took control, the relator 

had no say in the final disposition of the case. Further, the 1943 

amendments limited the relator’s portion of proceeds to ‘‘fair and 

reasonable compensation’’ not to exceed 10 percent of the proceeds 

if the Government prosecuted the suit.13 In the event the Government did not intervene, a relator could receive up to, but not to exceed, 25 percent of the recovery.14

These changes—the ‘‘government knowledge bar’’ in particular— 

significantly limited the number of FCA cases that were filed. By 

the 1980s, the FCA was no longer a viable tool for combating fraud 

against the Government. Courts had interpreted the ‘‘Government 

knowledge bar’’ narrowly and found that there was a complete bar 

for qui tam relators even if the Government made ‘‘no effort to investigate or take action after the original allegations were received.’’ 15 Some courts went further, finding that the bar precluded 

all qui tam cases when the information was already known, or 

should have been known by the Government, even if the source of 

the information to the Government was the qui tam relator.16 As 

a result, FCA filings plummeted from 1943 through 1986 with only 

about six to ten FCA cases filed per year.17

In the early 1980s, Congress began to take note of the increased 

evidence of fraud against the Government. A three-volume report 

issued by the General Accounting Office (now known as the Government Accountability Office or GAO) concluded that fraud 

against the Government was ‘‘widespread.’’ 18 The report also noted 

that undetected fraud was probably much higher than expected because ‘‘weak internal controls allow fraud to flourish.’’ 19 Further, 

this Committee observed that ‘‘the cost of fraud cannot always be 

measured in dollars and cents’’ 20 and the GAO report discussed 

how fraud erodes the public confidence and ability to manage programs.21 In addition, one Senate hearing included testimony that 

‘‘45 of the 100 largest defense contractors—including 9 of the top 


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22S. Rep. No 99–345, supra note 1, at 5267 (citing testimony of Dep’t of Defense Inspector 

Gen., Joseph Sherick). 23See, e.g., Erwin Chemerinsky, Controlling Fraud Against the Government: The Need for Decentralized Enforcement, 58 Notre Dame L. Rev. 995 (1983) (arguing that the FCA should be 

amended). 24False Claims Amendments Act of 1986, S. 1562, 99th Cong. (1985). 25False Claims Reform Act: Hearing Bef. the Subcomm. on Admin. Practice and Procedure 

of the Senate Comm. on the Judiciary, 99th Cong., 1st Sess. (Sept. 17, 1985); Hearings Bef. the 

Subcomm. on Admin. Law and Govern. Rel. of the House Comm. on the Judiciary, 99th Cong., 

2d Sess. (Feb. 5, 1986). 26S. Rep. No. 99–345 supra note 1, at 5272. 27 Id. 28 Id. 29False Claims Amendments Act of 1986, Pub. L. No. 99–562, 100 Stat. 3153 (codified as 

amended at 31 U.S.C. §§ 3729–3733) (1994); 22 Weekly Comp. Pres. Doc. 1499 (Nov. 3, 1986). 30 31 U.S.C. § 3730(b)(2)–(3) (2000). 

10—were under investigation for multiple fraud offenses.’’ 22 Scholars similarly expressed concern about serious fraud against the 

Government and began to discuss the past successes of the FCA.23

In response, Senators Charles E. Grassley, Carl Levin, and Dennis DeConcini introduced S. 1562, the False Claims Amendments 

Act, in 1985.24 This bill, along with similar legislation introduced 

by Senator Strom Thurmond, was referred to the Senate Committee on the Judiciary, Subcommittee on Administrative Practice 

and Procedure. The House of Representatives also considered a bill 

to amend the FCA, H.R. 3317, which was referred to the House 

Committee on the Judiciary, Subcommittee on Administrative Law 

and Governmental Relations. Both the House and Senate Subcommittees held hearings to review this legislation.25

The House and Senate bills amending the FCA in 1985 shared 

the similar goal of returning the qui tam provisions to the FCA in 

order to empower private citizens to work with the Government in 

rooting out fraud. More specifically, the Senate Committee on the 

Judiciary noted that ‘‘perhaps the most serious problem plaguing 

effective enforcement [of fraud] is a lack of resources on the part 

of Federal enforcement agencies.’’ 26 The Committee continued, ‘‘allegations that perhaps could develop into very significant cases are 

often left unaddressed at the outset due to a judgment that devoting scarce resources to a questionable case may not be efficient.’’ 27

This Committee concluded that it ‘‘believes that the amendments 

[to the FCA] which allow and encourage assistance from the private citizenry can make a significant impact on bolstering the Government’s fraud enforcement efforts.’’ 28

Ultimately, the House and the Senate passed the False Claims 

Amendments Act of 1986 (the 1986 Amendments) and President 

Reagan signed it into law on November 23, 1986.29 The final legislation made a number of reforms to the 1943 version of the FCA. 

Chief among them was a change to increase the penalty provision 

from the double damages to treble damages. The 1986 Amendments also provided the qui tam cases filed by private relators 

must be filed under seal for sixty days and served to the United 

States, but not the defendant.30 The purpose of this provision was 

two-fold: to provide the Department of Justice an opportunity to decide if the case was meritorious and worthy of the Department taking over the case, and to protect the defendant from unfounded accusations. The 1986 amendments also created a new mechanism 

that allowed the Department of Justice the option of intervening in 

a FCA case that it initially declined to take over, provided the DeVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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31 31 U.S.C. § 3730(c)(3) (2000). 32 31 U.S.C. § 3730(d)(1)–(2) (2000). 33 31 U.S.C. § 3730(h) (2000). 34 31 U.S.C. § 3730(e) (2000); see also United States ex rel. LeBlanc v. Raytheon Co., 874 F. 

Supp. 35, 38 (D. Mass 1995), aff’d 62 F.3d 1411 (1st Cir. 1995), cert. denied, 516 U.S. 1140 

(1996). 35 31 U.S.C. § 3730(e)(4)(A) (2000). 36 Id. 37 Id. 38 31 U.S.C. § 3730(e)(4)(B) (2000). 39 31 U.S.C. § 3730(d)(4) (2000). 

partment had ‘‘good cause.’’ 31 Further, the amendments included a 

provision that provided qui tam relators the ability to continue to 

participate in a FCA case working side-by-side with the Government, subject to a court’s ability to limit the relator’s role in certain 

instances. 

The 1986 amendments also sought to incentivize further qui tam 

relators by lifting the uncertainty of relators’ monetary rewards for 

coming forward and reporting fraud. Specifically, the amendments 

removed the discretionary award structure for qui tam relators 

and, in most cases, provided that a relator could be awarded 15 

percent of the recovery for coming forward and their hard work.32

Further, the amendments provided whistleblower protections in 

recognition of the risk that qui tam relators take in reporting fraud 

against the Government. This provision provided qui tam relators 

the ability to seek reinstatement, back pay with interest, as well 

as special damages that includes attorney’s fees and litigation costs 

in courts if they were retaliated against.33

Most importantly, the 1986 Amendments specifically overturned 

the Government knowledge bar that was created in the 1943 

amendments and replaced it with a new mechanism referred to as 

a ‘‘public disclosure bar.’’ 34 This new, public disclosure bar was designed to bar only truly parasitic cases filed by relators whose complaints were ‘‘based upon the public disclosure of allegations or 

transactions in a criminal, civil, or administrative hearing, in a 

congressional, administrative, or Government [General] Accounting 

Office report, hearing, audit, or investigation, or from the news 

media.’’ 35 However, this jurisdictional limitation included an important exception that allowed cases to go forward in two instances: first, if it was brought by the Attorney General; 36 and second, if ‘‘the person bringing the action is an original source of the 

information.’’ 37 The 1986 Amendments defined ‘‘original source’’ as 

‘‘an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily 

provided the information to the Government before filing an action 

under this section which is based on the information.’’ 38 The goal 

of this provision was to ensure that any individual qui tam relator 

who came forward with legitimate information that started the 

Government looking into an area it would otherwise not have 

looked, could proceed with an FCA case. 

Finally, the 1986 Amendments authorized an award of attorneys’ 

fees to any defendant that prevailed in a suit where the ‘‘court 

finds * * * [the litigation] was clearly frivolous, clearly vexatious, 

or brought primarily for the purposes of harassment.’’ 39


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40S. Hrg. 109–905, Physician-Owned Specialty Hospitals: Profits Before Patients? Hearing Before the Senate Comm. on Finance, 109th Cong. 141–142 (2006) (responses to questions for the 

record from Mark McClellan, Administrator, Centers for Medicare and Medicaid Services). 41 United States Dep’t of Health and Human Servs., Budget in Brief Fiscal Year 2009 61 

(2008) available at http://www.hhs.gov/budget/09budget/2009BudgetInBrief.pdf (last visited 

Aug. 13, 2008). 42See S. Hrg. 110–412, The False Claims Act Correction Act (S. 2041): Strengthening the 

Gov’t’s Most Effective Tool Against Fraud for the 21st Century, Hearing before Committee on 

the Judiciary, 110th Cong., 2d Sess. (February 27, 2008). 

B. IMPORTANCE OF THE FALSE CLAIMS ACT

The need for a robust FCA cannot be understated. For example, 

the year prior to the 1986 Amendments, the Department of Justice 

recovered only $54 million using the FCA. After the 1986 Amendments, recoveries have increased incrementally each year with over 

$5 billion from settlements and judgments recovered in the past 

two years alone. All told, the 1986 Amendments have led the Government to recover over $20 billion since 1986, of which $12.6 billion has been the result of qui tam actions. However, more work 

remains to be done. For instance, the Administrator of the Centers 

for Medicare and Medicaid Services testified in 2006 that fraud— 

excluding errors—in the Federal/State Medicaid program could be 

as high as 8 percent.40 Based on 2008 estimates, the fraud losses 

could be as high as $16.25 billion 41 this year for the Federal Government alone—not including the State share of funds required by 

the Medicaid program. With such a great potential for fraud 

against the Government, it is important that the Committee revisit 

the FCA and correct erroneous court interpretations that have limited the scope and application of the FCA in contravention of 

Congress’s intent in passing the 1986 Amendments. 

In the 110th Congress, the Judiciary Committee heard testimony 

highlighting the critical role that qui tam relators play in uncovering and prosecuting violations of the FCA.42 Pamela Bucy, Bainbridge Professor of Law at the University of Alabama School of 

Law, noted that a great deal of fraud would go unnoticed absent 

the assistance of qui tam relators. Professor Bucy testified: 

Complex economic wrongdoing cannot be detected or deterred effectively without the help of those who are intimately familiar with it. Law enforcement will always be 

outsiders to organizations where fraud is occurring. They 

will not find out about such fraud until it is too late, if at 

all. When law enforcement does find out about such fraud, 

it is very labor intensive to investigate. 

Fraud is usually buried in mountains of paper or digital 

documents. It is hidden within an organization. Many different people within an organization, in multiple offices, 

divisions, and corporate capacities, may have participated 

in the illegality. Because of the complex nature of economic 

crime and the diffuse nature of business environments, it 

may not be apparent, perhaps for years, that malfeasance 

is afoot. By then, victims will have been hurt, records and 

witnesses will have disappeared, and memories will have 

faded. 

Given these facts, insiders who are willing to blow the 

whistle are the only effective way to learn that wrongdoing 

has occurred. Information from insiders is the only way to 

effectively and efficiently piece together what happened 


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43 Id. at 120–21. 44 Id. at 192. 45 Id. at 189. 

and who is responsible. Insiders can provide invaluable assistance during an investigation by identifying key records 

and witnesses, interpreting technical or industry information, providing expertise, and explaining the customs and 

habits of the business or industry. Help from an insider 

can save time and expense for both law enforcement and 

putative defendants by focusing the investigation on relevant areas. Because of the valuable information brought 

by insiders, it is no surprise that Government officials 

state: ‘Whistleblowers are essential to our operation. Without them, we wouldn’t have cases.’ (Emphasis added).43

Michael Hertz, Deputy Assistant Attorney General, Civil Division, of the Department of Justice concurred with Professor Bucy, 

testifying: 

[T]he 1986 qui tam amendments to the Act that 

strengthened whistleblower provisions have allowed us to 

recover losses to the Federal fisc that we might not have 

otherwise been able to identify.44

The cases filed by qui tam relators following the 1986 Amendments have proven that fraud is pervasive and that it permeates 

Government programs from welfare and food stamp benefits to 

multibillion dollar defense contracts; from crop subsidies to disaster 

relief; and from Government-backed loan programs to health care 

benefits issued by Medicare and Medicaid. Resourceful qui tam relators have uncovered these often-complex frauds and have tipped 

off the Government to fraudulent activity. Mr. Hertz elaborated on 

this point: 

[T]here are no government programs that are immune 

from possible fraud, as reflected by our caseload. Cases 

brought by the Department under the Act, including those 

initiated by whistleblowers, have recovered significant 

funds on behalf of the Department of Interior, the General 

Services Administration, the Department of Housing and 

Urban Development, the Department of Agriculture, the 

Department of Education, the Department of State, the 

Department of Energy, NASA, and more recently, the Department of Homeland Security, to name but a few.45

Mr. Hertz’s testimony highlights the depth and breadth of frauds 

perpetrated against the Government. Yet it is important to note 

that some areas of fraud are more pervasive than others and none 

more so than healthcare benefits paid by the Government under 

the Medicare and Medicaid programs. FCA cases have touched virtually every area of the healthcare community, including hospitals, 

doctors, pharmaceutical companies, nursing homes, durable medical equipment retailers and manufacturers, and renal care facilities, among others. Healthcare cases have constituted a significant 

portion of FCA recoveries, with hospital cases recovering over $3.4 

billion and pharmaceutical manufacturer cases recovering over $4.6 

billion. That is about 40 percent of $20 billion that the Government 

has recovered using the FCA over the past 20 years. 


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46See S. Rep. No. 99–345, supra note 1, at 5268 (citing GAO Report). 47S. Hrg. 110–412, supra note 42, at 192. 

Qui tam relators have been particularly instrumental in unearthing healthcare frauds given the complexity of Federal healthcare 

programs. Prescription drug pricing cases and Medicare billing 

frauds are often sophisticated and, are often compartmentalized 

within a corporation so that only a very few individuals may actually understand the fraudulent scheme. Complexity of subject matter should never preclude the Government from uncovering fraud, 

but, unfortunately, it is impossible to determine how much fraud 

goes undetected. 

Of the over 5,800 qui tam FCA cases filed since 1986, more than 

half (roughly 3,117) have focused on fraud against Government 

health care programs. These cases have recovered over $9 billion 

of the $12.6 billion recovered through qui tam cases since 1986 

(nearly 72 percent). Frauds against the Department of Defense 

ranked second with over $1.6 billion of qui tam recoveries (nearly 

13 percent). While these recoveries represent a victory for American taxpayers, they are only one measure of the fraud against the 

Government. As the GAO pointed out,46 fraud erodes public confidence in the Government’s ability to efficiently and effectively 

manage its programs. This is why the FCA is so important to not 

just the Government, but to American taxpayers. It offers an opportunity for the Government to win back the hearts and minds of 

taxpayers who believe the Government does not care how taxpayer 

dollars are spent. 

In addition, the presence of effective qui tam provisions in the 

FCA has a deterrent effect on those who seek to defraud the Government. Mr. Hertz testified: 

In the wake of well-publicized recoveries attributable to 

the qui tam cases, those who might otherwise submit false 

claims to the Federal Government are more aware than 

ever of the ‘watchdog’ effect of the qui tam statute. We 

have no doubt that the Act has had the salutary effect of 

deterring fraudulent conduct.47

Despite these important successes, the FCA continues to face 

challenge after challenge in courts across the country, and recent 

court interpretations now undermine its potential effectiveness. 

C. PURPOSE OF THE BILL

The original FCA was written to assist the Government in combating fraud against the U.S. Treasury by incentivizing private individuals to act as private attorneys general. By multiplying the 

number of individuals looking for fraud, the FCA was designed to 

bolster the resources of the Government to protect the Federal fisc 

and uncover frauds that otherwise would never have come to light. 

The FCA was crafted to enable private individuals to not only report fraudulent conduct, but also to move forward with lawsuits 

and to participate in the recovery. Allowing individual relators to 

proceed with lawsuits also provided a check on the Government bureaucracy that may lack the resources or the incentive to pursue 

complex or potentially embarrassing fraud cases. Despite these 

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48 United States ex rel. Montgomery v. St. Edward Mercy Medical Center, 2008 WL 110858 

(E.D. Ark. Jan. 8, 2008). 

lenges that have led to conflicting interpretations from courts 

across the country. These conflicts make the outcomes of FCA cases 

unclear—not based upon facts, but based upon where the case is 

filed—and significantly undermine the effectiveness of the FCA. 

The Committee has closely watched various interpretations of 

the FCA that have been appealed all the way to the Supreme 

Court. Despite the Supreme Court’s holdings in these cases, the interpretation of the FCA widely varies from court to court. Earlier 

this year, a court summarized the current state of law interpreting 

the FCA stating: ‘‘The Court sympathizes with anyone litigating 

under the False Claims Act. Perhaps Congress will elect at some 

point to give legislative attention to the FCA to resolve some of the 

still unresolved questions about the Act’s application.’’ 48 In addition to conflicting interpretations of the FCA, a number of courts— 

including the Supreme Court—have interpreted provisions of the 

FCA contrary to Congress’s intent in passing the 1986 Amendments. 

The False Claims Act Corrections Act, S. 2041, seeks to clarify 

conflicting interpretations of the FCA, to provide an affirmative answer to unresolved questions created over the years by litigation, 

and to bring the FCA back into line with congressional intent. 

Among other things, this legislation makes clear that the FCA protects all Federal funds, including circumstances in which a person 

discovers an overpayment by the Government and decides to retain 

those funds. The legislation also defines recoverable damages; clarifies that Government employees may act as qui tam relators in 

limited, defined circumstances; prevents dismissal of qui tam allegations that assist Government investigations; strengthens anti-retaliation protections for qui tam whistleblowers; clarifies the statute of limitations period for all portions of the FCA; and provides 

technical amendments to the Civil Investigative Demands (CIDs) 

the Department of Justice is authorized to issue under the FCA. 

These provisions will assist practitioners, judges, and businesses 

across the country by providing clarity and certainty to the FCA. 

A more detailed section by section analysis of these provisions is 

provided below. 

II. HISTORY OF THE BILL AND COMMITTEE CONSIDERATION

A. INTRODUCTION OF THE BILL

Senator Grassley introduced S. 2041, the False Claims Act Correction Act of 2007, on September 12, 2007, joined by Senators 

Durbin, Leahy, Specter, and Whitehouse as original cosponsors. 

The bill was referred to the Committee on the Judiciary. 

B. COMMITTEE CONSIDERATION

1. Committee hearing 

The Committee held a hearing on S. 2041 entitled, ‘‘The False 

Claims Act Correction Act (S. 2041): Strengthening the Government’s Most Effective Tool Against Fraud for the 21st Century’’ on 

February 27, 2008. Testimony was received from: Michael F. Hertz, 

Deputy Assistant Attorney General, Civil Division, Department of 


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49See S. Hrg. 110–412, supra note 42, at 194. 50 Unfortunately, due to illness, Professor Bucy was unable to attend the hearing in person, 

but submitted written testimony. 

Justice; Tina M. Gonter of Jacksonville, Florida; The Honorable 

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

& Watson P.C., San Antonio, Texas; John T. Boese, Partner, Fried, 

Frank, Harris, Shriver, & Jacobson LLP, Washington, D.C.; and 

Pamela M. Bucy, Professor of Law, University of Alabama Law 

School, Tuscaloosa, Alabama. 

Mr. Hertz testified that while the Department of Justice was in 

agreement with many individual components contained in the legislation, it could not support the bill as drafted. In particular, the 

Department is concerned with section 3 of the legislation which expressly states that Government employees may act as qui tam relators in limited defined circumstances. Mr. Hertz also testified about 

the Department’s concerns regarding the revisions to the public 

disclosure bar contained in the legislation. Mr. Hertz discussed the 

position articulated by the Department in a formal views letter and 

corresponding appendix which was submitted to the Committee 

prior to the hearing. Mr. Hertz also discussed other subjects where 

the Department supported provisions in the bill that clarify the 

FCA. Mr. Hertz stated that the Department believed some cases 

had been wrongly decided by the courts, including the Supreme 

Court, and that the Department had submitted briefs consistent 

with provisions contained in S. 2041. Specifically, Mr. Hertz discussed how the Department disagreed with holdings in United 

States, ex rel., Totten v. Bombardier Corp., 286 F.3d 542 (D.C. Cir. 

2004) (hereinafter ‘‘Totten’’), Allison Engine Co. v. United States, ex 

rel., Sanders, 471 F.3d 610 (6th Cir. 2006), cert granted, 128 S. Ct. 

491 (2007), rev’d on other grounds, 553 U.S. ll, 128 S.Ct. 2123 

(2008), and United States ex rel. DRC, Inc., v. Custer Battles, LLC, 

376 F. Supp. 2d 617 (E.D. Va 2005) (hereinafter ‘‘Custer Battles’’). 

Mr. Hertz concluded by stating that the Department of Justice was 

supportive of the qui tam provisions of the FCA and provided their 

views to ensure that corrections to the FCA do not ‘‘create additional obstacles to government enforcement efforts.’’ 49

Ms. Gonter, Judge Clark, and Professor Bucy each provided testimony recognizing the need to clarify the FCA and to strengthen the 

partnership between relators and the Federal Government.50 Ms. 

Gonter shared her first hand experience as a qui tam relator. She 

worked as a quality assurance inspector for a Navy subcontractor 

and how she uncovered a scheme where the subcontractor, with 

tacit approval from the prime contractor, supplied defective valves 

for use in United States Navy submarines. Ms. Gonter told the 

Committee how she tried to raise her concerns regarding the defective valves, but was ignored by company managers. She reported 

this to the prime contractor, and they ignored her concerns as well. 

Ms. Gonter testified about how she made the decision to disclose 

the fraud as a whistleblower and how she alerted the Government 

to the problem. 

Ultimately, Ms. Gonter filed a FCA qui tam complaint and assisted the Government during its five-year investigation. As a result of Ms. Gonter’s efforts, the Government brought a criminal 

case against her company’s owners and recovered more than $13 

million from the prime contractor despite a decision by the DepartVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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51 Judge Clark has worked as a qui tam relator’s counsel after stepping down from the state 

bench in Texas. 

ment of Justice not to intervene in that part of the case. Had Ms. 

Gonter not come forward, the Government would not have known 

about the defective values, would not have brought a criminal case, 

and would not have recovered any money for the defective valves. 

Ms. Gonter concluded her testimony by noting that S. 2041 would 

clarify the scope of a subcontractor’s liability under the FCA, the 

statute of limitations period, the public disclosure provisions, and 

the CID provisions, all of which would enhance the Government’s 

effectiveness in using the FCA. Ms. Gonter’s testimony highlighted 

the very goals of the FCA—empowering everyday citizens to come 

forward and report fraud against the Government. 

Judge Clark discussed the need to amend the FCA from a practitioner’s standpoint.51 Judge Clark testified that S. 2041 provides 

much-needed clarification to the FCA by correcting several recent 

court decisions that have misconstrued the statute and limited its 

effectiveness. For instance, Judge Clark discussed how current case 

law has misinterpreted the public disclosure bar provisions in the 

1986 Amendments and provided defendants with ammunition to 

have meritorious cases dismissed. Judge Clark believes that these 

decisions were directly contrary to the spirit and intent of Congress 

in passing the 1986 Amendments. 

Judge Clark also emphasized the need to clarify the public disclosure bar provisions in the FCA because of a split among the Federal circuit courts of appeals. Most significantly, he testified that 

the Supreme Court’s decision in Rockwell International Corp. v. 

United States ex rel. Stone, 549 U.S. ll, 127 S.Ct. 1397 (2007), 

misinterpreted the public disclosure bar and eroded the effectiveness of the FCA. 

Judge Clark also testified that provisions in S. 2041 were needed 

to clarify the substantive liability provisions of the FCA outlined in 

31 U.S.C. § 3729. Specifically, Judge Clark testified about clarifying 

the definition of the term ‘‘claim’’ in S. 2041 as necessary to bring 

the FCA back into line with the intent of the 1986 Amendments. 

Judge Clark observed that S. 2041 would overrule the D.C. Circuit 

Court’s recent decision in Totten and its progeny, which the Committee views as critical to the future of the FCA. Those cases have 

misinterpreted the liability provisions of the FCA to include a ‘‘presentment’’ requirement, when Congress never intended that result. 

Judge Clark testified that S. 2041 makes clear that the FCA applies to funds administered by the United States under Government programs, noting that, as a result of the misapplication of 

this ruling, Custer Battles, was wrongly decided. 

Professor Bucy’s testimony also expressed general support for S. 

2041, stating that the legislation properly clarifies the presentment 

issue raised in the Totten case, corrects the Custer Battles case, 

and properly broadens the Department of Justice’s ability to use 

CIDs. Professor Bucy also supported S. 2041’s goal of clarifying the 

rules governing the FCA’s public disclosure bar provisions, although she offered the Committee some suggestions that she believes would make that provision even clearer. 

Mr. John Boese testified on behalf of the U.S. Chamber of Commerce and the U.S. Chamber Institute for Legal Reform in opposiVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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tion to S. 2041. Mr. Boese testified that S. 2041 would greatly expand the scope of the FCA beyond what Congress intended in 1986. 

He claimed that S. 2041 would result in the application of the Act 

to private contractual disputes that do not affect Federal funds, 

would unjustifiably allow whistleblowers who provide the Government with no new information to still share in recoveries of Government funds, and would allow Government employees to abuse 

their positions for personal profit. He also raised the concern that 

the amended liability provisions would cover false claims submitted 

to Federal Government employees in their personal capacity, and 

paid from their salary checks. Moreover, he voiced the specific concern that the amended liability provision would cover false claims 

to Social Security beneficiaries, if they used their Government benefits to pay the claims. 

2. Substitute bill 

In response to the concerns raised at the hearing, S. 2041 was 

revised and a substitute bill was prepared prior to the Committee 

mark-up on February 28, 2008. The substitute bill incorporated 13 

of 16 recommendations made by the Department of Justice, as well 

as addressing a number of concerns raised by Mr. Boese. 

First, the substitute bill modified the liability provisions of the 

FCA by removing ambiguous language that claims be presented to 

a Government officer or employee of the U.S. Government. The 

substitute also removed definitions of ‘‘Government money and 

property’’ and ‘‘Administrative Beneficiary’’ after hearing concerns 

from the Department of Justice that these new definitions would 

require substantive litigation and could render an outcome contrary to that which was intended. These modifications retained all 

the scienter requirements for liability to attach, but redefined the 

term ‘‘claim’’ to ensure that liability attaches to false claims to a 

Government contractor or grantee when the contractor or grantee 

pays the claim, at least in part, with funds that the Government 

has provided or for which the Government will provide reimbursement. Further, the substitute bill ensured that money or property 

under the trust of the Government or otherwise administered by 

the Government is protected as well. These changes made clear 

that false claims are covered whether made to the Government 

itself or to an organization that received Federal funds and expended them on the Government’s behalf or to further Government 

programs, purposes, or interests. However, the substitute bill did 

not amend any of the FCA’s current intent requirements. Additionally, in response to the concerns raised by the U.S. Chamber of 

Commerce, the substitute bill made clear that FCA liability will 

not attach to false claims submitted to individuals who receive employment compensation or income subsidies (such as Social Security) from the Federal Government. 

Second, the substitute bill outlined the circumstances under 

which a Government employee can serve as a whistleblower in a 

qui tam lawsuit. The substitute bill made modifications to this provision to help alleviate concerns about the motives of a Government 

employee who may serve as a qui tam relator. Specifically, the provision defined narrow circumstances where a Government employee can act as a qui tam relator and created a defined procedure 

that a qualifying Government employee must follow before filing a 


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qui tam action. If the Government employee does not meet the 

qualifications or if proper procedure is not followed, the Government has the right to dismiss the relator from the case. 

Regarding the Government relator’s qualifications, the substitute 

bill specifically barred Government employees from being relators 

when they were auditors, attorneys, and other Government investigators. The substitute also barred family members of Government 

employees from filing qui tam lawsuits, closing a potential loophole 

for barred Government employees who could merely pass along the 

information to family members. 

The substitute bill also created a defined procedure that a qualifying Government employee relator must follow. The substitute required that if the Government employee learned of the information 

that is the basis for his/her FCA case during the course of his/her 

employment for the Government, then that employee must first directly disclose such information to the agency’s designated Inspector General or to the Attorney General if there is not an Inspector 

General. Further, the Government employee must also notify his/ 

her supervisor of the disclosures as well as the Attorney General 

(if he/she had previously reported to the Inspector General). Only 

if the Attorney General fails to bring a claim based on the disclosed 

information within 18 months is the Government employee then 

free to bring the claim as a qui tam relator. In addition, the substitute bill prohibited Government employees from being qui tam 

relators if they derive information for their FCA claim from an indictment or information, or any ongoing active criminal, civil, or 

administrative investigation. The Committee notes that these 

modifications in the substitute bill are restrictions that were discussed by the Tenth Circuit Court of Appeals in then-Chief Judge 

Tacha’s dissenting opinion in United States ex rel. Holmes v. Consumer Ins. Group, 318 F.3d 1199 (10th Cir. 2003). While the Committee strongly agrees with the majority opinion holding that Government employees may serve as qui tam relators without condition under the current FCA and these restrictions are currently not 

imposed upon Government employees that file FCA cases as qui 

tam relators in the Eleventh and Sixth Circuits, the Committee 

nonetheless believes such a limitation would help to clarify the 

split of authority across the country related to Government employee relators. 

Third, the substitute bill empowered the Attorney General to file 

a timely motion to dismiss a claim, so that the only cases barred 

are those in which a qui tam relator truly contributed no information providing a new basis for recovery. This section incorporated 

much of the language submitted by the Department of Justice in 

its views letter. The provision allows courts to dismiss a claim if 

it relates to substantially the same matters and same wrongdoer 

that is the subject of an open and active criminal indictment or information, criminal, civil, or administrative fraud investigation or 

audit, news media report, or congressional hearing, report or investigation that is acted on by the Department of Justice or Inspector 

General within 90 days. This section also makes technical modifications to the FCA including a clarification that no claim for a violation of section 3729 may be waived or released from liability by a 

person other than the Government, unless it is part of a settlement 

of a section 3730(b) action. This section also included additional 


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language requested by the Department of Justice that ensures that 

this limitation will not prohibit the Government from pursuing 

FCA settlements with defendants. This provision will ensure that 

the courts dictate which violations of the FCA may be dismissed as 

part of an approved settlement agreement. 

Fourth, with respect to the FCA’s retaliation provisions, the substitute bill included a clarifying provision to include the term 

‘‘agent’’ in the list of individuals who may use the anti-retaliation 

provisions of the FCA. The omission of the term ‘‘agent’’ was merely a clerical error in the original draft of S. 2041 and was always 

intended to be included. 

Fifth, the substitute bill made two minor amendments to the use 

of CIDs by including a provision allowing the Department of Justice to share information derived from a CID with Federal, State, 

or local law enforcement officers conducting an investigation into 

allegations raised in a FCA case. 

Sixth, the substitute made a clarifying amendment that information obtained from a CID by the Department of Justice, may be 

shared with qui tam relators who filed the FCA claim. The Committee included this provision because it is well-recognized that qui 

tam relators are often insiders who have substantive knowledge of 

how a corporation may work and can provide substantive background (as was the case with Ms. Gonter’s support of Navy investigators). 

Seventh, with respect to severability, the substitute bill adopted 

language offered by the Department of Justice designed to avoid 

the unnecessary use of Government resources to litigate the application of these amendments to current cases and to ‘‘ensure that 

any provision in the FCA that might be invalidated does not result 

in the invalidity of the remaining provisions.’’ 

Finally, the substitute bill incorporated a provision sought by the 

Department of Justice that would expressly apply to ‘‘all cases 

pending on the date of enactment, and to all cases filed thereafter.’’ 

This provision was requested in order to avoid the same type of litigation that occurred following the passage of the 1986 Amendments. The Department of Justice noted that it spent significant 

resources and time litigating the application of the 1986 Amendments and that this provision would help to prevent a similar situation. 

3. Executive business meeting 

The False Claims Act Corrections Act of 2008, S. 2041, was 

placed on the Committee’s executive business meeting agenda on 

February 28, 2008. However, the bill was held over and not addressed by the Committee until April 2008. During this time, the 

sponsors of the bill drafted and circulated a second substitute bill 

that incorporated three additional changes. First, the second substitute amended a clerical error where the previous version of S. 

2041 erroneously struck portions of 31 U.S.C. 3730(d)(1). Second, 

the substitute made a technical change requested by the Department of Justice to the CID provision. Finally, the second substitute 

made one substantive change creating a tiered application of the effective date as recommended by the Department of Justice. The 

second substitute also renamed the bill as ‘‘The False Claims Corrections Act of 2008,’’ to reflect the changes made in 2008. 


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52 380 F.3d 488 (D.C. Cir. 2005); see, e.g., United States, ex rel., Atkins v. McInteer, 345 F. 

Supp. 2d 1302 (N.D. Ala. 2004), aff’d on other grounds, 470 F.3d 1350 (11th Cir. 2006); United 

States, ex rel., Rafizadeh v. Continental Common, Inc., 2006 WL 980676 (E.D. La. April 10, 

2006); United States v. City of Houston, 2006 WL 2382327 (S.D. Tex. Aug. 16, 2006); United 

States, ex rel., Rutz v. Village of River Forest, 2007 WL 3231439 (N.D. Ill. Oct. 25, 2007); United 

States, ex rel., Arnold v. CMC Engineering, 2007 WL 442237 (W.D. Pa. Feb. 7, 2007). 

The bill was considered by the Committee at its executive business meeting on April 3, 2008. Chairman Leahy, on behalf of Senator Grassley, offered the complete second substitute bill as an 

amendment, which was accepted by unanimous consent. No other 

amendments were offered. 

The Committee then voted to report the False Claims Act Correction Act of 2008, with an amendment in the nature of a substitute, 

favorably to the Senate by voice vote. 

III. SECTION-BY-SECTION SUMMARY OF THE BILL

Section 1. Short title 

This section provides that the legislation may be cited as the 

‘‘False Claims Act Correction Act of 2008.’’ 

Section 2. False claims generally 

This section of the bill updates the substantive liability provisions of the FCA which are contained in section 3729(a) of the Act. 

The bill contains clarifications to remove ambiguities and inconsistencies in the law that have been created through years of litigation. As the bill makes changes to the section and renumbers the 

liability provisions compared to the current statute, this report will 

outline the clarifications to the law based on each topic. 

A. Fraud against government contractors and grantees 

Following the decision in United States ex rel. Totten v. Bombardier Corp. a number of courts have held that the FCA does not 

reach false claims that are (1) presented to Government grantees 

and contractors, and (2) paid with Government grant or contract 

funds.52 These cases are representative of the types of frauds the 

FCA was intended to reach when it was amended in 1986. This 

section of the bill clarifies that liability under 3729(a) attaches 

whenever a person knowingly makes a false claim to obtain money 

or property, any part of which is provided by the Government without regard to whether the wrongdoer deals directly with the Federal Government; with an agent acting on the Government’s behalf; 

or with a third party contractor, grantee, or other recipient of such 

money or property. The bill explicitly excludes from liability requests or demands for money or property that the Government has 

paid to an individual as compensation for Federal employment or 

has received as an income subsidy, such as Social Security benefits. 

As some defendants have argued that Totten and Atkins restrict 

FCA liability from attaching to Medicaid claims, the bill clarifies 

the position taken by the Committee in 1986 that the FCA reaches 

all false claims submitted to State-administered Medicaid programs. By removing the offending language from section 3729(a)(1), 

which requires a false claim be presented to ‘‘an officer or employee 

of the Government, or to a member of the Armed Forces,’’ the bill 

clarifies that direct presentment is not required for liability to attach. This is consistent with the intent of Congress in amending 


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53 31 U.S.C. 3729(c) (2000). See also S. Rep. No. 99–345 supra note 1, at 5282–5301 (providing 

section-by-section analysis explaining that a false claim includes claims submitted to grantees 

and contractors if the payment ultimately results in a loss to the Government). 54 376 F. Supp. 2d 617 (E.D. Va. 2006). 55See, e.g., United States ex rel. Haynes v. CMC Electronics, Inc., 297 F.Supp.2d 734 (D.N.J. 

2003) (discussing sales of equipment to foreign governments under the Arms Export Control 

Act). 56See, e.g., United States ex rel. Huangyan Import & Export Corp. v. Nature’s Farm Products, 

Inc., 370 F.Supp.2d 993 (N.D. Cal. 2005) (holding that section 3729(a)(3) does not extend to conspiracies to violate section 3729(a)(7)). 57 31 U.S.C. §§ 3729(a)(4)–(6) (2000). 

the definition of ‘‘claim’’ in the 1986 Amendments to include ‘‘any 

request or demand . . . for money or property which is made to a 

contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such 

contractor, grantee, or other recipient for any portion of the money 

or property which is requested or demanded.’’ 53

B. Fraud against funds administered by the United States 

The Committee included provisions in Section 2 of the bill to address a decision recently decided involving funds administered by 

the U.S. Government during the reconstruction of Iraq. In United 

States ex rel. DRC, Inc. v. Custer Battles, LLC, a trial court judge 

set aside a jury award finding that Iraqi funds administered by the 

U.S. Government on behalf of the Iraqi people were not U.S. Government funds within the scope of the FCA.54 The Committee believes this result is inconsistent with the spirit and intent of the 

FCA. 

When the U.S. Government elects to invest its resources in administering funds belonging to another entity, or providing property to another entity, it does so because use of such investments 

for their designated purposes will further interest of the United 

States.55 False claims made against Government-administered 

funds harm the ultimate goals and U.S. interests and reflect negatively on the United States. The FCA should extend to these administered funds to ensure that the bad acts of contractors do not 

harm the foreign policy goals or other objectives of the Government. Accordingly, this bill includes a clarification to the definition 

of the term ‘‘claim’’ in new section 3729(b)(2)(A) and attaches FCA 

liability to knowingly false requests or demands for money and 

property from the U.S. Government, without regard to whether the 

United States holds title to the funds under its administration. 

C. Conspiracy 

As noted above, the current FCA contains a provision that subjects those who knowingly conspire to defraud the Government by 

getting a false or fraudulent claim allowed or paid. Some courts 

have interpreted this provision narrowly.56 The current FCA conspiracy provision does not explicitly impose liability on those who 

conspire to violate other provisions of the FCA, such as delivery of 

less Government property than that promised or making false 

statements to conceal an obligation to pay money to the Government.57 Because of the confusion and uncertainty surrounding the 

application of the conspiracy provision, Section 2 amends current 

section 3729(a)(3) to clarify that conspiracy liability can arise 


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58 31 U.S.C. § 3729(a)(4) (2000). 59 31 U.S.C. § 3729(a)(7) (2000). 60 31 U.S.C. § 3729(a)(2) (2000). 61See, e.g., United States ex rel. Prawer & Co. v. Verrill & Dana, 946 F.Supp. 87, 93–95 (D. 

Me. 1996) (discussing the definition of ‘‘obligation’’ at length); Am. Textile Mfr’s Inst., Inc. v. The 

Limited, Inc., 190 F.3d 729, 736 (6th Cir. 1999) (discussing definition of ‘‘obligation’’). 

whenever a person conspires to violate any of the provisions in Section 3729 imposing FCA liability. 

D. Wrongful possession, custody or control of government 

property 

Section 3729(a)(4) of the FCA has remained unchanged since enactment of the FCA in 1863. This provision establishes FCA liability upon an individual that has ‘‘possession, custody, or control of 

property or money used, or to be used, by the Government, and, intending to defraud the Government or willfully to conceal the property, delivers, or causes to be delivered, less property than the 

amount for which the person receives a certificate of receipt.’’ 58

This section allows the Government to recover losses that are incurred because of conversion of Government assets. However, because this section has remained unchanged from the original act 

that was drafted in 1863, the archaic language has made recoveries 

under a conversion theory contingent upon the individual receiving 

an actual receipt for the property. The new section, renumbered as 

section 3729(a)(1)(D) in the bill, updates this provision by retaining 

the core conversion principle while redrafting it in a more straightforward manner and removing the receipt requirement. Where 

knowing conversion of Government property occurs, it should make 

no difference whether the person receives a valid receipt from the 

Government. This amendment to 3729(a)(1)(4) was supported by 

the Department of Justice, as noted in its February 21, 2008 views 

letter. 

E. ‘‘Reverse’’ false claims 

Section 3729(a)(7) of the FCA currently imposes liability on any 

person who ‘‘knowingly makes, uses, or causes to be made or used, 

a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government.’’ 59

This provision is commonly referred to as creating ‘‘reverse’’ false 

claims liability because it is designed to cover Government money 

or property that is knowingly retained by a person even though 

they have no right to it. This provision is similar to the liability 

established under 3729(a)(2) for making ‘‘false records or statements to get false or fraudulent claims paid or approved.’’ 60 However, the provision does not capture conduct described in 

3729(a)(1), which imposes liability for actions to conceal, avoid, or 

decrease an obligation directly to the Government. This legislation 

closes this loophole and incorporates an analogous provision to 

3729(a)(1) for ‘‘reverse’’ false claims liability. 

Further, this legislation addresses current confusion among 

courts that have developed conflicting definitions of what the term 

‘‘obligation’’ in section 3729(a)(7) really means.61 The term ‘‘obligation’’ now contains an express definition under new section 

3729(b)(3) and includes both fixed and contingent duties owed to 

the Government—including fixed liquidated obligations such as 

judgments, and fixed, unliquidated obligations such as tariffs on 


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62 Brief for United States at 23, United States v. Bourseau No. 06–56741, 06–56743 (9th Cir. 

July 14, 2008). 63See S. Rep. No. 99–345 supra note 1, at 5283. 64See, e.g., Am. Textile Mfrs. Inst. v. The Limited, Inc., 190 F.3d 729 (6th Cir. 1999); United 

States v. Q Int’l Courier, Inc., 131 F.3d 770 (8th Cir. 1997). 65 Brief for United States at 24, United States v. Bourseau No. 06–56741, 06–56743 (9th Cir. 

July 14, 2008) (citing United States ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1201 (10th 

Cir. 2006), motn. for reh’g pending, (10th Cir. 2007)); United States v. Pemco Aeroplex, Inc., 195 

F.3d 1234, 1237–38 (11th Cir. 1999) (en banc). 66See Am. Textile Mfrs. Inst., 190 F.3d at 729. 67See, e.g., United States ex rel. Bahrani, 465 F.3d 1189, 1208 (10th Cir. 2006); United States 

ex rel. Koch v. Koch Indus., 57 F.Supp.2d 1122, 1144 (N.D. Okla. 1999). 68Letter from Brian Benczkowski, Principal Deputy Assistant Attorney General, United 

States Department of Justice, to Senator Patrick Leahy, Chairman, Senate Committee on the 

Judiciary Appendix 3 (Feb. 21, 2008) (hereinafter ‘‘DOJ Views Letter’’). 

imported goods. It is also noteworthy to restate that while the new 

definition of ‘‘obligation’’ expressly includes contingent, non-fixed 

obligations, the Committee supports the position of the Department 

of Justice that current section 3729(a)(7) ‘‘speaks of an ‘obligation,’ 

not a ‘fixed obligation.’ ’’ 62 By including contingent obligations such 

as ‘‘implied contractual, quasi-contractual, grantor-grantee, licensor-licensee, fee-based, or similar relationship,’’ this new section reflects the Committee’s view, held since the passage of the 1986 

Amendments,63 that an ‘‘obligation’’ arises across the spectrum of 

possibilities from the fixed amount debt obligation where all particulars are defined 64 to the instance where there is a relationship 

between the Government and a person that ‘‘results in a duty to 

pay the Government money, whether or not the amount owed is yet 

fixed.’’ 65

The new definition of the term ‘‘obligation’’ also includes ‘‘customs duties for mismarking country of origin,’’ a singular type of 

obligation that is specific and not a general class of obligations. The 

Committee included this provision in response to the decision in 

American Textile Manufacturers Institute, Inc. v. The Limited, Inc. 

where the Sixth Circuit Court of Appeals narrowly defined the 

term ‘‘obligation’’ to apply reverse false claims to only fixed obligations and dismissing a claim for false statements made by importers to avoid paying customs duties.66 The inclusion of this express 

reference to customs duties is not intended to exclude other types 

of contingent or fixed obligations that are similar in effect and purpose or that otherwise meet the definition set forth in the proposed 

amendments. 

The Committee also notes that the reverse false claims provision 

and amendments to that provision do not include any new language that would incorporate or should otherwise be construed to 

include a presentment requirement. This is consistent with various 

court decisions that have held that the current reverse false claims 

provision does not contain a presentment requirement.67

Finally, the new definition of ‘‘obligation’’ includes an express 

statement that an obligation under the FCA includes ‘‘the retention 

of an overpayment.’’ The Department of Justice supported the inclusion of this provision and provided technical advice that the 

proper place to include overpayments was in the definition of obligation.68 This new definition will be useful to prevent Government 

contractors and others who receive money from the Government incrementally based upon cost estimates from retaining any Government money that is overpaid during the estimate process. Thus, 

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69 31 U.S.C. § 3729(a)(2000). 70See United States ex rel. Pogue v. Am. Healthcorp, Inc., 914 F.Supp. 1507, 1513 (M.D. Tenn. 

1996) (hereinafter ‘‘Pogue I’’) (holding that the FCA was ‘‘intended to govern not only fraudulent 

acts that create a loss to the government but also those fraudulent acts that cause the government to pay out sums of money to claimants it did not intend to benefit); United States ex rel. 

Pogue v. Diabetes Treatment Ctrs. of Am. Inc., 238 F. Supp.2d 258, 264–66 (D.D.C. 2002) (discussing various courts that have upheld implied certification theory for violations of the AntiKickback and Stark laws as sufficient to state a claim under the FCA and reaffirming Pogue 

I). 71See, e.g. United States ex rel. Holmes v. Consumer Ins. Group, 318 F.3d 1199 (10th Cir. 

2003); United States ex rel. LeBlanc v. Raytheon Co., Inc., 913 F.2d 17 (1st Cir. 1990); United 

States ex rel. Maxwell v. Kerr-McGee Chemical Worldwide, LLC, 486 F.Supp.2d 1217 (D. Colo. 

2007). 

curs once a payment is retained following the final submission of 

payment as required by statute or regulation—including relevant 

statutory or regulatory periods designated to reconcile cost reports, 

but excluding administrative and judicial appeals. 

F. Damages 

The 1986 Amendments to the FCA created a system where damages are measured based on ‘‘the amount of damages which the 

Government sustains because of the act of that person.’’ 69 After determining that amount, the damages are trebled. This provision 

was designed to provide courts flexibility to measure damages on 

a case-by-case basis to ensure the broad remedial goal of the Act. 

Despite this legislative goal, some courts have read the damage 

provision narrowly and have made it difficult for the Government 

to recover the true losses sustained because of the fraud, let alone 

include penalties to provide a deterrent effect. 

For example, problems have occurred with certain medical providers who were sued for violating the FCA. These providers received payments from Medicare and Medicaid despite being disqualified from participating in the programs because they received 

kickbacks from referring physicians, but argued there were no 

damages when they provided services and sought reimbursement.70

While it may appear that there are no actual damages for simply 

seeking reimbursement when disqualified, the integrity of those 

Federal programs is seriously undermined by these practices which 

can cause overutilization of services, patient steering, and medical 

decisions made outside of the best interest of the patient. 

To address problems that have occurred, this bill amends the 

damages provision in Section 3729(a) to a more simplified approach 

that measures damages based on the amount of money or property 

‘‘paid or approved because of the act of the defendant.’’ 

Section 3. Government right to dismiss certain actions 

This section addresses the current split of authority between various courts regarding whether or not Government employees may 

act as qui tam relators under the FCA. The FCA was originally designed to be an avenue for any individual to bring a claim for recovery when the predicate elements for the offense were met. The 

FCA currently provides no specific guidance as to whether a Government employee may serve as a qui tam relator, and a number 

of courts have addressed this issue during the course of litigation.71

The crux of the debate surrounding the role Government employees 

may play in qui tam litigation involves ethics concerns about Government employees filing potentially parasitic qui tam actions 


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72False Claims Act Implementation, Hearing Before the House Subcomm. on Admin. and Governmental Relations, 101st Cong., 2d Sess. 1 (Apr. 4, 1990). 73 Id. at 7. 74 Id. 75False Claims Act Amendments Act of 1992, H.R. 4563, 102 Cong., 2d Sess. (1992); False 

Claims Act Amendments Act of 1993, S. 841, 103rd Cong., 1st Sess. (1993). 76See United States ex rel. Williams v. NEC Corp., 931 F.2d 1493, 1502 (11th Cir. 1991) (finding no general prohibition against government employees serving as qui tam relators); United 

States ex rel. Holmes v. Consumer Ins. Group, 318 F.3d 1199, 1214 (10th Cir. 2007) (en banc) 

(rejecting arguments seeking to preclude government employees per se from filing qui tam actions based upon information obtained during the course of their employment). 77See United States ex rel. LeBlanc v. Raytheon Co., Inc., 913 F.2d 17 (1st Cir. 1990) re’hrg 

denied, cert. denied, 499 U.S. 921 (1991); United States ex rel. Fine v. Chevron, U.S.A., Inc., 72 

F.3d 740 (9th Cir. 1995). 

based upon information learned in the course of fulfilling their job 

duties. 

This issue first arose following the passage of the 1986 Amendments, when the House Judiciary Committee, Subcommittee on Administrative and Government Relations held hearings to discuss 

the topic in 1990.72 At the hearing, Senator Grassley—the original 

Senate sponsor of the 1986 Amendments—testified that Government employees should be allowed to act as qui tam relators under 

the FCA provided, ‘‘he can show that he first made a good faith effort within the proper channels’’ to report the fraud.73 Further, 

Senator Grassley stated that Government employee relators are a 

key check on the Government bureaucracy and are a basic resource 

to fight fraud.74 Subsequent to the hearings, legislation was introduced in the next two sessions of Congress to remedy this open 

question.75

Over time, courts across the country began to take various approaches in addressing the question of whether a Government employee could serve as a qui tam relator. Currently, the prevailing 

case law in the Tenth and Eleventh Circuits supports the proposition that Government employees are not categorically barred 

from acting as relators in FCA cases regardless of whether reporting fraud was one of the employee’s main duties.76 However, the 

prevailing case law in the First Circuit and the Ninth Circuit does 

not allow Government employees to act as qui tam relators.77 Together these decisions create a patchwork of applications of the 

FCA to Government employee relators and the Committee believes 

providing clarity on the issue is consistent with the spirit and intent of the 1986 Amendments. 

To achieve this goal, the bill includes section 3, which clarifies 

when Government employees could serve as qui tam relators. The 

section resolves the circuit split by providing that Government employees can file qui tam suits in narrow circumstances and only 

after following a specific procedure. If the specific procedure is not 

followed, the Government has the right to dismiss the relator from 

the case. For example, if the person learned of the information that 

is the basis for their FCA claim in the course of their employment 

for the Government, the person must disclose such information to 

the agency’s designated Inspector General or to the Attorney General directly if there is not an Inspector General. Further, that individual must also notify their supervisor of the disclosures as well 

as to the Attorney General (if they had previously reported to the 

inspector general). Only if the Attorney General fails to bring a 

claim based on the disclosed information within 18 months, is the 

employee then free to bring the claim as a qui tam relator. 


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78See, e.g., United States ex rel. Green v. Northrop Corp., 59 F.3d 953 (9th Cir. 1995); United 

States. ex rel. Gebert v. Transport Admin. Servs., 260 F.3d 909 (8th Cir. 2001). 

This section also includes new language that bars any Government employee from being a qui tam relator if they derive information for their FCA claim from an indictment or information, or any 

ongoing active criminal, civil, or administrative investigation. Government employees are also barred if they work as investigators, 

auditors, or attorneys who have a duty to investigate fraud and 

they learn about the alleged fraud from an ongoing investigation 

or audit. These are restrictions that were discussed by the Tenth 

Circuit in then-Chief Judge Tacha’s dissenting opinion in United 

States ex rel. Holmes v. Consumer Ins. Group. The Committee believes these restrictions strike the proper balance between providing protections so that Government employees simply do not 

hide fraud in order to file a qui tam action, while ensuring that 

good faith claims brought by Government employees can remain a 

check on Government bureaucrats who may be disinterested in 

chasing allegations of fraud against taxpayer dollars. 

Section 4. Barred actions 

A. Waiver of claims 

Section 4(a) of the bill adds language to the FCA that is designed 

to protect individuals from unknowingly waiving their right to file 

qui tam actions on behalf of the Government. This provision was 

included because of the growing number of employees who unwittingly waive the right of either the United States, or that individual, to file FCA cases.78 These cases have created a situation 

where employers may use separation agreements as a method of 

preventing the Government’s right to recover monies lost to fraud, 

waste, or abuse. 

This section clarifies that no person who brings an action under 

the FCA may waive or release a claim unless it is part of a courtapproved settlement of a false claim civil action. However, because 

the Department of Justice was concerned that the original language could be construed to require court approval of a non-qui 

tam settlement negotiated by the Department, the Committee included the requested modifications the Department sought in the 

second substitute bill adopted during the mark-up. These changes 

added the following language: ‘‘Nothing in this paragraph shall be 

construed to limit the ability of the United States to decline to pursue any claim brought under this subsection, or to require court approval of a settlement by the Government with a defendant, unless 

the person bringing the act objects to the settlement.’’ This language is consistent with the intent of the sponsors not to restrict 

the Department of Justice in settling non-qui tam FCA cases, while 

protecting qui tam relators from accidently waiving valid claims for 

themselves, or the Government. 

B. Basis for government dismissal 

Section 4(b) of the bill amends the provisions that were commonly referred to as the ‘‘public disclosure bar’’ which is contained 

in section 3730(e)(4) of the FCA. These amendments were required 

because of excessive litigation over perceived ambiguities in the 

statute following the 1986 Amendments. As a result, many meriVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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79See S. Rep. No. 99–345 supra note 1, at 5275–5278. 80See Rockwell Int’l Corp. v. United States, supra note 4. 

torious cases brought by qui tam relators have been dismissed because of the misuse of the public disclosure bar and other related 

erroneous interpretations of the 1986 Amendments. The Committee 

believes that many of these court interpretations dismissing qui 

tam actions have created a situation where the prevailing case law 

in many jurisdictions is inconsistent with the original intent of the 

public disclosure bar. 

The 1986 Amendments added the public disclosure bar to ensure 

the dismissal of truly parasitic cases filed where a qui tam relator 

brought no new information to the Government. It also sought to 

dismiss parasitic claims based solely upon public information. The 

one statutory exception to this public disclosure bar was for qui 

tam relators that were an ‘‘original source’’ of the public information. An original source was statutorily defined as an individual 

with direct and independent knowledge of the information and 

brought the information to the Government before filing suit. In 

creating both the public disclosure bar and the original source exception, the Committee explained that this provision was intended 

to only bar truly ‘‘parasitic’’ lawsuits, such as those brought by individuals who did nothing more than copy a criminal indictment 

filed by the Government.79

Section 4(b) replaces the ‘‘public disclosure’’ jurisdictional bar 

with a new section that provides the Government with the sole authority to move to dismiss parasitic qui tam cases that are brought 

based upon information that is known to the Government and has 

led to or was based upon part of an ‘‘open and active criminal, civil, 

or administrative investigation or audit.’’ This new dismissal for 

barred actions will apply only when the Government has already 

initiated an investigation into the same matter based on information received from an independent source. The Committee does not 

intend to bar suits solely because the Government already knew of 

the fraud or could have learned of the fraud from information in 

the public domain. This balance was designed to bar parasitic cases 

while encouraging relators to come forward with information that 

would assist the Government in recovering money or property lost 

to fraud, waste, or abuse. 

Despite the Committee’s belief that the public disclosure bar and 

original source statutory provisions were clear when passed in 

1986, many courts have interpreted these provisions to create ambiguities and have issued opinions contrary to the intent outlined 

in the 1986 Committee report. The result of these interpretations 

has been significant litigation, delays in settling FCA cases with 

clear violations of law, and, regrettably, the dismissal and presumptive barring of meritorious claims brought by qui tam relators. These decisions have created a chilling effect on relators coming forward with claims because certain types of cases cannot survive dismissal. Some examples—but by no means an exclusive 

list—of these decisions that run contrary to the intent of the Committee are: 

• Using the public disclosure bar to deny an award to a qui tam 

relator despite the objections of the United States.80


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81See United States ex rel. Doe v. John Doe Corp, 960 F.2d 318 (2d Cir. 1992) (holding that 

investigators questioning employees during execution of a search warrant was sufficient to make 

information about the fraud ‘‘public’’ and barring the qui tam action); United States ex rel. 

Mistick PBT v. Housing Auth. of City of Pittsburgh, 186 F.3d 376 (3d Cir. 1999) (holding release 

of information under Freedom of Information Act (FOIA) by Government agency was a public 

disclosure in an administrative report triggering jurisdictional bar). 82See, e.g., United States ex rel. Paranich v. Sorngard, 396 F.3d 326 (3d Cir. 2005) (holding 

that disclosures made in an unrelated state lawsuit constitute public disclosures); United States 

ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1158 

(3d Cir. 1991) (determining that absent a protective order information disclosed in court ordered 

discovery is ‘‘potentially accessible’’ to the public and therefore qualifies as a public disclosure). 83See, e.g., United States ex rel. Grynberg v. Praxair, Inc., 389 F.3d 1038 (10th Cir. 2004), 

cert. denied, 545 U.S. 1129 (2005); United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg’l 

Healthcare Sys., 384 F.3d 168, 175–176 (5th Cir. 2004); United States ex rel. Mistick PBT v. Housing Auth. of City of Pittsburgh, 186 F.3d at 383, cert. denied, 529 U.S. 1018 (2000). 84See, e.g., United States ex rel. Maxwell v. Kerr McGee Oil & Gas Corp., 486 F.Supp.2d 1217 

(D. Colo. 2007); United States ex rel., Bly-Magee v. Premo, 470 F.3d 914 (9th Cir. 2006), cert. denied, 128 S.Ct.1119 (2008) (holding that an administrative report, audit or investigation prepared by a state entity qualifies as a ‘‘congressional, administrative, or Government Accounting 

Office report, hearing, audit, or investigation’’ for purposes of the public disclosure bar). 85See, e.g., United States ex rel. Fowler v. Caremark RX, LLC, 496 F.3d 730 (7th Cir. 2007) 

(holding that disclosure to U.S. Attorney was a public disclosure for purposes of Section 

3730(e)(4)(A)). 86 Id. See also United States ex rel. Montgomery v. St. Edwards Mercy Medical Center, et al., 

2007 U.S. Dist. LEXIS 73376 (E.D. Ark. 2007) (holding reviewed by relators along with Government agents and Attorney’s after the filing of the initial complaint, but prior to the filing of 

an amended complaint, constitute public disclosures barring the action). 87See United States ex rel. Gear v. Emergency Medical Assoc’s of Illinois, Inc., 436 F.3d 726 

(7th Cir. 2006); see also 145 Cong. Rec. E1546 (July 14, 1999) (remarks of Rep. Berman and 

letter to Attorney General Reno) (critiquing the notion that report of industry-wide practice sufficiently informs Government of fraud against a particular defendant). 

• Finding the public disclosure bar applies to bar cases that are 

‘‘similar to’’ rather than the statutorily required standard of ‘‘derived from’’ information in the public domain, unless the relator 

has firsthand knowledge of the fraud—thus finding that any information about the matter that was available in the public domain, 

even if it was not readily accessible, is sufficient to prompt a Government investigation and bar the qui tam action.81

• Finding production of documents or information during the discovery phase of trial is a ‘‘public disclosure’’ even if documents are 

not put into the public record of the judicial proceeding.82

• Four Courts of Appeals have ruled that responses to FOIA requests are public disclosures and deprives jurisdiction even if the 

relator relies exclusively on knowledge gained as an insider to establish the requisite elements of liability.83

• Interpreting the public disclosure bar to mean that disclosure 

in a Government report includes disclosures even in a State or 

local government report, which were not required to be given to the 

Federal Government and might never have come to the Government’s attention.84

• Courts have concluded that a public disclosure occurs even 

when the information is not disclosed to the public at large.85

• Courts have concluded that when the Government enlists the 

qui tam relators help reviewing documents obtained from the defendant; either the act of the defendant producing the documents 

or the act of the Government showing the documents to the relator 

constitutes a public disclosure.86

• Courts have held that the public disclosure of an industry-wide 

fraud constitutes a public disclosure with respect to a particular defendant even though that defendant had not been identified and 

the Government would not be aware of the particular fraud by that 

entity.87


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88See United States ex rel. Grynberg v. Praxair, Inc., 380 F.3d 1038 (10th Cir. 2004), cert. denied, 545 U.S. 1139 (2005). 89See United States ex rel. Stone v. Rockwell Int’l Corp., 127 S. Ct. 1397, 1411 (2007). 90See United States ex rel. Maxwell v. Kerr-McGee Oil & Gas Corp., 486 F.Supp.2d 1233 (D. 

Colo. 2007). 

While these are examples of the problem with the overuse and 

overexpansion of the public disclosure bar, it is by no means an exclusive list. The Committee believes providing examples of these 

cases is helpful in explaining the need for legislating, but the Committee also wants to make clear that courts should not use this as 

a exhaustive list of problematic cases. All cases that have expanded 

the public disclosure bar and narrowed the original source doctrine 

threaten to limit the FCA more than the Committee ever intended 

in passing the 1986 Amendments. 

The erroneous court interpretations of the public disclosure bar 

are particularly problematic for the FCA because once a court finds 

that a case is based upon a public disclosure, the qui tam relator 

then has an uphill battle to prove he/she was the original source 

of that information. Because courts have also narrowly construed 

the terms ‘‘direct’’ and ‘‘independent’’ under the original source exception to bar actions in which any aspect of the relator’s information was derivative or second-hand, real meritorious cases have 

been dismissed where the Government would have never been 

brought but for the qui tam action pointing the Government to the 

fraud. For instance, courts have dismissed cases where a relator 

has hired an investigator to corroborate information or has obtained Government documents to confirm that false claims were 

submitted.88

Many of these cases arose as a result of a motion by defendants 

because of the jurisdictional nature of public disclosure bar. However, the best source for determining whether a relator has provided meaningful, new information to the Government is the Government itself. Only the Government has an interest in ensuring 

that its resources are not squandered on litigation that does no 

more than duplicate a fraud matter already under investigation. In 

fact, the incentive is strongest with the Government to ensure that 

monies recovered based upon an internal Government investigation 

are not split or shared with qui tam relators who file truly parasitic suits. This is especially true when the law allows the Government to proceed against the defendant for the same damages even 

after a relator is dismissed.89 Despite this, defendants continue to 

raise this jurisdictional defense in virtually all FCA cases, while 

searching in court filings across the country hoping to find that one 

piece of information the Government would never have found that 

may deny the court jurisdiction. In fact, in one case a court declared the Government could not intervene to collect a judgment 

despite the fact that a jury had awarded the judgment, all because 

the defendant successfully argued that the relator should be dismissed on public disclosure grounds.90

The amendments in section 4(b) of the bill are designed to stop 

this abuse of the public disclosure bar from occurring. The provision converts the public disclosure bar from a jurisdictional bar 

that may be invoked by either the defendant or the Government, 

to a basis for a motion to dismiss that may only be filed by the 

Government. The provision also clarifies that a FCA action may be 


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dismissed only if the action is truly parasitic. Thus, the provision 

provides for a motion to dismiss only when the Government 

learned of the matter from another source prior to the qui tam filing, and then either filed a criminal indictment or information, or 

launched an active fraud investigation or audit either prior to the 

filing, or, if the source was a media or congressional publication, 

with 90 days of the publication. Importantly, the media report or 

congressional matter must be the reason the Government opened 

its investigation or audit. If the court’s examination of the relevant 

circumstances indicates that the Government actually opened its 

investigation or audit as a response to the qui tam filing, the qui 

tam case is not barred. 

This new provision is designed to balance and further two important public policies. First, it encourages relators to come forward 

with information that will contribute in a meaningful way to the 

United States ability to exercise its remedies under section 3729. 

Second, it prevents relators from pursuing cases that do no more 

than add to the administrative workload of law enforcement and 

the judiciary. Accordingly, while this provision should operate to 

bar cases that do no more than replicate information that the Government already obtained from independent sources in a still active 

investigation, it should not discourage or bar qui tam cases with 

important information that provides a new basis for recovery. 

To carry out these policies, amended section 3730(e)(4) applies 

when the prior Government criminal indictment or information, investigation, or audit, or the prior disclosure in the media or in a 

congressional publication, is focused on ‘‘the same wrongdoer’’ and 

‘‘substantially the same matters.’’ This means that the prior Government criminal indictment or information, investigation or audit, 

or the prior disclosure in the media or in a congressional publication, must concern the same transactions, claims or communications as those at issue in the qui tam complaint and must involve 

alleged violations of the FCA or other law imposing liability or penalties for knowing false claims or fraud. 

For example, under Section 3730(e)(4), an investigation or audit 

into specific information about misconduct leading to false claims 

in one time period or at one company location does not provide a 

basis to dismiss a qui tam with specific information about the same 

type of conduct leading to false claims in a different time period or 

a separate company location. Likewise, an investigation or audit 

into particular kickback transactions does not bar a qui tam alleging different kickback transactions. Further, an investigation or 

audit into alleged fraud in one contract does not bar a qui tam case 

alleging fraud in a separate contract. 

To help guard against the Government misusing the provision to 

dismiss cases for political or other inappropriate reasons, the 

amendment requires that the Government’s investigation or audit 

be open and active. The Committee anticipates that courts will 

question and look critically at the Government’s representations 

that it is conducting an ‘‘open’’ and ‘‘active’’ investigation and audit 

of the matter. Courts should ask for factual support for the Government’s representation. In some cases, courts may see merit in permitting such information to be submitted under seal or pursuant 

to a protective order to ensure that the Government investigation 

is not compromised. 


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91S. Rep. No. 99–345 supra note 1, at 5299. 92 Id. 93See United States ex rel. Watson v. Connecticut Gen. Life Ins., 2004 U.S. App. LEXIS 1736 

(3d Cir. 2004); Vessell v. DPS Assocs. of Charleston, Inc., 148 F.3d 407 (4th Cir. 1998). 

The new provision acknowledges that even when the Government 

is already looking into the same transactions, claims or communications as possible violations of the FCA or other false claims or 

fraud law, there will be instances in which a qui tam plaintiff’s information or evidence brings new additional value to the case and 

that they should not be barred because of the similar claims. The 

goal of this is to promote and expedite the recovery for fraud and 

relators that add value to any case are encouraged to come forward. Thus, the provision states that a qui tam case shall not be 

dismissed when ‘‘new information’’ provided by the person adds 

‘‘substantial grounds for additional recovery.’’ The application of 

this exception should be fact-specific. 

Finally, there is no basis for dismissal under new section 

3730(e)(4) when the person filing the qui tam action brought information to the Government prior to the Government initiating its 

investigation or audit, or, in the case of a Government investigation 

or audit prompted by a media or congressional publication, prior to 

the publication in question. This exception applies regardless of 

whether the person’s information prompted the Government’s investigation or audit. The qui tam relator has no control over the 

diligence or competency of the particular Government official to 

whom they disclose information and should not be penalized if that 

official fails to follow up on the matter as required by their job duties. On the other hand, the clause ‘‘brought by the person to the 

Government’’ assumes that the person properly brought the information to the Government by making a full and comprehensible 

disclosure of the material facts to an office within the Government 

charged with responsibility for investigating fraud or false claims. 

This provision is designed to ensure that qui tam relators are not 

mere opportunists who file incomprehensible documents with the 

Government in the hopes of evading the disclosure responsibility 

and trying to obtain a windfall profit. The courts should view such 

actions as parasitic and take all appropriate steps to prevent this 

from occurring. 

Section 5. Relief from retaliatory actions 

The 1986 Amendments included Section 3730(h) which provides 

a cause of action for individuals who faced retaliation in response 

to bringing forth FCA claims of fraud against the Government.91

Congress included this provision in the 1986 Amendments because, 

as the Committee noted, it recognized ‘‘that few individuals will expose fraud if they fear their disclosures will lead to harassment, demotion, loss of employment, or any other form of retaliation.’’ 92

While this provision was designed to protect employees from employer retaliation, over the past 20 years courts have limited this 

protection through various decisions narrowly interpreting the definition of ‘‘employee’’ and thus leaving contractors and subcontractors open to retaliation. 

For example, the Third and Fourth Circuits have held that an 

independent contractor is not protected under section 3730(h).93 To 

correct this loophole, section 5 clarifies section 3730(h) by simply 


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94 31 U.S.C. § 3731(b)(1)(2000). 95 31 U.S.C. § 3731(b)(2)(2000). 96 Id. 97See U.S. ex rel. El Amin v. George Washington Univ., 26 F.Supp.2d 162, 171 (D.D.C. 1998). 98See, e.g., Id.; United States ex rel. Thistlewaite v. Dowty Woodville Polymer, Ltd, 6 

F.Supp.2d 263 (S.D.N.Y 1998) (holding three year tolling provision only applies to the government); United States ex rel. Sikkenga v. Regence BlueCross BlueShield of Utah, 2006 WL 

3491784 (10th Cir. 2006) (holding 3731(b)(2) inapplicable to private qui tam relators). 99See United States ex rel. Hyatt v. Northrop, 91 F.3d 1211 (9th Cir. 1996); cf. United States 

ex rel. Pogue, 474 F.Supp.2d 75 (D.D.C. 2007) (holding that in a qui tam case where the Government declined to intervene, the three year tolling provision runs from the date the Government 

official learned of the alleged violation, not the qui tam relator). 100 31 U.S.C. § 3731(b)(2000). 

including the terms ‘‘government contractor, or agent’’ in addition 

to the term ‘‘employee.’’ The Committee believes that it is necessary to include these additional terms to assist individuals who 

are not technically employees within the typical employer-employee 

relationship, but nonetheless have a contractual or agent relationship with an employer. The Committee believes this is a vitally important clarification that respects the spirit and intent of the 1986 

Amendments while offering whistleblower protections to contractors and agents who may come across fraud against the Government and report it under the FCA. 

Section 6. Statute of limitations 

A. Statute of limitations period 

The FCA currently contains a statute of limitation provision in 

section 3731(b)(1) and 3731(b)(2). These provisions provide that a 

FCA action may not be brought more than six years after the date 

on which the violation is committed,94 or not more than three years 

after the date when facts material to the right of action are known 

or reasonably should have been known by the official of the United 

States charged with responsibility to act in the circumstances.95

That current statute of limitations also includes a 10-year statute 

of repose that prohibits the filing of a FCA action, ‘‘more than 10 

years after the date on which the violation was committed.’’ 96 This 

provision has been the subject of significant litigation over the 

years and varying interpretations of the statute of limitations have 

created significant questions as to the true applicability of the statute of limitations to certain provisions of the FCA. 

Federal courts have taken two different approaches to determining the application of the statute of limitations.97 One line of 

cases has taken the position that section 3731(b)(2), which contains 

the tolling provision, only applies to cases the Government initiates, imposing a shorter statute of limitations on cases that originate as qui tam actions.98 Other cases have stated that the section 

3731(b)(2) applies to suits brought solely by a qui tam relator, but 

that a relator is also subject to the tolling provision same as the 

Government and must file within three years of when they learn 

of the fraud.99 The Supreme Court has also interpreted the statute 

of limitations provisions contrary to the spirit and intent of the 

1986 Amendments. 

In 2005, the Supreme Court held that the FCA statute of limitations which applies to ‘‘a civil action under section 3730’’ 100 is not 

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101See Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 

U.S. 409 (2005). 102See Graham County, 545 U.S. at 419, n3, citing Conn. Gen. Stat 31–51m (2005) (90 days); 

Fla. Stat.112.3187(8)(a), 448.103 (2003) (180 days); Mich. Comp. Laws Ann. 15.363(1) (West 

2004) (90 days); N.Y.C.P.L.R. 215(4) (West 2003) (one year); Ohio Rev. Code Ann. 4113.52(D) 

(Lexis 2001) (six months); and Tex. Gov’t. Code Ann. 554.005 (West 2004) (90 days). 103S. Rep. No. 99–345, supra note 1, at 5299. 104See Graham County, 545 U.S. at 409. 105Fed. R. Civ. Pro. 15(c)(2). 106 United States v. Baylor Univ. Med. Ctr., 469 F.3d 263 (2d Cir. 2006). 

lation of section 3730(h).101 The Supreme Court held that instead 

of utilizing the six year statute of limitations proscribed in section 

3731(b)(1) or even the three-year tolling provision in 3730(b)(2), the 

plaintiff must follow the most applicable State law statute of limitations of a similar anti-retaliation statute. These similar State law 

statutes for unlawful termination or retaliation are usually shorter 

than the FCA statute of limitations and vary from 90 days, to six 

months, or up to one year after the alleged retaliation occurs.102

This decision effectively renders the statute of limitations provision 

in section 3731 inapplicable to claims filed under 3730(h) and potentially incorporates 50 different State statute of limitations provisions for Federal courts to consider. Further, without clear guidance, Federal courts could mix and match different statutes of limitations from different analogous State law statutes on a case-bycase basis lending confusion to individuals seeking relief from retaliatory actions. The Committee believes that Congress did not intend to create such uncertainty when it included this provision in 

1986, and that such uncertainty also frustrates the goal the Committee had in seeking to protect individuals from ‘‘harassment, demotion, loss of employment or any other retaliation’’ 103 for coming 

forward with claims of fraud and abuse of Government programs. 

In seeking to correct these interpretations that are inconsistent 

with the intent of the 1986 Amendments, the bill clarifies the statute of limitations in section 3731(b). Section 6 of the bill addresses 

all of the aforementioned problems by adopting a simple and 

straightforward 10-year statute of limitations that begins when the 

violation occurs for claims brought under section 3729 or 3730, 

brought by either the United States or a qui tam relator on behalf 

of the United States, and it exclusively applies the provision to retaliation claims filed under section 3730(h), rejecting the State law 

application favored by the Supreme Court in Graham County.104

B. Relation back doctrine 

The FCA is silent on the question of whether the United States 

may amend a qui tam plaintiff’s complaint or file its own complaint 

upon intervention in a qui tam case subject to the same rules that 

allow ‘‘relation back’’ of amended complaints as if it were the Government’s own complaint. Federal Rule of Civil Procedure 15(c)(2) 

provides that a party’s amendment of a pleading will relate back 

to the date of its original pleading when the claim, ‘‘asserted in the 

amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading.’’ 105 The Second Circuit recently ruled that the United States 

cannot use Rule 15(c)(2) when amending a qui tam plaintiff’s complaint.106 The implication of this decision is that the United States 

will be forced to forego a complete and thorough investigation of 

the merits of a qui tam relators’ allegations in order to expedite a 


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filing so as not to have an action foreclosed upon due to the statute 

of limitations. 

Section 6 of the bill clarifies that the Government’s complaint in 

intervention or amended complaint will relate back to the date of 

the original qui tam complaint so long as the conditions of Federal 

Rule of Civil Procedure 15(c)(2) are met. 

Section 7. Civil investigative demands 

Currently, the FCA allows the Attorney General to issue CIDs 

for ‘‘any documentary material or information relevant to a false 

claims law investigation.’’ The CID is authorized when the Attorney General ‘‘has reason to believe that any person may be in possession, custody or control’’ of the documents in question. The Attorney General may issue a CID before commencing a civil proceeding under the FCA. There are problems with the CID provision 

as written that prohibit its effective use by the Department of Justice in prosecuting FCA cases. 

The CID is seldom-used because of two strict interpretations by 

the Department of Justice of the CID statute. First, the statute 

currently reads that only the Attorney General may issue a CID, 

which has been interpreted to mean that the Attorney General, 

Deputy Attorney General, or Assistant Attorney General must personally sign off on the CID order and that they cannot delegate 

that authority. This procedure is cumbersome and limiting for Government attorneys and as a result, CIDs are infrequently used. 

Second, the Department of Justice has interpreted the CID statute 

to prohibit discussions of information obtained from CIDs with qui 

tam relators. This lack of ability to share information makes FCA 

investigations more difficult and requires the utilization of court orders. 

This section of the bill resolves both issues, first by inserting the 

phrase ‘‘or designee’’ after Attorney General to clarify that the Attorney General may delegate his or her authority to issue a CID. 

Second, this section states explicitly that any information obtained 

by the Attorney General under a CID may be shared with qui tam 

relators if the Attorney General determines that doing so is a necessary part of the investigation. Further, this section incorporates 

a new definition of ‘‘official use’’ to allow the Department to share 

information with Federal, State, and local government agencies in 

furtherance of a Department of Justice investigation or prosecution. This will allow the Department to properly investigate FCA 

cases by coordinating with relators and investigative entities. 

Section 8. Severability 

At the request of the Department of Justice, and out of an abundance of caution, the Committee included a severability clause that 

would ensure the integrity of the bill in the event any provision is 

found to invalid by severing any invalid piece from the rest of the 

Act. This amendment is consistent with the intent of the Committee to provide narrowly tailored clarifications to the FCA and 

ensures the integrity of the FCA will remain even in the event of 

one section being held invalid. 


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107DOJ Views Letter I supra note 96, at 16. See also Hughes Aircraft Co. v. United States 

ex rel. Schumer, 520 U.S. 939 (1997). 108See DOJ Views Letter supra note 96, at 16. 109 United States Dept. of Justice, Comments on Manager’s Substitute Amendment to S. 2041 

at 8 (April 2, 2008). 

Section 9. Effective date and application 

The original draft of S. 2041 was silent on the question of what 

the effective date and application of the amendments would be. 

However, the Department of Justice views letter pointed out that 

after the 1986 Amendments, the Department spent ‘‘substantial 

time and resources litigating the effective date’’ of the amendments.107 The Committee recognized the concerns and incorporated 

a provision applying the amendments contained in S. 2041 to ‘‘all 

cases pending on the date of enactment, and to all cases filed thereafter.’’ 108

The Department of Justice filed a second views letter April 2, 

2008, discussing additional views on the proposed substitute 

amendment circulated prior to mark-up. In the second views letter, 

the Department stated that it ‘‘was not clear whether the effective 

date should apply to all parts of the bill or only to its procedural 

provisions.’’ 109 As such, the Department revised its position on the 

effective date and application and supported a tiered system for application of the amendments. 

The sponsors of the legislation agreed with the recommendation 

from the Department of Justice and incorporated a three-tiered effective date and application in the substitute amendment adopted 

by the Committee. First, section 9 of the bill provides that the substantive liability provisions amended in section 3729 take effect 

upon the date of enactment and ‘‘shall apply to conduct occurring 

after that date of enactment.’’ Second, the bill states that amendments to section 3731(b)(1)—the statute of limitations provisions— 

apply upon date of enactment and shall apply to civil actions filed 

after the date of enactment and not revive claims that are timebarred as of the date of enactment. Finally, section 9 of the bill 

states that all remaining provisions take effect on the date of enactment and apply to all civil actions before, on, or after that date. 

IV. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The Committee sets forth, with respect to the bill, S. 2041, the 

following estimate and comparison prepared by the Director of the 

Congressional Budget Office under section 402 of the Congressional 

Budget Act of 1974: 

APRIL 21, 2008. 

Hon. PATRICK J. LEAHY, 

Chairman, Committee on the Judiciary, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2041, the False Claims Act 

Correction Act of 2008. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Leigh Angres. 

Sincerely, 

PETER R. ORSZAG. 


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Enclosure. 

S. 2041—False Claims Act Correction Act of 2008 

S. 2041 would amend certain provisions of the False Claims Act 

(FCA), which allows a private individual with knowledge of past or 

present fraud committed against the government to file qui tam 

claims against federal contractors. In qui tam claims, such individuals (known as relators or whistleblowers) receive a share of any 

recovered claims against the government. CBO estimates that S. 

2041 would have no significant effect on the federal budget. S. 2041 

contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect 

the budgets of state, local, or tribal governments. 

In most cases, the amendments that would be made by the bill 

would take effect on the date of enactment and apply to all civil 

actions filed before, on, or after such date. Specifically, the legislation would: 

• Stipulate that individuals who present false claims to contractors, grantees, and others can be held liable under the FCA 

(under current law, that liability exists only for false claims 

presented to government employees); 

• Permit qui tam suits by government employees, while allowing the government, under certain circumstances, to dismiss actions brought by a qui tam relator who is, or is related 

to, a federal employee; 

• Bar waivers or releases of claims except as part of a courtapproved settlement; 

• Authorize a court, upon a motion by the Attorney General, 

to dismiss an action if, when it was filed, the same matters 

were disclosed in federal hearings or reports from the news 

media; 

• Expand the court’s authority to reduce the relator’s share 

of proceeds under certain circumstances; 

• Place a 10-year statute of limitations on the filing of civil 

actions against individuals who submit a false or fraudulent 

claim for payment; and 

• Permit the Attorney General to delegate authority to other 

officials of the Department of Justice (DOJ) to issue a civil investigative demand against an individual possessing information relevant to a false claims investigation. 

According to information from DOJ, each year its attorneys handle several hundred qui tam cases under the False Claims Act. In 

the past two years, the government has recovered more than $5 billion from settlements and judgements in such cases. Because the 

proposed amendments would not appreciably change the workload 

of DOJ attorneys nor the monetary recoveries in such cases, CBO 

estimates that S. 2041 would have no significant impact on the federal budget. 

The CBO staff contact for this estimate is Leigh Angres. This estimate was approved by Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 


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V. REGULATORY IMPACT EVALUATION

In compliance with rule XXVI of the Standing Rules of the Senate, the Committee finds that no significant regulatory impact will 

result from the enactment of S. 2041. 

VI. CONCLUSION

The False Claims Act Correction Act of 2008, S. 2041, will bring 

much needed clarity to the FCA and will enhance the efforts of the 

Federal Government in recovering monies lost to fraud, waste, and 

abuse of Government programs. It will streamline FCA litigation 

by clarifying the law and will reduce unnecessary and costly litigation. It will expedite settlements and will reward and protect qui 

tam relators for coming forward to alert the Government to fraud. 

Finally, the legislation will bring the FCA back into alignment with 

the 1986 Amendments and the expressed intent of Congress that 

has been overlooked and misinterpreted by some Federal courts. 

VII. CHANGES TO EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 2041, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new matter is printed in italic, and 

existing law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

TITLE 31—MONEY AND FINANCE 

* * * * * * * 

Subtitle III—Financial Management 

* * * * * * * 

CHAPTER 37—CLAIMS 

* * * * * * * 

Subchapter III—Claims Against the United States 

Government 

* * * * * * * 

§ 3729. False claims 

(a) LIABILITY FOR CERTAIN ACTS.—øAny person who—¿ 

(1) IN GENERAL.—Subject to paragraph (2), any person who— 

ø(1)¿(A) knowingly presents, or causes to be presented, 

øto an officer or employee of the United States Government or member of the Armed Forces of the United 

States¿ a false or fraudulent claim for payment or approval; 


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ø(2)¿(B) knowingly makes, uses, or causes to be made or 

used, a false record or statement to get a false or fraudulent claim paid or approved øby the Government¿; 

ø(3)¿(C) conspires to commit a violation of subparagraph 

(A), (B), (D), (E), (F), or (G) or otherwise to defraud the 

Government by getting a false or fraudulent claim paid or 

approvedøallowed or paid¿; 

ø(4)¿(D) has possession, custody, or control of property 

or money used, or to be used, by the Government and 

knowingly delivers, or causes to be delivered, less than all 

of that money or property;ø, intending to defraud the Government or willfully to conceal the property, delivers, or 

cause to be delivered, less property than the amount for 

which the person receives a certificate or receipt;¿ 

ø(5)¿(E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes 

or delivers the receipt without completely knowing that 

the information on the receipt is true; 

ø(6)¿(F) knowingly buys, or receives as a pledge of an 

obligation or debt, public property from an officer or employee of the Government, or a member of the Armed 

Forces, who lawfully may not sell or pledge øthe¿ property; 

or 

ø(7)¿(G) knowingly makes, uses, or causes to be made or 

used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property 

to the Government, or knowingly conceals, avoids, or decreases an obligation to pay or transmit money or property 

to the Government, 

is liable to the United States Government for a civil penalty of 

not less than $5,000 and not more than $10,000, as adjusted 

by the Federal Civil Penalties Inflation Adjustment Act of 1990 

(28 U.S.C. 2461 note; Public Law 104–410), plus 3 times the 

amount of ødamages which the Government sustains¿ money 

or property paid or approved because of the act of that person 

ø, except that if the court finds that—¿. 

(2) REDUCED DAMAGES.—If the court finds that— 

(A) the person committing the violation of this subsection furnished officials of the United States responsible 

for investigating false claims violations with all information known to such person about the violation within 30 

days after the date on which the defendant first obtained 

the information; 

(B) such person fully cooperated with any Government 

investigation of such violation; and 

(C) at the time such person furnished the United States 

with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and 

the person did not have actual knowledge of the existence 

of an investigation into such violationø,¿; 

The court may assess not less than 2 times the amount of 

ødamages which the Government sustains¿ money or property 

paid or approved because of the act of that person. øA person 


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violating this subsection shall also be liable to the United 

States Government for the costs of a civil action brought to recover any such penalty or damages.¿ 

(b) øKNOWING AND KNOWINGLY DEFINED.—¿ DEFINITIONS.—For 

the purposes of this section— 

(1) the terms ‘‘knowing’’ and ‘‘knowingly’’ mean that a person, with respect to information— 

(A) has actual knowledge of the information; 

(B) acts in deliberate ignorance of the truth or falsity of 

the information; or 

(C) acts in reckless disregard of the truth or falsity of 

the information, 

and no proof of specific intent to defraud is requiredø.¿; 

ø(c) CLAIM DEFINED.—For purposes of this section, ‘‘claim’’ 

includes¿ (2) the term ‘‘claim’’— 

(A) means any request or demand, whether under a contract or otherwise, for money or property, øwhich¿ that— (i) is presented to an officer, employee, or agent of the 

United States; or 

(ii) is made to a contractor, grantee, or other recipient if the United States Government— 

(I) provides or has provided any portion of the 

money or property øwhich is¿ requested or 

demandedø,¿; or 

(II) øif the Government¿ will reimburse such 

contractor, grantee, or 

other recipient for any portion of the money or property which is requested or demandedø.¿; and 

(B) does not include requests or demands for money or 

property that the Government has paid to an individual as 

compensation for Federal employment or as an income subsidy with no restrictions on that individual’s use of the 

money or property; and 

(3) the term ‘‘obligation’’ means a fixed duty, or a contingent 

duty arising from an express or implied contractual, quasi-contractual, grantor-grantee, licensor-licensee, fee-based, or similar 

relationship, including customs duties for mismarking country 

of origin, and the retention of any overpayment; 

ø(d)¿(c) EXEMPTION FROM DISCLOSURE.—Any information furnished pursuant to øsubparagraphs (A) through (C) of subsection 

(a)¿ subsection (a)(2) shall be exempt from disclosure under section 

552 of title 5. 

ø(e)¿(d) EXCLUSION.—This section does not apply to claims, 

records, or statements made under the Internal Revenue Code of 

1986. 

§ 3730. Civil actions for false claims 

(a) RESPONSIBILITIES OF THE ATTORNEY GENERAL.—The Attorney 

General diligently shall investigate a violation under section 3729. 

If the Attorney General finds that a person has violated or is violating section 3729, the Attorney General may bring a civil action 

under this section against the person. 

(b) ACTIONS BY PRIVATE PERSONS.— 

(1) A person may bring a civil action for a violation of section 

3729 for the person and for the United States Government. 


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The action shall be brought in the name of the Government. 

The action may be dismissed only if the court and the Attorney 

General give written consent to the dismissal and their reasons 

for consenting. No claim for a violation of section 3729 may be 

waived or released by any action of any person who brings an 

action under this subsection, except insofar as such action is 

part of a court approved settlement of a false claim civil action 

brought under this section. Nothing in this paragraph shall be 

construed to limit the ability of the United States to decline to 

pursue any claim brought under this subsection, or to require 

court approval of a settlement by the Government with a defendant of an action brought under subsection (a), or under this 

subsection, unless the person bringing the action objects to the 

settlement under subsection (c)(2)(B). 

(2) A copy of the complaint and written disclosure of substantially all material evidence and information the person 

possesses shall be served on the Government pursuant to 

øRule 4(d)(4)¿ rule 4 of the Federal Rules of Civil Procedure. 

The complaint shall be filed in camera, shall remain under seal 

for at least 60 days, and shall not be served on the defendant 

until the court so orders. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information. 

(3) The Government may, for good cause shown, move the 

court for extensions of the time during which the complaint remains under seal under paragraph (2). Any such motions may 

be supported by affidavits or other submissions in camera. The 

defendant shall not be required to respond to any complaint 

filed under this section until 20 days after the complaint is unsealed and served upon the defendant pursuant to Rule 4 of 

the Federal Rules of Civil Procedure. 

(4) Before the expiration of the 60-day period or any extensions obtained under paragraph (3), the Government shall— 

(A) proceed with the action, in which case the action 

shall be conducted by the Government; or 

(B) notify the court that it declines to take over the action, in which case the person bringing the action shall 

have the right to conduct the action. 

(5) When a person brings an action under this subsection, no 

person other than the Government may intervene or bring a 

related action based on the facts underlying the pending action. 

(6)(A) Not later than 120 days after the date of service under 

paragraph (2), the Government may move to dismiss from the 

action a qui tam relator that is an employee of the Federal Government, or that is a family member of an employee of the Federal Government, if— 

(i) the necessary and specific material allegations contained in such action were derived from a filed criminal indictment or information or an open and active criminal, 

civil, or administrative investigation or audit by the Government into substantially the same fraud alleged in the 

action; 


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(ii) the duties of the employee’s position specifically include uncovering and reporting the particular type of fraud 

that is alleged in the action, and the employee, as part of 

the duties of that employee’s position, is participating in or 

has knowledge of an open and active criminal, civil, or administrative investigation or audit by the Government of 

the alleged fraud; 

(iii) the person bringing the action learned of the information that underlies the alleged violation of section 3729 

that is the basis of the action in the course of the person’s 

employment by the United States, and either— 

(I) in a case in which the employing agency has an 

inspector general, such person, before bringing the action has not— 

(aa) disclosed in writing substantially all material evidence and information that relates to the 

alleged violation that the person possessed to such 

inspector general; and 

(bb) notified in writing the person’s supervisor 

and the Attorney General of the disclosure under 

division (aa); or 

(II) in a case in which the employing agency does not 

have an inspector general, such person, before bringing 

the action has not— 

(aa) disclosed in writing substantially all material evidence and information that relates to the 

alleged violation that the person possessed, to the 

Attorney General; and 

(bb) notified in writing the person’s supervisor of 

the disclosure under division (aa); or 

(iv) the person bringing the action learned of the information that underlies the alleged violation of section 3729 

that is the basis of the action in the course of the person’s 

employment by the United States, made the required disclosures and notifications under clause (iii), and— 

(I) less than 18 months (and any period of extension 

as provided for under subparagraph (B)) have elapsed 

since the disclosures of information and notification 

under clause (iii) were made; or 

(II) within 18 months (and any period of extension as 

provided for under subparagraph (B)) after the disclosures of information and notification under clause (iii) 

were made, the Attorney General has filed an action 

based on such information. 

(B) Prior to the expiration of the 18-month period described 

under subparagraph (A)(iv)(II) and upon notice to the person 

who has disclosed information and provided notice under subparagraph (A)(iii), the Attorney General may extend such 18- 

month period by 1 additional 12-month period. 

(C) For purposes of subparagraph (A), a person’s supervisor 

is the officer or employee who— 

(i) is in a position of the next highest classification to the 

position of such person; 

(ii) has supervisory authority over such person, and 


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(iii) such person believes is not culpable of the violation 

upon which the action under this subsection is brought by 

such person. 

(D) A motion to dismiss under this paragraph shall set forth 

documentation of the allegations, evidence, and information in 

support of the motion. 

(E) Any person against who the Government has filed a motion to dismiss under subparagraph (A) shall be provided an 

opportunity to contest a motion to dismiss under this paragraph. The court may restrict access to the evidentiary materials filed in support of the motion to dismiss, as the interests 

of justice require. A motion to dismiss and evidentiary material 

filed in support or opposition of such motion shall not be— 

(i) made public without the prior written consent of the 

person bringing the civil action; and 

(ii) subject to discovery by the defendant. 

(F) Upon granting a motion filed under subparagraph (A), 

the court shall dismiss the qui tam relator from the action. 

(G) If the motion to dismiss under this paragraph is granted, 

the matter shall remain under seal. 

(H) Not later than 12 months after the date of the enactment 

of this paragraph, and every 12 months thereafter, the Department of Justice shall submit a report to the Committee on the 

Judiciary of the Senate and the Committee on the Judiciary of 

the House of Representatives relating to— 

(i) the cases in which the Department of Justice has filed 

a motion to dismiss under this paragraph; 

(ii) the outcome of such motions; and 

(iii) the status of false claims civil actions in which such 

motions are filed. 

(I) Nothing in this paragraph shall be construed to limit the 

authority of the Government to dismiss an action or claim, or 

a person who brings an action or claim, under this subsection 

for any reason other than the grant of a motion filed under subparagraph (A). 

(c) RIGHTS OF THE PARTIES TO QUI TAM ACTIONS.—(1) If the Government proceeds with the action, it shall have the primary responsibility for prosecuting the action, and shall not be bound by an act 

of the person bringing the action. Such person shall have the right 

to continue as a party to the action, subject to the limitations set 

forth in paragraph (2). 

(2)(A) The Government may dismiss the action notwithstanding 

the objections of the person initiating the action if the person has 

been notified by the Government of the filing of the motion and the 

court has provided the person with an opportunity for a hearing on 

the motion. 

(B) The Government may settle the action with the defendant 

notwithstanding the objections of the person initiating the action if 

the court determines, after a hearing, that the proposed settlement 

is fair, adequate, and reasonable under all the circumstances. Upon 

a showing of good cause, such hearing may be held in camera. 

(C) Upon a showing by the Government that unrestricted participation during the course of the litigation by the person initiating 

the action would interfere with or unduly delay the Government’s 

prosecution of the case, or would be repetitious, irrelevant, or for 


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purposes of harassment, the court may, in its discretion, impose 

limitations on the person’s participation, such as— 

(i) limiting the number of witnesses the person may call; 

(ii) limiting the length of the testimony of such witnesses; 

(iii) limiting the person’s cross-examination of witnesses; or 

(iv) otherwise limiting the participation by the person in the 

litigation. 

(D) Upon a showing by the defendant that unrestricted participation during the course of the litigation by the person initiating the 

action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit 

the participation by the person in the litigation. 

(3) If the Government elects not to proceed with the action, the 

person who initiated the action shall have the right to conduct the 

action. If the Government so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with 

copies of all deposition transcripts (at the Government’s expense). 

When a person proceeds with the action, the court, without limiting 

the status and rights of the person initiating the action, may nevertheless permit the Government to intervene at a later date upon 

a showing of good cause. 

(4) Whether or not the Government proceeds with the action, 

upon a showing by the Government that certain actions of discovery by the person initiating the action would interfere with the 

Government’s investigation or prosecution of a criminal or civil 

matter arising out of the same facts, the court may stay such discovery for a period of not more than 60 days. Such a showing shall 

be conducted in camera. The court may extend the 60-day period 

upon a further showing in camera that the Government has pursued the criminal or civil investigation or proceeding with reasonable diligence and any proposed discovery in the civil action will 

interfere with the ongoing criminal or civil investigation or proceedings. 

(5) Notwithstanding subsection (b), the Government may elect to 

pursue its claim through any alternate remedy available to the 

Government, including any administrative proceeding to determine 

a civil money penalty. If any such alternate remedy is pursued in 

another proceeding, the person initiating the action shall have the 

same rights in such proceeding as such person would have had if 

the action had continued under this section. Any finding of fact or 

conclusion of law made in such other proceeding that has become 

final shall be conclusive on all parties to an action under this section. For purposes of the preceding sentence, a finding or conclusion is final if it has been finally determined on appeal to the appropriate court of the United States, if all time for filing such an 

appeal with respect to the finding or conclusion has expired, or if 

the finding or conclusion is not subject to judicial review. 

(d) AWARD TO QUI TAM PLAINTIFF.—(1) If the Government proceeds with an action brought by a person under subsection (b), such 

person shall, subject to the second sentence of this paragraph, receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the 

extent to which the person substantially contributed to the prosecution of the action. If the person bringing the action is not dismissed 

under subsection (e)(4) because the person provided new information 


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that adds substantial grounds for additional recovery beyond those 

encompassed within the Government’s existing indictment, information, investigation, or audit, then such person shall be entitled to receive a share only of proceeds of the action or settlement that are 

attributable to the new basis for recovery that is stated in the action 

brought by that person. øWhere the action is one which the court 

finds to be based primarily on disclosures of specific information 

(other than information provided by the person bringing the action) 

relating to allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or 

from the news media, the court may award such sums as it considers appropriate, but in no case more than 10 percent of the proceeds, taking into account the significance of the information and 

the role of the person bringing the action in advancing the case to 

litigation.¿ Any payment to a person under the first or second sentence of this paragraph shall be made from the proceeds. Any such 

person shall also receive an amount for reasonable expenses which 

the court finds to have been necessarily incurred, plus reasonable 

attorneys’ fees and costs. All such expenses, fees, and costs shall 

be awarded against the defendant. 

(2) If the Government does not proceed with an action under this 

section, the person bringing the action or settling the claim shall 

receive an amount which the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less 

than 25 percent and not more than 30 percent of the proceeds of 

the action or settlement and shall be paid out of such proceeds. 

Such person shall also receive an amount for reasonable expenses 

which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs. All such expenses, fees, and costs 

shall be awarded against the defendant. 

(3)(A) Whether or not the Government proceeds with the action, 

the court may, to the extent the court considers appropriate, reduce 

the share of the proceeds of the action which a person would otherwise receive under paragraph (1) or (2) of this subsection (taking 

into account the role of that person in advancing the case to litigation and any relevant circumstances pertaining to the violation), if 

the court finds that person—øWhether or not the Government proceeds with the action, if the court finds that the action was brought 

by a person who planned and initiated the violation of section 3729 

upon which the action was brought, then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action which the person would otherwise receive under 

paragraph (1) or (2) of this subsection, taking into account the role 

of that person in advancing the case to litigation and any relevant 

circumstances pertaining to the violation. If the person bringing 

the action is convicted of criminal conduct arising from his or her 

role in the violation of section 3729, that person shall be dismissed 

from the civil action and shall not receive any share of the proceeds 

of the action. Such dismissal shall not prejudice the right of the 

United States to continue the action, represented by the Department of Justice.¿ 

(i) planned and initiated the violation of section 3729 upon 

which the action was brought; or 


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(ii) derived the knowledge of the claims in the action primarily from specific information relating to allegations or 

transactions (other than information provided by the person 

bringing the action) that the Government publicly disclosed, as 

that term is defined in subsection (e)(4)(A), or that the Government disclosed privately to the person bringing the action in the 

course of its investigation into potential violations of this subchapter. 

(B) If the person bringing the action is convicted of criminal conduct arising from the role of that person in the violation of section 

3729, that person shall be dismissed from the civil action and shall 

not receive any share of the proceeds of the action. Such dismissal 

shall not prejudice the right of the United States to continue the action, represented by the Department of Justice. 

(4) If the Government does not proceed with the action and the 

person bringing the action conducts the action, the court may 

award to the defendant its reasonable attorneys’ fees and expense 

if the defendant prevails in the action and the court finds that the 

claim of the person bringing the action was clearly frivolous, clearly 

vexatious, or brought primarily for purposes of harassment. 

(e) CERTAIN ACTIONS BARRED.—(1) No court shall have jurisdiction over an action brought by a former or present member of the 

armed forces under subsection (b) of this section against a member 

of the armed forces arising out of such person’s service in the 

armed forces. 

(2)(A) No court shall have jurisdiction over an action brought 

under subsection (b) against a Member of Congress, a member of 

the judiciary, or a senior executive branch official if the action is 

based on evidence or information known to the Government when 

the action was brought. 

(B) For purposes of this paragraph, ‘‘senior executive branch official’’ means any officer of employee listed in paragraphs (1) through 

(8) of section 101(f) of the Ethics in Government Act of 1978 (5 

U.S.C. App.). 

(3) In no event may a person bring an action under subsection 

(b) which is based upon allegations or transactions which are the 

subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party. 

(4) A court shall dismiss an action or claim or the person bringing the action or claim under subsection (b), upon a motion by the 

Government filed on or before service of a complaint on the defendant under subsection (b), or thereafter for good cause shown if— 

(A) on the date of the action or claim was filed, substantially 

the same matters, involving the same wrongdoer, as alleged in 

the action or claim were contained in, or the subject of—øNo 

court shall have jurisdiction over an action under this section 

based upon the public disclosure of allegations or transactions 

in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, 

unless the action is brought by the Attorney General or the 

person bringing the action is an original source of the information.¿ 


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(i) filed criminal indictment or information, or an open 

and active criminal, civil, or administrative investigation 

or audit; or 

(ii) a news media report, or public congressional hearing, 

report, or investigation, if within 90 days after the issuance 

or completion of such news media report or congressional 

hearing, report, or investigation, the Department of Justice 

or an Office of Inspector General opened a fraud investigation or audit of the facts contained in such news media report or congressional hearing, report, or investigation as a 

result of learning about the public report, hearing, or investigation; 

(B) any new information provided by the person does not add 

substantial grounds for additional recovery beyond those encompassed within the Government’s existing criminal indictment or information, or an open and active criminal, civil, or 

administrative investigation or audit; and øFor purposes of this 

paragraph, ‘‘original source’’ means an individual who has direct and independent knowledge of the information on which 

the allegations are based and has voluntarily provided the information to the Government before filing an action under this 

section which is based on the information.¿ 

(C) the Government’s existing criminal indictment or information, or an open and active criminal, civil, or administrative investigation or audit, or the news media report, or congressional 

hearing, report, or investigation was not initiated or published 

after the Government’s receipt of information about substantially the same matters voluntarily brought by the person to the 

Government. 

(f) GOVERNMENT NOT LIABLE FOR CERTAIN EXPENSES.—The Government is not liable for expenses which a person incurs in bringing an action under this section. 

(g) FEES AND EXPENSES TO PREVAILING DEFENDANT.—In civil actions brought under this section by the United States, the provisions of section 2412(D) of title 28 shall apply. 

(h) RELIEF FROM RETALIATORY ACTIONS.— (1) IN GENERAL.—Any employee, government contractor, or 

agent shall be entitled to all relief necessary to make that employee, government contractor, or agent whole, if that employee, 

government contractor, or agent øwho¿ is discharged, demoted, 

suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment 

øby his or her employer¿ because of lawful acts done by the 

employee, government contractor, or agent on behalf of the employee, government contractor, or agent or associated others in 

furtherance of efforts to stop 1 or more violations of this subchapter. øan action under this section, including investigation 

for, initiation of, testimony for, or assistance in an action filed 

or to be filed under this section, shall be entitled to all relief 

necessary to make the employee whole. Such relief¿ 

(2) RELIEF.—Relief under paragraph (1) shall include reinstatement with the same seniority status that øsuch¿ employee, government contractor, or agent would have had but for 

the discrimination, 2 times the amount of back pay, interest on 

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tained as a result of the discrimination, including litigation 

costs and reasonable attorneys’ fees. An action under this subsection may be brought øemployee may bring an action¿ in the 

appropriate district court of the United States for the relief 

provided in this subsection. 

§ 3731. False claims procedure 

(a) A subpoena requiring the attendance of a witness at a trial 

or hearing conducted under section 3730 of this title may be served 

at any place in the United States. 

(b)ø A civil action under section 3730 may not be brought—¿(1) 

A civil action under 3730 may not be brought more than ø6¿ 10 

years after the date on which the violation of section 3729 or 3730 

is committed.ø, or¿ 

(2) Upon intervention, the Government may file its own complaint 

in intervention or amend the complaint of a person who has brought 

an action under section 3730(b) to clarify or add detail to the claims 

in which the Government is intervening and to add any additional 

claims with respect to which the Government contends it is entitled 

to relief. For statute of limitations purpose any such Government 

pleading shall relate back to the filing date of the complaint of the 

person who originally brought the action, to the extent that the 

claim of the Government arises out of the conduct, transactions, or 

occurrences set forth, or attempted to be set forth, in the prior complaint of that person. ømore than 3 years after the date when facts 

material to the right of action are known or reasonably should have 

been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 

10 years after the date on which the violation is committed, whichever occurs last.¿ 

(c) In any action brought under section 3730, the United States 

shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence. 

(d) Notwithstanding any other provision of law, the Federal 

Rules of Criminal Procedure, or the Federal Rules of Evidence, a 

final judgment rendered in favor of the United States in any criminal proceeding charging fraud or false statements, whether upon a 

verdict after trial or upon a plea of guilty or nolo contendere, shall 

estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the 

criminal proceeding and which is brought under subsection (a) or 

(b) of section 3730. 

§ 3733. Civil investigative demands 

(a) IN GENERAL.— 

(1) ISSUANCE AND SERVICE.—Whenever the Attorney General, 

or a designee (for purposes of this section) has reason to believe 

that any person may be in possession, custody, or control of 

any documentary material or information relevant to a false 

claims law investigation, the Attorney General, or a designee, 

may, before commencing a civil proceeding under section 

3730(a) or other false claims law, or electing under section 

3730(b), issue in writing an cause to be served upon such person, a civil investigative demand requiring such person— 


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(A) to produce such documentary material for inspection 

and copying, 

(B) to answer in writing written interrogatories with respect to such documentary material or information, 

(C) to give oral testimony concerning such documentary 

material or information, or 

(D) to furnish any combination of such material, answers, or testimony. 

The Attorney General may ønot¿ delegate the authority to 

issue civil investigative demands under this subsection. Whenever a civil investigative demand is an express demand for any 

product of discovery, the Attorney General, the Deputy Attorney General, or an Assistant Attorney General shall cause to 

be served, in any manner authorized by this section, a copy of 

such demand upon the person from who the discovery was obtained and shall notify the person to whom the discovery was 

obtained and shall notify the person to whom such demand is 

issued of the date on which such copy was served. Any information obtained by the Attorney General or a designee of the 

Attorney General under this section may be shared with any qui 

tam relator if the Attorney General or designee determine it is 

necessary as part of any false claims act investigation. 

(2) CONTENTS AND DEADLINES.— 

(A) Each civil investigative demand issued under paragraph (1) shall state the nature of the conduct constituting 

the alleged violation of a false claims law which is under 

investigation, and the applicable provision of law alleged 

to be violated. 

(B) If such demand is for the production of documentary 

material, the demand shall— 

(i) describe each class of documentary material to be 

produced with such definiteness and certainty as to 

permit such material to be fairly identified; 

(ii) prescribe a return date for each such class which 

will provide a reasonable period of time within which 

the material so demanded may be assembled and 

made available for inspection and copying; and 

(iii) identify the false claims law investigator to 

whom such material shall be made available. 

(C) If such demand is for answers to written interrogatories, the demand shall— 

(i) set forth with specificity the written interrogatories to be answered; 

(ii) prescribe dates at which time answers to written 

interrogatories shall be submitted; and 

(iii) identify the false claims law investigator to 

whom such answers shall be submitted. 

(D) If such demand is for the giving of oral testimony, 

the demand shall— 

(i) prescribe a date, time, and place at which oral 

testimony shall be commenced; 

(ii) identify a false claims law investigator who shall 

conduct the examination and the custodian to whom 

the transcript of such examination shall be submitted; 


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(iii) specify that such attendance and testimony are 

necessary to the conduct of the investigation; 

(iv) notify the person receiving the demand of the 

right to be accompanied by an attorney and any other 

representative; and 

(v) describe the general purpose for which the demand is being issued and the general nature of the 

testimony, including the primary areas of inquiry, 

which will be taken pursuant to the demand. 

(E) Any civil investigative demand issued under this section which is an express demand for any product of discovery shall not be returned or returnable until 20 days 

after a copy of such demand has been served upon the person from whom the discovery was obtained. 

(F) The date prescribed for the commencement of oral 

testimony pursuant to a civil investigative demand issued 

under this section shall be a date which is not less than 

seven days after the date on which demand is received, unless the Attorney General or an Assistant Attorney General designated by the Attorney General determines that 

exceptional circumstances are present which warrant the 

commencement of such testimony within a lesser period of 

time. 

(G) The Attorney General shall not authorize the 

issuance under this section of more than one civil investigative demand for oral testimony by the same person unless the person requests otherwise or unless the Attorney 

General, after investigation, notifies that person in writing 

that an additional demand for oral testimony is necessary. 

øThe Attorney General may not, notwithstanding section 

510 of title 28, authorize the performance, by any other officer, employee, or agency, of any function vested in the Attorney General under this subparagraph.¿ 

(b) PROTECTED MATERIAL OR INFORMATION.— 

(1) IN GENERAL.—A civil investigative demand issued under 

subsection (a) may not require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony if such material, 

answers, or testimony would be protected from disclosure 

under— 

(A) the standards applicable to subpoenas or subpoenas 

duces tecum issued by a court of the United States to aid 

in a grand jury investigation; or 

(B) the standards applicable to discovery requests under 

the Federal Rules of Civil Procedure, to the extent that the 

application of such standards to any such demand is appropriate and consistent with the provisions and purposes 

of this section. 

(2) EFFECT ON OTHER ORDERS, RULES, AND LAWS.—Any such 

demand which is an express demand for any product of discovery supersedes any inconsistent order, rule, or provision of 

law (other than this section) preventing or restraining disclosure of such product of discovery to any person. Disclosure of 

any product of discovery pursuant to any such express demand 

does not constitute a waiver of any right or privilege which the 


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person making such disclosure may be entitled to invoke to resist discovery of trial preparation materials. 

(c) SERVICE; JURISDICTION.— (1) BY WHOM SERVED.—Any such demand which is an express demand for any product of discovery supersedes any inconsistent order, rule, or provision of law (other than this section) preventing or restraining disclosure of such product of 

discovery to any person. Disclosure of any product of discovery 

pursuant to any such express demand does not constitute a 

waiver of any right or privilege which the person making such 

disclosure may be entitled to invoke to resist discovery of trial 

preparation materials. 

(2) SERVICE IN FOREIGN COUNTRIES.—Any such demand or 

any petition filed under subsection (j) may be served upon any 

person who is not found within the territorial jurisdiction of 

any court of the United States in such manner as the Federal 

Rules of Civil Procedure prescribe for service in a foreign country. To the extent that the courts of the United States can assert jurisdiction over any such person consistent with due process, the United States District Court for the District of Columbia shall have the same jurisdiction to take any action respecting compliance with this section by any such person that such 

court would have if such person were personally within the jurisdiction of such court. 

(d) SERVICE UPON LEGAL ENTITIES AND NATURAL PERSONS.— (1) LEGAL ENTITIES.—Service of any civil investigative demand issued under subsection (a) or of any petition filed under 

subsection (j) may be made upon a partnership, corporation, 

association, or other legal entity by— 

(A) delivering an executed copy of such demand or petition to any partner, executive officer, managing agent, or 

general agent of the partnership, corporation, association, 

or entity, or to any agent authorized by appointment or by 

law to receive service of process on behalf of such partnership, corporation, association, or entity; 

(B) delivering an executed copy of such demand or petition to the principal office or place of business of the partnership, corporation, association, or entity; or 

(C) depositing an executed copy of such demand or petition in the United States mails by registered or certified 

mail, with a return receipt requested, addressed to such 

partnership, corporation, association, or entity at its principal office or place of business. 

(2) NATURAL PERSONS.—Service of any such demand or petition may be made upon any natural person by— 

(A) delivering an executed copy of such demand or petition to the person; or 

(B) depositing an executed copy of such demand or petition in the United States mails by registered or certified 

mail, with a return receipt requested, addressed to the 

person at the person’s residence or principal office or place 

of business. 

(e) PROOF OF SERVICE.— A verified return by the individual serving any civil investigative demand issued under subsection (a) or 

any petition filed under subsection (j) setting forth the manner of 


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such service shall be proof of such service. In the case of service 

by registered or certified mail, such return shall be accompanied by 

the return post office receipt of delivery of such demand. 

(f) DOCUMENTARY MATERIAL.— (1) SWORN CERTIFICATES.—The production of documentary 

material in response to a civil investigative demand served 

under this section shall be made under a sworn certificate, in 

such form as the demand designates, by— 

(A) in the case of a natural person, the person to whom 

the demand is directed, or 

(B) in the case of a person other than a natural person, 

a person having knowledge of the facts and circumstances 

relating to such production and authorized to act on behalf 

of such person. 

The certificate shall state that all of the documentary material 

required by the demand and in the possession, custody, or control of the person to whom the demand is directed has been 

produced and made available to the false claims law investigator identified in the demand. 

(2) PRODUCTION OF MATERIALS.—Any person upon whom any 

civil investigative demand for the production of documentary 

material has been served under this section shall make such 

material available for inspection and copying to the false 

claims law investigator identified in such demand at the principal place of business of such person, or at such other place 

as the false claims law investigator and the person thereafter 

may agree and prescribe in writing, or as the court may direct 

under subsection (j)(1). Such material shall be made so available on the return date specified in such demand, or on such 

later date as the false claims law investigator may prescribe in 

writing. Such person may, upon written agreement between 

the person and the false claims law investigator, substitute 

copies for originals of all or any part of such material. 

(g) INTERROGATORIES.— Each interrogatory in a civil investigative demand served under this section shall be answered separately 

and fully in writing under oath and shall be submitted under a 

sworn certificate, in such form as the demand designates, by— 

(1) in the case of a natural person, the person to whom the 

demand is directed, or 

(2) in the case of a person other than a natural person, the 

person or persons responsible for answering each interrogatory. 

If any interrogatory is objected to, the reasons for the objection 

shall be stated in the certificate instead of an answer. The certificate shall state that all information required by the demand and 

in the possession, custody, control, or knowledge of the person to 

whom the demand is directed has been submitted. To the extent 

that any information is not furnished, the information shall be 

identified and reasons set forth with particularity regarding the 

reasons why the information was not furnished. 

(h) ORAL EXAMINATIONS.— (1) PROCEDURES.—The examination of any person pursuant 

to a civil investigative demand for oral testimony served under 

this section shall be taken before an officer authorized to administer oaths and affirmations by the laws of the United 

States or of the place where the examination is held. The offiVerDate Aug 31 2005 07:04 Oct 01, 2008 Jkt 069010 PO 00000 Frm 00046 Fmt 6659 Sfmt 6602 E:\HR\OC\SR507.XXX SR507

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cer before whom the testimony is to be taken shall put the witness on oath or affirmation and shall, personally or by someone 

acting under the direction of the officer and in the officer’s 

presence, record the testimony of the witness. The testimony 

shall be taken stenographically and shall be transcribed. When 

the testimony is fully transcribed, the officer before whom the 

testimony is taken shall promptly transmit a copy of the transcript of the testimony to the custodian. This subsection shall 

not preclude the taking of testimony by any means authorized 

by, and in a manner consistent with, the Federal Rules of Civil 

Procedure. 

(2) PERSONS PRESENT.—The false claims law investigator 

conducting the examination shall exclude from the place where 

the examination is held all persons except the person giving 

the testimony, the attorney for and any other representative of 

the person giving the testimony, the attorney for the Government, any person who may be agreed upon by the attorney for 

the Government and the person giving the testimony, the officer before whom the testimony is to be taken, and any stenographer taking such testimony. 

(3) WHERE TESTIMONY TAKEN.—The oral testimony of any 

person taken pursuant to a civil investigative demand served 

under this section shall be taken in the judicial district of the 

United States within which such person resides, is found, or 

transacts business, or in such other place as may be agreed 

upon by the false claims law investigator conducting the examination and such person. 

(4) TRANSCRIPT OF TESTIMONY.—When the testimony is fully 

transcribed, the false claims law investigator or the officer before whom the testimony is taken shall afford the witness, who 

may be accompanied by counsel, a reasonable opportunity to 

examine and read the transcript, unless such examination and 

reading are waived by the witness. Any changes in form or 

substance which the witness desires to make shall be entered 

and identified upon the transcript by the officer or the false 

claims law investigator, with a statement of the reasons given 

by the witness for making such changes. The transcript shall 

then be signed by the witness, unless the witness in writing 

waives the signing, is ill, cannot be found, or refuses to sign. 

If the transcript is not signed by the witness within 30 days 

after being afforded a reasonable opportunity to examine it, 

the officer or the false claims law investigator shall sign it and 

state on the record the fact of the waiver, illness, absence of 

the witness, or the refusal to sign, together with the reasons, 

if any, given therefor. 

(5) CERTIFICATION AND DELIVERY TO CUSTODIAN.—The officer 

before whom the testimony is taken shall certify on the transcript that the witness was sworn by the officer and that the 

transcript is a true record of the testimony given by the witness, and the officer or false claims law investigator shall 

promptly deliver the transcript, or send the transcript by registered or certified mail, to the custodian. 

(6) FURNISHING OR INSPECTION OF TRANSCRIPT BY WITNESS.— 

Upon payment of reasonable charges therefor, the false claims 

law investigator shall furnish a copy of the transcript to the 


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witness only, except that the Attorney General, the Deputy Attorney General, or an Assistant Attorney General may, for 

good cause, limit such witness to inspection of the official transcript of the witness’s testimony. 

(7) CONDUCT OF ORAL TESTIMONY.—(A) Any person compelled 

to appear for oral testimony under a civil investigative demand 

issued under subsection (a) may be accompanied, represented, 

and advised by counsel. Counsel may advise such person, in 

confidence, with respect to any question asked of such person. 

Such person or counsel may object on the record to any question, in whole or in part, and shall briefly state for the record 

the reason for the objection. An objection may be made, received, and entered upon the record when it is claimed that 

such person is entitled to refuse to answer the question on the 

grounds of any constitutional or other legal right or privilege, 

including the privilege against self-incrimination. Such person 

may not otherwise object to or refuse to answer any question, 

and may not directly or through counsel otherwise interrupt 

the oral examination. If such person refuses to answer any 

question, a petition may be filed in the district court of the 

United States under subsection (j)(1) for an order compelling 

such person to answer such question. 

(B) If such person refuses to answer any question on the 

grounds of the privilege against self-incrimination, the testimony of such person may be compelled in accordance with the 

provisions of part V of title 18. 

(8) WITNESS FEES AND ALLOWANCES.—Any person appearing 

for oral testimony under a civil investigative demand issued 

under subsection (a) shall be entitled to the same fees and allowances which are paid to witnesses in the district courts of 

the United States. 

(i) CUSTODIANS OF DOCUMENTS, ANSWERS, AND TRANSCRIPTS.— 

(1) DESIGNATION.—The Attorney General shall designate a 

false claims law investigator to serve as custodian of documentary material, answers to interrogatories, and transcripts of 

oral testimony received under this section, and shall designate 

such additional false claims law investigators as the Attorney 

General determines from time to time to be necessary to serve 

as deputies to the custodian. 

(2) RESPONSIBILITY FOR MATERIALS; DISCLOSURE.—(A) A false 

claims law investigator who receives any documentary material, answers to interrogatories, or transcripts of oral testimony 

under this section shall transmit them to the custodian. The 

custodian shall take physical possession of such material, answers, or transcripts and shall be responsible for the use made 

of them and for the return of documentary material under 

paragraph (4). 

(B) The custodian may cause the preparation of such copies 

of such documentary material, answers to interrogatories, or 

transcripts of oral testimony as may be required for official use 

by any false claims law investigator, or other officer or employee of the Department of Justiceø, who is authorized for 

such use under regulations which the Attorney General shall 

issue¿. Such material, answers, and transcripts may be used 

by any such authorized false claims law investigator or other 


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officer or employee in connection with the taking of oral testimony under this section. 

(C) Except as otherwise provided in this subsection, no documentary material, answers to interrogatories, or transcripts of 

oral testimony, or copies thereof, while in the possession of the 

custodian, shall be available for examination by any individual 

other than a false claims law investigator or other officer or 

employee of the Department of Justice authorized under subparagraph (B). The prohibition in the preceding sentence on 

the availability of material, answers, or transcripts shall not 

apply if consent is given by the person who produced such material, answers, or transcripts, or, in the case of any product 

of discovery produced pursuant to an express demand for such 

material, consent is given by the person from whom the discovery was obtained. Nothing in this subparagraph is intended 

to prevent disclosure to the Congress, including any committee 

or subcommittee of the Congress, or to any other agency of the 

United States for use by such agency in furtherance of its statutory responsibilities. øDisclosure of information to any such 

other agency shall be allowed only upon application, made by 

the Attorney General to a United States district court, showing 

substantial need for the use of the information by such agency 

in furtherance of its statutory responsibilities.¿ 

(D) While in the possession of the custodian and under such 

reasonable terms and conditions as the Attorney General shall 

prescribe— 

(i) documentary material and answers to interrogatories 

shall be available for examination by the person who produced such material or answers, or by a representative of 

that person authorized by that person to examine such 

material and answers; and 

(ii) transcripts of oral testimony shall be available for examination by the person who produced such testimony, or 

by a representative of that person authorized by that person to examine such transcripts. 

(3) USE OF MATERIAL, ANSWERS, OR TRANSCRIPTS IN OTHER

PROCEEDINGS.—Whenever any attorney of the Department of 

Justice has been designated to appear before any court, grand 

jury, or Federal agency in any case or proceeding, the custodian of any documentary material, answers to interrogatories, 

or transcripts of oral testimony received under this section may 

deliver to such attorney such material, answers, or transcripts 

for official use in connection with any such case or proceeding 

as such attorney determines to be required. Upon the completion of any such case or proceeding, such attorney shall return 

to the custodian any such material, answers, or transcripts so 

delivered which have not passed into the control of such court, 

grand jury, or agency through introduction into the record of 

such case or proceeding. 

(4) CONDITIONS FOR RETURN OF MATERIAL.—If any documentary material has been produced by any person in the course 

of any false claims law investigation pursuant to a civil investigative demand under this section, and— 

(A) any case or proceeding before the court or grand jury 

arising out of such investigation, or any proceeding before 


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any Federal agency involving such material, has been completed, or 

(B) no case or proceeding in which such material may be 

used has been commenced within a reasonable time after 

completion of the examination and analysis of all documentary material and other information assembled in the 

course of such investigation, 

the custodian shall, upon written request of the person who 

produced such material, return to such person any such material (other than copies furnished to the false claims law investigator under subsection (f)(2) or made for the Department of 

Justice under paragraph (2)(B)) which has not passed into the 

control of any court, grand jury, or agency through introduction 

into the record of such case or proceeding. 

(5) APPOINTMENT OF SUCCESSOR CUSTODIANS.—In the event 

of the death, disability, or separation from service in the Department of Justice of the custodian of any documentary material, answers to interrogatories, or transcripts of oral testimony 

produced pursuant to a civil investigative demand under this 

section, or in the event of the official relief of such custodian 

from responsibility for the custody and control of such material, answers, or transcripts, the Attorney General shall 

promptly— 

(A) designate another false claims law investigator to 

serve as custodian of such material, answers, or transcripts, and 

(B) transmit in writing to the person who produced such 

material, answers, or testimony notice of the identity and 

address of the successor so designated. 

Any person who is designated to be a successor under this 

paragraph shall have, with regard to such material, answers, 

or transcripts, the same duties and responsibilities as were imposed by this section upon that person’s predecessor in office, 

except that the successor shall not be held responsible for any 

default or dereliction which occurred before that designation. 

(j) JUDICIAL PROCEEDINGS.— (1) PETITION FOR ENFORCEMENT.—Whenever any person fails 

to comply with any civil investigative demand issued under 

subsection (a), or whenever satisfactory copying or reproduction of any material requested in such demand cannot be done 

and such person refuses to surrender such material, the Attorney General may file, in the district court of the United States 

for any judicial district in which such person resides, is found, 

or transacts business, and serve upon such person a petition 

for an order of such court for the enforcement of the civil investigative demand. 

(2) PETITION TO MODIFY OR SET ASIDE DEMAND.—(A) Any person who has received a civil Investigative demand issued under 

subsection (a) may file, in the district court of the United 

States for the judicial district within which such person resides, is found, or transacts business, and serve upon the false 

claims law investigator identified in such demand a petition for 

an order of the court to modify or set aside such demand. In 

the case of a petition addressed to an express demand for any 

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mand may be brought only in the district court of the United 

States for the judicial district in which the proceeding in which 

such discovery was obtained is or was last pending. Any petition under this subparagraph must be filed— 

(i) within 20 days after the date of service of the civil investigative demand, or at any time before the return date 

specified in the demand, whichever date is earlier, or 

(ii) within such longer period as may be prescribed in 

writing by any false claims law investigator identified in 

the demand. 

(B) The petition shall specify each ground upon which the 

petitioner relies in seeking relief under subparagraph (A), and 

may be based upon any failure of the demand to comply with 

the provisions of this section or upon any constitutional or 

other legal right or privilege of such person. During the pendency of the petition in the court, the court may stay, as it 

deems proper, the running of the time allowed for compliance 

with the demand, in whole or in part, except that the person 

filing the petition shall comply with any portions of the demand not sought to be modified or set aside. 

(3) PETITION TO MODIFY OR SET ASIDE DEMAND FOR PRODUCT

OF DISCOVERY.—(A) In the case of any civil investigative demand issued under subsection (a) which is an express demand 

for any product of discovery, the person from whom such discovery was obtained may file, in the district court of the United 

States for the judicial district in which the proceeding in which 

such discovery was obtained is or was last pending, and serve 

upon any false claims law investigator identified in the demand and upon the recipient of the demand, a petition for an 

order of such court to modify or set aside those portions of the 

demand requiring production of any such product of discovery. 

Any petition under this subparagraph must be filed— 

(i) within 20 days after the date of service of the civil investigative demand, or at any time before the return date 

specified in the demand, whichever date is earlier, or 

(ii) within such longer period as may be prescribed in 

writing by any false claims law investigator identified in 

the demand. 

(B) The petition shall specify each ground upon which the 

petitioner relies in seeking relief under subparagraph (A), and 

may be based upon any failure of the portions of the demand 

from which relief is sought to comply with the provisions of 

this section, or upon any constitutional or other legal right or 

privilege of the petitioner. During the pendency of the petition, 

the court may stay, as it deems proper, compliance with the 

demand and the running of the time allowed for compliance 

with the demand. 

(4) PETITION TO REQUIRE PERFORMANCE BY CUSTODIAN OF DUTIES.—At any time during which any custodian is in custody 

or control of any documentary material or answers to interrogatories produced, or transcripts of oral testimony given, by any 

person in compliance with any civil investigative demand 

issued under subsection (a), such person, and in the case of an 

express demand for any product of discovery, the person from 

whom such discovery was obtained, may file, in the district 


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court of the United States for the judicial district within which 

the office of such custodian is situated, and serve upon such 

custodian, a petition for an order of such court to require the 

performance by the custodian of any duty imposed upon the 

custodian by this section. 

(5) JURISDICTION.—Whenever any petition is filed in any district court of the United States under this subsection, such 

court shall have jurisdiction to hear and determine the matter 

so presented, and to enter such order or orders as may be required to carry out the provisions of this section. Any final 

order so entered shall be subject to appeal under section 1291 

of title 28. Any disobedience of any final order entered under 

this section by any court shall be punished as a contempt of 

the court. 

(6) APPLICABILITY OF FEDERAL RULES OF CIVIL PROCEDURE.— The Federal Rules of Civil Procedure shall apply to any petition under this subsection, to the extent that such rules are 

not inconsistent with the provisions of this section. 

(k) DISCLOSURE EXEMPTION.—Any documentary material, answers to written interrogatories, or oral testimony provided under 

any civil investigative demand issued under subsection (a) shall be 

exempt from disclosure under section 552 of title 5. 

(l) DEFINITIONS.—For purposes of this section— 

(1) the term ‘‘false claims law’’ means— 

(A) this section and sections 3729 through 3732; and 

(B) any Act of Congress enacted after the date of the enactment of this section which prohibits, or makes available 

to the United States in any court of the United States any 

civil remedy with respect to, any false claim against, bribery of, or corruption of any officer or employee of the 

United States; 

(2) the term ‘‘false claims law investigation’’ means any inquiry conducted by any false claims law investigator for the 

purpose of ascertaining whether any person is or has been engaged in any violation of a false claims law; 

(3) the term ‘‘false claims law investigator’’ means any attorney or investigator employed by the Department of Justice who 

is charged with the duty of enforcing or carrying into effect any 

false claims law, or any officer or employee of the United 

States acting under the direction and supervision of such attorney or investigator in connection with a false claims law investigation; 

(4) the term ‘‘person’’ means any natural person, partnership, corporation, association, or other legal entity, including 

any State or political subdivision of a State; 

(5) the term ‘‘documentary material’’ includes the original or 

any copy of any book, record, report, memorandum, paper, 

communication, tabulation, chart, or other document, or data 

compilations stored in or accessible through computer or other 

information retrieval systems, together with instructions and 

all other materials necessary to use or interpret such data 

compilations, and any product of discovery; 

(6) the term ‘‘custodian’’ means the custodian, or any deputy 

custodian, designated by the Attorney General under subsection (i)(1); øand¿ 


rfrederick on PROD1PC67 with HEARING
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(7) the term ‘‘product of discovery’’ includes— 

(A) the original or duplicate of any deposition, interrogatory, document, thing, result of the inspection of land or 

other property, examination, or admission, which is obtained by any method of discovery in any judicial or administrative proceeding of an adversarial nature; 

(B) any digest, analysis, selection, compilation, or derivation of any item listed in subparagraph (A); and 

(C) any index or other manner of access to any item listed in subparagraph (A)bø.¿; and 

(8) the term ‘‘official use’’ means any use that is consistent 

with the law, and the regulations and policies of the Department of Justice, including use in connection with internal Department of Justice memoranda and reports; communications 

between the Department of Justice and a Federal, State, or 

local government agency, or a contractor of a Federal, State, or 

local government agency, undertaken in furtherance of a Department of Justice investigation or prosecution of a case; interviews of any qui tam relator or other witness; oral examinations; depositions; preparation for and response to civil discovery requests; introduction into the record of a case or proceeding; applications, motions, memoranda and briefs submitted to a court or other tribunal; and communications with 

Government investigators, auditors, consultants and experts, 

the counsel of other parties, arbitrators and mediators, concerning an investigation, case or proceeding. 

Æ 


rfrederick on PROD1PC67 with HEARING