79–006 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 111–97 

FALSE CLAIMS ACT CORRECTION ACT OF 2009 

MAY 5, 2009.—Committed to the Committee of the Whole House on the State of the 

Union and ordered to be printed 

Mr. CONYERS, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 1788] 

[Including cost estimate of the Congressional Budget Office] 

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

(H.R. 1788) to amend the provisions of title 31, United States Code, 

relating to false claims to clarify and make technical amendments 

to those provisions, and for other purposes, having considered the 

same, reports favorably thereon without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 2 

Background and Need for the Legislation ............................................................. 2 

Hearings ................................................................................................................... 8 

Committee Consideration ........................................................................................ 8 

Committee Votes ...................................................................................................... 8 

Committee Oversight Findings ............................................................................... 11 

New Budget Authority and Tax Expenditures ...................................................... 11 

Congressional Budget Office Cost Estimate .......................................................... 11 

Performance Goals and Objectives ......................................................................... 13 

Constitutional Authority Statement ...................................................................... 13 

Advisory on Earmarks ............................................................................................. 13 

Section-by-Section Analysis .................................................................................... 13 

Changes in Existing Law Made by the Bill, as Reported ..................................... 15 

Dissenting Views ..................................................................................................... 27 


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1See Department of Justice Fraud Statistics 1986–2008, available at http://www.usdoj.gov/ 

opa/pr/2008/November/fraud-statistics1986-2008.htm. 2 Id. 

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

(E.D. Ark. Jan. 8, 2008). 4 Cong. Globe, 37th Cong., 3d Sess. 952 (1863). 

5See T.J. Halstead, Constitutional Aspects of Qui Tam Actions: Background and Analysis of 

Issues in Vermont Agency of Natural Resources v. United States ex rel. Stevens, CRS Report 

for Congress RL30463 (Mar. 8, 2000). 

PURPOSE AND SUMMARY

H.R. 1788 amends title 31, United States Code, to remove judicially-created limitations and qualifications which have undermined the effectiveness of the False Claims Act. The central purpose of the False Claims Act is to enlist private citizens in combating fraud against the United States. The Act’s qui tam provisions were crafted to provide clear procedures and appropriate incentives for private citizens to report fraudulent schemes and participate in the resulting investigations and prosecutions. 

Since the False Claims Act was amended in 1986, recoveries 

under the Act have totaled nearly $22 billion,1 with qui tam lawsuits responsible for about $14 billion of that amount.2 However, 

over the two decades since legislation last addressed the False 

Claims Act, court decisions have created a complex patchwork of 

procedural and jurisdictional hurdles that have often derailed meritorious actions and discouraged private citizens from filing qui tam 

actions. 

An Arkansas Federal court recently invited Congress to take legislative action to clarify misinterpretations of the False Claims Act, 

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.’’ 3 The False Claims 

Act Correction Act of 2009 responds to that request by clarifying 

the reach of the Act’s liability provisions, preventing dismissals of 

certain qui tam actions, strengthening anti-retaliation protections, 

setting a uniform statute of limitations, and modifying the requirements for plaintiffs to bring qui tam actions. 

This legislation is particularly relevant during this period of increased reliance on private contractors to perform what have traditionally been viewed as governmental functions. These amendments to the False Claims Act will strengthen the tools available 

to combat those who seek to pilfer Government funds, resulting in 

a recovery of losses from fraud, as well as deterring those who otherwise might consider defrauding the Government. 

BACKGROUND AND NEED FOR THE LEGISLATION

A HISTORY OF THE FALSE CLAIMS ACT

The False Claims Act, often called ‘‘Lincoln’s Law,’’ was first enacted in 1863, as a means to remedy ‘‘the frauds and corruptions 

practiced in obtaining pay from the Government during the [Civil] 

War.’’ 4 During the Civil War, fraud by Government contractors had 

become so prevalent that the United States Army was often delivered decrepit horses, or sold the same horse twice, and packages 

of gunpowder often arrived filled with sawdust.5 President Lincoln 


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6 Cong. Globe, 37th Cong., 3d Sess. 955 (1863). 

7Qui tam lawsuits date back to medieval England. The term comes from a longer Latin expression meaning ‘‘he who sues in this matter for the King as well as for himself.’’ Black’s Law 

Dictionary. The qui tam procedure was brought to the colonies by English settlers, and included 

in a number of colonial and early American laws, before being enacted in the False Claims Act 

in 1863. See Department of Justice, False Claims Act Cases: Government Intervention in Qui 

Tam (Whistleblower) Suits, available at www.usdoj.gov/usao/pae/Documents/fcaprocess2.pdf; 

Whistleblower Qui Tam Law Center, available at www.whistleblower-qui-tam.com/pages/quitam-history.html. 8See Erickson ex rel. United States v. Amer. Inst. of Biological Scis., 716 F.Supp. 908, 915 

(E.D. Va. 1989). 9 Act of March 2, 1863, 12 Stat. 696. 

10S. Rep. No. 1708, 77th Cong., 2d Sess. (1942) (reprinting Biddle’s letter to Congress). 11S. Rep. No. 1708, 77th Cong., 2d Sess. (1942) (reprinting Biddle’s letter to Congress). 12 89 Cong. Rec. 2801 (1943). 13 Act of December 23, 1943, ch. 377, 57 Stat. 608, codified as amended at 31 U.S.C. §§ 232– 

235 (1976); U.S. v. Pittman, 151 F.2d 851, 853–54 (5th Cir. 1945) (discussing the history of the 

1943 amendments). 

implored Congress to pass legislation to address these and other 

incidences of fraud. 

The False Claims Act offered ‘‘a reward to the informer who 

comes into court and betrays his coconspirator, if he be such; but 

it is not confined to that class.’’ 6 Pursuant to the Act, private individuals, called qui tam relators, were authorized to bring lawsuits 

on behalf of the United States to prosecute fraud against the Government and to recover funds that were wrongfully obtained.7 The 

Act provided for double damages and a $2,000 civil penalty per 

false claim. Private individuals who successfully pursued claims 

under the Act were entitled to half of the Government’s recovery, 

as an incentive to expose fraud against the Federal Government.8

The Act did not authorize the Government to intervene in the private individual’s case, nor did it preclude qui tam actions based 

upon the source of the relator’s information.9

Nearly eighty years later, in the midst of World War II, Attorney 

General Francis Biddle requested that Congress amend the False 

Claims Act to repeal the authorization for qui tam lawsuits. Attorney General Biddle expressed concerns that qui tam complaints 

were being filed based solely on information contained in criminal 

indictments.10 He argued that such cases did not contribute anything new, and could interfere with the Government’s criminal 

prosecutions.11

Both the House of Representatives and the Senate considered Attorney General Biddle’s request. The House passed legislation to 

repeal the qui tam provisions.12 The Senate took a different approach, and passed legislation providing that jurisdiction would 

only be barred on qui tam suits based on information in the possession of the Government, if the relator was not an original source 

of that information. The final 1943 amendments to the False 

Claims Act included a ‘‘government knowledge bar’’ which deprived 

courts of jurisdiction over qui tam actions that were ‘‘based upon 

evidence or information in the possession of the United States, or 

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

brought.’’ 13

The 1943 amendments also impacted suits under the False 

Claims Act by authorizing the Department of Justice to take over 

cases initiated by relators. The amendments required relators to 

submit all of their supporting evidence to the Department of Justice at the time they filed a complaint, and gave the Department 

sixty days to decide whether or not to intervene and take exclusive 


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14 Act of December 23, 1943, ch. 377, 57 Stat. 608. 15 Elleta Sangrey Callahan & Terry Morehead Dworkin, Do Good and Get Rich: Financial Incentives for Whistleblowing and the False Claims Act, 37 Will. L. Rev. 273, 318 (1992). 16General Accounting Office, Fraud in Government Programs: How Extensive is It?—How 

Can It Be Controlled, ii (1981). 17 E.g., United States ex rel. State of Wis. (Dep’t of Health and Soc. Servs.) v. Dean, 729 F.2d 

1100 (7th Cir. 1984). 18False Claims Reform Act: Hearing Before the Subcomm. on Admin. Practice and Procedure 

of the Senate Comm. on the Judiciary, 99th Cong., 1st Sess. (Sept. 17, 1985). 19 Hearing Before the Subcomm. on Admin. Law and Gov’t Rel. of the House Comm. on the 

Judiciary, 99th Cong., 2d Sess. (Feb. 5, 1986). 20 126 Cong. Rec. 4580 (1980); S. Rep. No. 615, 96th Cong. 2d Sess. (1981). 21False 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). 

control of the suit. If the Government elected to intervene, then the 

relator would have no role in the case, and no voice in its resolution. 

The 1943 amendments also reduced the amount of the relator’s 

share of any recovery: if the Government prosecuted the suit, then 

the court could award the informer ‘‘fair and reasonable compensation’’ not to exceed 10 percent of the proceeds; if the Government 

did not intervene, then the informer’s award could not exceed twenty-five percent of the proceeds.14 In neither case was there any assurance that the relators would obtain even a minimum amount. 

As a result of the 1943 amendments, relators were far less likely 

to come forward and expose fraud against the Government. Indeed, 

from 1943 to 1986, only about six to ten False Claims Act cases 

were brought each year.15 Notably, as the number of qui tam suits 

decreased, fraud against the Government was again rampant by 

the 1980’s. In 1981, the General Accounting Office reported that 

such fraud was ‘‘widespread’’ and was resulting in monetary loss, 

diminished confidence in Government programs, Government benefits diverted from intended recipients, and harm to public health 

and safety.16 Additionally, the effectiveness of the False Claims Act 

was weakened by some court decisions in which judges interpreted 

the government-knowledge bar broadly, holding that the bar precluded all qui tam cases involving information already known to 

the Government, even when the qui tam relator had been the 

source of that information.17

Congress responded to the decrease in False Claims Act suits. In 

1985, the Senate conducted hearings on legislation to reform the 

False Claims Act.18 The next year, the House Subcommittee on Administrative Law and Governmental Relations of the House Committee on the Judiciary held hearings on similar legislation.19

These bills sought to empower private citizens with knowledge of 

fraud or false claims to come forward and bring the resources of 

private counsel to bear on the Government’s behalf under the 

Act.20

Following the hearings, the legislation was refined to take into 

account concerns raised by the Department of Justice and potential 

defendants, and the False Claims Amendments Act of 1986 was enacted on October 27, 1986.21 The 1986 amendments made a number of changes to the False Claims Act. 

The 1986 amendments increased the penalties from double damages to treble damages. They also provided that qui tam actions 

would be filed under seal for sixty days, and served on the United 

States, but not the defendant, to provide the Government time to 

determine whether to intervene in the action. The amendments 


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22 In order to address the Department’s concern about politically-motivated suits, Congress retained the prior broader ban on information in the possession of the Government for suits 

against top Government officials. 31 U.S.C. § 3730(e)(2)(A). 23 31 U.S.C. § 3730(d)(4). 24 United States ex rel. Totten v. Bombardier Corp., 380 F. 3d 488 (D.C. Cir. 2005) (where 

a former Amtrak employee who filed suit against two Amtrak contractors alleged that the contractors violated the False Claims Act by supplying Amtrak with non-compliant goods). 25 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. Rutz v. Village of River 

Forest, 2007 LEXIS 80506 (N.D. Ill. Oct. 25, 2007); United States ex rel. Arnold v. CMC Engineering, 2007 WL 442237 (W.D. Pa. Feb. 7, 2007); 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). 

further provided the Government, upon a showing of ‘‘good cause,’’ 

the option of intervening later in a case that it had initially declined to join. They provided that a qui tam relator could fully participate in cases in which the Government intervened, but authorized courts to restrict the role of relators, under specified circumstances. The amendments eliminated purely discretionary 

awards to relators, and based the relator’s share on his or her contributions to the case, such that, in most cases, relators would be 

guaranteed at least a fifteen percent share of the Government’s recovery. 

The 1986 amendments also replaced the government-knowledge 

bar with a ‘‘public disclosure’’ bar, barring qui tam actions that 

were based on allegations or transactions in a Government proceeding or investigation, or from the news media—but not where 

the relator was an original source of the information.22 The amendments created a new right of action for any employee who was retaliated against for engaging in lawful conduct in furtherance of 

False Claims Act proceedings. Employees who suffered retaliation 

would be entitled to all relief necessary to make them whole, including double back pay and attorneys’ fees. The amendments authorized the award of attorneys’ fees to a defendant prevailing in 

a False Claims Act suit that ‘‘the court finds . . . was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.’’ 23 Finally, the amendments authorized the Department of 

Justice to use civil investigative demands as an investigative tool 

to obtain documents and testimony. 

COURT DECISIONS SINCE 1986 HAVE DIMINISHED THE EFFECTIVENESS

OF THE FALSE CLAIMS ACT

Unfortunately, since the 1986 amendments were enacted, several 

court decisions have limited the reach of the False Claims Act, 

jeopardizing billions in Federal funds. For example, in 2005, the 

D.C. Circuit ruled that the False Claims Act does not reach false 

claims that are (i) presented to Government grantees or contractors, and (ii) paid with Government grant or contract funds.24 The 

Court indicated that Congress’s intent to include those claims 

under the law was unclear. Several other courts have held similarly, which has lead to widespread confusion regarding the scope 

of the law.25

More recently, in 2008, the Supreme Court held that plaintiffs 

must prove that the defendant intended for its false statements to 

cause the Federal Government itself to rely on the false statements 


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26 Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008). For an analysis 

of the case, see Jennifer Staman, The False Claims Act, the Allison Engine Decision, and Health 

Care Fraud Enforcement, CRS Report for Congress RS22982 (Apr. 16, 2009). 27 United States ex rel. DRC, Inc. v. Custer Battles, LLC, 376 F. Supp. 2d 617, 636–641 (E.D. 

Va. 2006) (holding that while the False Claims Act protects funds ‘‘presented to’’ the Government, a $10 million verdict for fraud against a defense contractor in Iraq was invalid on the 

ground that the money lost was not taxpayer money, but rather Iraqi money under the control 

of the United States, and thus not covered by the False Claims Act). 28See, e.g., United States ex rel. Huangyan Imp. & Exp. Corp. v. Nature’s Farm Prod., 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)). 29 United States ex rel. Aakhus v. Dyncorp, Inc., 136 F.3d 676 (10th Cir. 1998) 30 E.g., United States ex rel. Prawer & Co. v. Verrill & Dana, 946 F. Supp. 87 (D. Me. 1996); 

Am. Textile Mfrs. Inst., Inc. v. The Limited, Inc., 190 F.3d 729 (6th Cir. 1999). 31 132 Cong. Rec. H9382–03 (daily edition Oct. 7, 1986). 32False Claims Act Implementation: Hearing Before the Subcomm. on Admin. Law and Gov’t 

Rel. of the H. Comm. on the Judiciary, 101st Cong., 2d Sess. 3, (1990) (statement of Sen. Grassley). 

as a condition for payment.26 With the Federal Government increasingly relying on private entities to disburse Federal funds, 

this situation would presumably become increasingly rare. 

In 2006, another Federal court ruled that the False Claims Act 

does not cover false claims for funds that are administered by, but 

not owned by, the Government.27 Even though false claims made 

against Government-administered funds harm Government interests and frustrate Government programs and purposes, the Act 

was read not to cover those claims—removing protection of funds 

intended for the Iraq War, for example. Similarly, although the Act 

prohibits conspiring to defraud the Government, several courts 

have read the conspiracy provision narrowly, applying it to some 

violations of the Act, but not others.28

In 1998, the Tenth Circuit decided a case involving a provision 

of the False Claims Act that imposes liability upon those who 

wrongfully possess more Government money or property than the 

amount for which they have a certificate or receipt.29 In its decision, the court focused on the technical element of whether the defendant had a receipt or certificate for the property, not on whether 

the defendant actually wrongfully possessed or converted the property. As a result, a seemingly meritorious case was dismissed. 

Similarly, several cases have greatly limited the ‘‘reverse false 

claims’’ provision of the Act, which imposes liability on those who 

make or use false records or statements to conceal, avoid, or decrease an obligation to pay or transmit money or property to the 

Government.30 Indeed, the provision has been read so narrowly 

that the Government is presently able to prosecute only those rare 

fraudfeasors who submit reports concealing their wrongful retention of Government funds. Without adequate prosecutorial tools, 

the ‘‘finders, keepers’’ mentality continues to infect Government 

contracting. 

When the 1986 amendments were enacted, Congress expressly 

stated that the public disclosure bar was intended to bar only truly 

parasitic qui tam lawsuits; the provision was not intended 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, such as from a media report.31 Congress drafted the public 

disclosure bar to provide a balance between ‘‘encouraging people to 

come forward with information and preventing parasitic lawsuits.’’ 32 Yet, despite this clear congressional intent and Department of Justice recommendations, courts have used the public disVerDate Nov 24 2008 23:02 May 05, 2009 Jkt 079006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6601 E:\HR\OC\HR097.XXX HR097

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33 Rockwell Int’l Corp. v. U.S., 127 S. Ct. 1397 (2007). 34 E.g., United States ex rel. Bly-Magee v. Premo, 470 F.3d 914 (9th Cir. 2006), cert. denied, 

128 S.Ct. 1119 (2008); United States ex rel. Fowler v. Caremark RX, LLC, 496 F.3d 730, 736 

(7th Cir. 2007), cert denied, 128 S.Ct. 1246 (2008); United States ex rel. Gear v. Emergency 

Med. Assocs. of Illinois, Inc., 436 F.3d 726 (7th Cir. 2006); United States ex rel. Paranich v. 

Sorgnard, 396 F.3d 326 (3d Cir. 2005); United States ex rel. Mathews v. Bank of Farmington, 

166 F.3d 853 (7th Cir. 1999); United States ex rel. Mistick PBT v. Hous. Auth. of City of Pittsburgh, 186 F.3d 376 (3d Cir. 1999); United States ex rel. McKenzie v. BellSouth Telecomm., Inc., 

123 F.3d 935 (6th Cir. 1997); United States ex rel. Doe v. John Doe Corp., 960 F.2d 318 (2d 

Cir. 1992); United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. 

Co., 944 F.2d 1149, 1158 (3d Cir. 1991); United States ex rel. Maxwell v. Kerr McGee Oil & 

Gas Corp., 486 F. Supp. 2d 1217 (D. Colo. 2007); United States ex rel. Montgomery v. St. Edwards Mercy Med. Ctr., 2007 U.S. Dist. LEXIS 73376 (E.D. Ark. Sep. 28, 2007). 35 E.g., United States, ex rel., Watson v. Connecticut Gen. Life Ins., 2004 U.S. App. LEXIS 

1736 (3d Cir. Jan. 16, 2004) (independent contractor held not protected); Vessell v. DPS Assocs. 

of Charleston, Inc., 148 F.3d 407 (4th Cir. 1998) (landscaper of real estate agency deemed not 

protected); cf. United States, ex rel., Conner v. Salina Reg’l Health Ctr., 459 F. Supp. 2d 1981 

(D. Kan. 2006) (concluding that doctor adequately alleged that he was an ‘‘employee’’ of the hospital even though the hospital did not pay him a salary). 36Graham County Soil & Water Conservation Dist. v. United States, ex rel., Wilson, 545 U.S. 

409 (2005). 

closure bar to dismiss relators who provided important information 

in cases still being pursued by the Government. 

For example, in 2007 the Supreme Court upheld the granting of 

a defendant’s motion to dismiss a relator from a lawsuit after judgment against the defendant was entered, and despite strong objections from the Department of Justice who had filed a brief with the 

Court in support of the relator.33 Many other courts have misapplied the public disclosure bar, resulting in decisions that Congress never intended.34 The confusing patchwork of public disclosure case law has not only frustrated meritorious suits; it has discouraged relators from even filing qui tam suits, removing a critical 

source of assistance to Government investigations. 

Since the 1986 amendments, courts have also limited the scope 

of the False Claims Act’s anti-retaliation provisions. For instance, 

several courts have read new limits into the Act by holding that 

the protections of the Act’s anti-retaliation provisions apply only to 

‘‘employees,’’ and not to independent contractors, subcontractors, or 

agents.35

A 2005 Supreme Court decision has also complicated statute of 

limitations questions even though the 1986 amendments extended 

the False Claims Act’s statute of limitations. In interpreting the 

False Claims Act, the Supreme Court held that the law’s statute 

of limitations did not apply to retaliation claims brought under the 

False Claims Act; rather, relators must conform their claims to the 

most similar type of action available under State law.36 Because 

many State false claims statutes of limitations are short, the 

Court’s decision created a significant obstacle to recovery for legitimate retaliation claims. Consequently, many whistleblowers who 

encounter retaliatory tactics from their employers are now forced 

to file their false claims actions within a narrow window in order 

to obtain relief, or be limited to less attractive legal avenues for relief. 

Finally, many courts have overly strictly applied Rule 9(b) of the 

Federal Rules of Civil Procedure to False Claims Act suits. Rule 

9(b) requires claims to be pled with particularity, to ensure that defendants are given proper notice of any claims that are being levVerDate Nov 24 2008 23:02 May 05, 2009 Jkt 079006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6601 E:\HR\OC\HR097.XXX HR097

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37 Rule 9(b) states: ‘‘In all averments of fraud or mistake, the circumstances constituting fraud 

or mistake shall be state with particularity. Malice, intent, knowledge, and other condition of 

mind of a person may be averred generally.’’ 38 E.g., United States ex rel. Bledsoe v. Community Health Sys., Inc., 501 F.3d 493 (6th Cir. 

2007); United States ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 559 (8th Cir. 2006); 

United States ex rel. Sikkenga v. Bluecross, 472 F.3d 702 (10th Cir. 2006) (10th Cir., Dec. 5, 

2006); Sanderson v. HCA, 447 F.3d 873, 877 (6th Cir. 2006); United States ex rel. Karvelas v. 

Melrose-Wakefield Hosp., 360 F.3d 220 (1st Cir. 2004); In re Genesis Health Ventures, Inc., 112 

Fed. Appx. 140, 144 (3rd Cir. 2004); United States ex rel. Clausen v. Lab Corp. of America, 290 

F.3d 1301 (11th Cir. 2002), cert. denied, 537 U.S. 1105 (2003). 

eled against them so they can formulate a vigorous defense.37 In 

False Claims Act suits, however, many courts have required a degree of specificity that is not only beyond what is necessary to give 

defendants notice of the charges against them but goes far beyond 

the information readily available at the pleading stage to many qui 

tam relators with meritorious allegations. 

A relator may have knowledge of the method of fraud employed, 

for example, but not be in possession of detailed records documenting precisely how the fraud was executed. Courts have nevertheless ruled against relators who could not provide the false invoices or phoney billing records, even though they are not generally 

available to anyone outside a company’s billing department—often 

without even providing an opportunity for discovery.38

HEARINGS

The Committee held a hearing on proposals to fight fraud and to 

protect taxpayers on April 1, 2009. The Committee heard testimony 

on H.R. 1788, among several other bills. Testimony on H.R. 1788 

was received from two witnesses—Joseph E. B. White, President 

and CEO of Taxpayers Against Fraud; and Marcia Madsen, an attorney with Mayer Brown LLP, who appeared on behalf of the 

United States Chamber of Commerce and the United States Chamber Institute for Legal Reform. 

During the 110th Congress, the Committee’s Subcommittee on 

Commercial and Administrative Law and the Subcommittee on 

Courts, the Internet, and Intellectual Property held a joint hearing 

on substantially identical legislation, H.R. 4854, the ‘‘False Claims 

Act Correction Act of 2007.’’ Testimony was received from Albert 

Campbell, a small business owner from Florida; Shelley Slade, an 

attorney with Vogel, Slade, & Goldstein, LLP; Peter B. Hutt, II, an 

attorney with Akin Gump Strauss Hauer & Feld, LLP, who appeared on behalf of the United States Chamber of Commerce and 

the United States Chamber Institute for Legal Reform; and James 

B. Helmer, Jr., President of the law firm Helmer, Martins, Rice & 

Popham Co., L.P.A. 

COMMITTEE CONSIDERATION

On April 28, 2009, the Committee met in open session and ordered the bill H.R. 1788 favorably reported without amendment, by 

a rollcall vote of 20 to 6, a quorum being present. 

COMMITTEE VOTES

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the following 

rollcall votes occurred during the Committee’s consideration of H.R. 

1788. 


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1. An amendment offered by Mr. Issa to explicitly require the 

court to consider, in determining whether to reduce the share of recovered proceeds that a relator receives, the value to the relator of 

avoiding prosecution. Defeated 18 to 10. 

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Conyers, Jr., Chairman ............................................................................... X 

Mr. Berman ....................................................................................................... X 

Mr. Boucher .......................................................................................................

Mr. Nadler ......................................................................................................... X 

Mr. Scott ........................................................................................................... X 

Mr. Watt ............................................................................................................ X 

Ms. Lofgren ....................................................................................................... X 

Ms. Jackson Lee ................................................................................................

Ms. Waters ........................................................................................................ X 

Mr. Delahunt .....................................................................................................

Mr. Wexler .........................................................................................................

Mr. Cohen .......................................................................................................... X 

Mr. Johnson ....................................................................................................... X 

Mr. Pierluisi ....................................................................................................... X 

Mr. Gutierrez .....................................................................................................

Mr. Sherman .....................................................................................................

Ms. Baldwin ......................................................................................................

Mr. Gonzalez ...................................................................................................... X 

Mr. Weiner ......................................................................................................... X 

Mr. Schiff .......................................................................................................... X 

Ms. Sa ́nchez ...................................................................................................... X 

Ms. Wasserman Schultz ....................................................................................

Mr. Maffei ......................................................................................................... X 

[Vacant] ............................................................................................................

Mr. Smith, Ranking Member ............................................................................. X 

Mr. Sensenbrenner, Jr. ...................................................................................... X 

Mr. Coble ........................................................................................................... X 

Mr. Gallegly .......................................................................................................

Mr. Goodlatte .................................................................................................... X 

Mr. Lungren ....................................................................................................... X 

Mr. Issa ............................................................................................................. X 

Mr. Forbes ......................................................................................................... X 

Mr. King ............................................................................................................ X 

Mr. Franks ......................................................................................................... X 

Mr. Gohmert ......................................................................................................

Mr. Jordan ......................................................................................................... X 

Mr. Poe ..............................................................................................................

Mr. Chaffetz ...................................................................................................... X 

Mr. Rooney ........................................................................................................ X 

Mr. Harper ......................................................................................................... X 

Total ................................................................................................ 10 18 

2. An amendment offered by Mr. Issa to bar an employee from 

bringing a qui tam suit against his or her employer without first 

notifying the employer, and to bar anyone from bringing a qui tam 

suit against any entity other than his or her employer without first 

notifying the applicable agency’s Inspector General, and unless the 

employer or Inspector General fails to take action within 90 days. 

Defeated 18 to 8. 

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Conyers, Jr., Chairman ............................................................................... X 

Mr. Berman ....................................................................................................... X 


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ROLLCALL NO. 2—Continued 

Ayes Nays Present 

Mr. Boucher .......................................................................................................

Mr. Nadler ......................................................................................................... X 

Mr. Scott ........................................................................................................... X 

Mr. Watt ............................................................................................................ X 

Ms. Lofgren ....................................................................................................... X 

Ms. Jackson Lee ................................................................................................

Ms. Waters ........................................................................................................ X 

Mr. Delahunt .....................................................................................................

Mr. Wexler .........................................................................................................

Mr. Cohen .......................................................................................................... X 

Mr. Johnson ....................................................................................................... X 

Mr. Pierluisi ....................................................................................................... X 

Mr. Gutierrez ..................................................................................................... X 

Mr. Sherman .....................................................................................................

Ms. Baldwin ......................................................................................................

Mr. Gonzalez ...................................................................................................... X 

Mr. Weiner ......................................................................................................... X 

Mr. Schiff .......................................................................................................... X 

Ms. Sa ́nchez ...................................................................................................... X 

Ms. Wasserman Schultz ....................................................................................

Mr. Maffei ......................................................................................................... X 

[Vacant] ............................................................................................................

Mr. Smith, Ranking Member .............................................................................

Mr. Sensenbrenner, Jr. ...................................................................................... X 

Mr. Coble ........................................................................................................... X 

Mr. Gallegly ....................................................................................................... X 

Mr. Goodlatte ....................................................................................................

Mr. Lungren ....................................................................................................... X 

Mr. Issa ............................................................................................................. X 

Mr. Forbes .........................................................................................................

Mr. King ............................................................................................................

Mr. Franks ......................................................................................................... X 

Mr. Gohmert ...................................................................................................... X 

Mr. Jordan ......................................................................................................... X 

Mr. Poe ..............................................................................................................

Mr. Chaffetz ...................................................................................................... X 

Mr. Rooney ........................................................................................................

Mr. Harper ......................................................................................................... X 

Total ................................................................................................ 8 18 

3. The motion to report H.R. 1788 favorably, without amendment, was approved 20 to 6. 

ROLLCALL NO. 3 

Ayes Nays Present 

Mr. Conyers, Jr., Chairman ............................................................................... X 

Mr. Berman ....................................................................................................... X 

Mr. Boucher .......................................................................................................

Mr. Nadler ......................................................................................................... X 

Mr. Scott ........................................................................................................... X 

Mr. Watt ............................................................................................................ X 

Ms. Lofgren ....................................................................................................... X 

Ms. Jackson Lee ................................................................................................

Ms. Waters ........................................................................................................ X 

Mr. Delahunt .....................................................................................................

Mr. Wexler .........................................................................................................

Mr. Cohen .......................................................................................................... X 

Mr. Johnson ....................................................................................................... X 

Mr. Pierluisi ....................................................................................................... X 

Mr. Gutierrez ..................................................................................................... X 

Mr. Sherman .....................................................................................................


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ROLLCALL NO. 3—Continued 

Ayes Nays Present 

Ms. Baldwin ......................................................................................................

Mr. Gonzalez ...................................................................................................... X 

Mr. Weiner ......................................................................................................... X 

Mr. Schiff .......................................................................................................... X 

Ms. Sa ́nchez ...................................................................................................... X 

Ms. Wasserman Schultz ....................................................................................

Mr. Maffei ......................................................................................................... X 

[Vacant] ............................................................................................................

Mr. Smith, Ranking Member .............................................................................

Mr. Sensenbrenner, Jr. ...................................................................................... X 

Mr. Coble ........................................................................................................... X 

Mr. Gallegly ....................................................................................................... X 

Mr. Goodlatte ....................................................................................................

Mr. Lungren ....................................................................................................... X 

Mr. Issa ............................................................................................................. X 

Mr. Forbes .........................................................................................................

Mr. King ............................................................................................................

Mr. Franks ......................................................................................................... X 

Mr. Gohmert ...................................................................................................... X 

Mr. Jordan ......................................................................................................... X 

Mr. Poe ..............................................................................................................

Mr. Chaffetz ...................................................................................................... X 

Mr. Rooney ........................................................................................................

Mr. Harper ......................................................................................................... X 

Total ................................................................................................ 20 6 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 1788, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, May 5, 2009. 

Hon. JOHN CONYERS, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1788, the False Claims 

Act Correction Act of 2009. 


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

to provide them. The CBO staff contact is Leigh Angres, who can 

be reached at 226–2860. 

Sincerely, 

DOUGLAS W. ELMENDORF, 

DIRECTOR. 

Enclosure 

cc: Honorable Lamar S. Smith. 

Ranking Member 

H.R. 1788—False Claims Act Correction Act of 2009. 

H.R. 1788 would amend certain provisions of the False Claims 

Act (FCA), which generally provides that a person who knowingly 

submits a false or fraudulent claim for overpayments to the U.S. 

Government may be subject to a civil action in a federal court. The 

FCA also allows for private individuals 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 

amounts recovered as a result of such claims. The amendments in 

the bill would take effect on the date of enactment and most would 

apply to cases pending or filed on or after such date. Among other 

changes, the bill 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); 

• Clarify that only actions where all the essential parts of a 

case are derived from public disclosure can be dismissed; and 

• Set a uniform statute of limitations of eight years for any 

claim brought under the FCA. 

Each year, the Department of Justice’s (DOJ’s) docket includes 

several hundred cases filed under the FCA. In 2008, the Government recovered more than $1.3 billion from settlements and judgments in such cases. Under H.R. 1788, the Government would be 

able to initiate additional FCA cases that it otherwise would not 

be able to pursue. Accordingly, additional litigation activities could 

require more resources. Funding needed for such activities would 

depend on the complexity and number of cases DOJ chooses to pursue and would be subject to the availability of appropriated funds. 

More prosecutions also would result in the collection of civil 

fines, which are recorded in the budget as revenues, and additional 

recoveries, which are recorded as offsetting receipts and collections 

to the Government. CBO cannot estimate the magnitude of such 

amounts because the outcome of any new FCA cases pursued as a 

result of this legislation is uncertain. Furthermore, the outcome of 

cases that might be prosecuted under other authorities if H.R. 1788 

were not enacted is unknown. 

H.R. 1788 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. 


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

for Budget Analysis. 

PERFORMANCE GOALS AND OBJECTIVES

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 1788 amends 

title 31, United States Code, to correct the effect of unduly restrictive judicial opinions by clarifying that Congress intends the law to 

reach all types of fraud concerning Federal funds, regardless of the 

form of the transaction, and to restore the intended incentives for 

whistleblowers to act when they discover fraud against the United 

States Government. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8 of the Constitution. 

ADVISORY ON EARMARKS

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 1788 does not contain any congressional 

earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(d), 9(e), or 9(f) of Rule XXI. 

SECTION-BY-SECTION ANALYSIS

The following discussion describes the bill as reported by the 

Committee. 

Sec. 1. Short Title. Section 1 sets forth the short title of the bill 

as the ‘‘False Claims Act Correction Act of 2009.’’ 

Sec. 2. Liability for False Claims. Section 2 clarifies liability 

under the False Claims Act. It clarifies that liability 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 

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. Section 2 amends the False Claims Act to apply 

to all instances where there is unlawful conversion of Government 

money to unauthorized uses or the knowing retention of Government overpayments. 

Section 2 specifies that conspiracy under the False Claims Act 

arises whenever a person conspires to violate any of the provisions 

of 31 U.S.C. § 3729. Section 2 defines the term ‘‘government money 

or property’’ broadly, and redefines the term ‘‘claim’’ to cover all requests or demands for Government money or property, without regard to whether the United States holds title to the money or property or is merely managing it. Finally, section 2 also provides that 

all elements necessary to state a claim under the False Claims Act 

are set forth in § 3729, and that no additional elements should be 

implied or required. 

Sec. 3. Civil Actions for False Claims. Subsection 3(a)(1) streamlines the procedures under which a court may dismiss a qui tam 


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39See fn 32. 

action on the plaintiff’s motion. Subsection 3(a)(2) provides that— 

absent a showing of extraordinary need—the written disclosure of 

any material evidence and information and any other attorney 

work product that the plaintiff provides to the Department of Justice in anticipation of the Government joining the case is not subject to discovery. Subsection 3(a)(3) crafts a uniform timetable for 

relators to decide to either dismiss the case or move forward alone 

where the Government declines to take up a case. Subsection 

3(a)(4) provides that the joinder of qui tam plaintiffs in similar 

False Claims Act actions is permissible, and it bars an individual 

from bringing a case that is based on the facts underlying a similar 

pending action. 

Subsection 3(c)(1) requires that awards withheld from successful 

qui tam plaintiffs by the Government would accrue interest at the 

Internal Revenue Service underpayment rate, beginning 30 days 

after the Government obtains an award until it is fully paid to the 

plaintiff. Subsection 3(c)(2) allows successful relators to recover 

reasonable incurred expenses from defendants, and subsection 

3(c)(3) gives courts wide discretion to reduce a relator’s award in 

those instances where the relator’s case is derived primarily from 

public disclosures. 

Subsection 3(d) clarifies that the public disclosure bar precludes 

only actions where all the essential elements of a relator’s case are 

derived from a public disclosure that has been made on the public 

record or broadly disseminated to the general public, and provides 

that only the Government, and not a defendant, may move to dismiss an action based on the public disclosure bar. This clarifying 

language should return the meaning of the public disclosure bar to 

what Congress intended in the 1986 amendments, while still preventing truly parasitic suits.39

Subsection 3(e) would broaden protections for whistleblowers by 

expanding the False Claims Act’s anti-retaliation provision to cover 

any retaliation against those who planned to file an action (but did 

not), people related to or associated with relators, and contract 

workers and others who are not technically ‘‘employees.’’ 

Sec. 4. False Claims Procedures. Subsection 4(a) sets a uniform 

statute of limitations of 8 years for any claim brought under the 

False Claims Act, and clarifies that in cases where the Government 

intervenes, its amended complaint relates back to the date the initial action was filed. The uniform standard addresses the divergence among the Federal circuits in interpreting the statute of limitations, and takes into consideration concerns expressed by potential defendants regarding a 10-year statute of limitations period. 

Subsection 4(b) makes the standard of proof required under the 

statute the same whether an action is pursued by the Government 

or by a relator. 

Subsection 4(c) specifies that a plaintiff need not identify specific 

claims on alleged misconduct so long as the facts alleged provide 

a reasonable indication that a False Claims Act violation occurred 

and that the allegations proffered by the relator provide adequate 

notice to the Government and the defendant. Subsection 4(c) will 

not encourage baseless suits, but instead still place defendants on 

adequate notice of the claims against them. Subsection 4(c) voids 


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any contract, private agreement, or private term or condition of 

employment intended to limit or circumvent the ability of any individual to take part in a False Claims Act action. Subsection 4(c) 

will ensure that qui tam relators will not be prevented from bringing actions under the False Claims Act. 

Sec. 5. False Claims Jurisdiction. Section 5 adds a new subsection to § 3732 to clarify that, with respect to any State or local 

government that is named as a co-plaintiff with the United States 

in an action, a seal imposed by a Federal court does not preclude 

the Government or a qui tam relator from complying with State requirements to serve a complaint, other pleadings, or the written 

disclosure of all material evidence and information possessed by 

the person bringing the action on the State or local authorities. 

Sec. 6. Civil Investigative Demands. Section 6 amends § 3733 to 

permit the Attorney General to delegate his authority to issue a 

civil investigative demand to a designee and allows the Department of Justice to share any information obtained through a civil 

investigative demand with a relator in any case where the Attorney 

General or a designee deems it necessary to a False Claims Act investigation. 

Sec. 7. Effective Date. This section provides that the amendments 

made by this bill take effect on the date of the bill’s enactment, and 

that they apply to both pending and future cases, with the exception of the provisions dealing with overpayments in Section 2, retaliation against associates in Section 3(e), and the statute of limitations, which will apply only to cases filed on or after the date of 

enactment. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

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

TITLE 31, UNITED STATES CODE 

* * * * * * * 

SUBTITLE III—FINANCIAL MANAGEMENT 

* * * * * * * 

CHAPTER 37—CLAIMS 

* * * * * * * 

SUBCHAPTER III—CLAIMS AGAINST THE UNITED STATES 

GOVERNMENT 

* * * * * * * 

ø§ 3729. False claims 

ø(a) LIABILITY FOR CERTAIN ACTS.—Any person who— 


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ø(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member 

of the Armed Forces of the United States a false or fraudulent 

claim for payment or approval; 

ø(2) 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 by the Government; 

ø(3) conspires to defraud the Government by getting a false 

or fraudulent claim allowed or paid; 

ø(4) 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 or receipt; 

ø(5) 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) 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 the property; or 

ø(7) 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, 

is liable to the United States Government for a civil penalty of not 

less than $5,000 and not more than $10,000, plus 3 times the 

amount of damages which the Government sustains because of the 

act of that person, except that if the court finds that— 

the court may assess not less than 2 times the amount of damages 

which the Government sustains because of the act of the person. 

A person 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. 

ø(b) KNOWING AND KNOWINGLY DEFINED.—For purposes of this 

section, the terms ‘‘knowing’’ and ‘‘knowingly’’ mean that a person, 

with respect to information— 

ø(1) has actual knowledge of the information; 

ø(2) acts in deliberate ignorance of the truth or falsity of the 

information; or 

ø(3) acts in reckless disregard of the truth or falsity of the 

information, 

and no proof of specific intent to defraud is required. 

ø(c) CLAIM DEFINED.—For purposes of this section, ‘‘claim’’ includes any request or demand, whether under a contract or otherwise, 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. 


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ø(d) EXEMPTION FROM DISCLOSURE.—Any information furnished 

pursuant to subparagraphs (A) through (C) of subsection (a) shall 

be exempt from disclosure under section 552 of title 5. 

ø(e) EXCLUSION.—This section does not apply to claims, records, 

or statements made under the Internal Revenue Code of 1986.¿ 

§ 3729. False claims 

(a) LIABILITY FOR CERTAIN ACTS.— 

(1) IN GENERAL.—Any person who— 

(A) knowingly presents, or causes to be presented for payment or approval, a false or fraudulent claim for Government money or property, 

(B) knowingly makes, uses, or causes to be made or used, 

a false record or statement to get a false or fraudulent 

claim for Government money or property paid or approved, 

(C) has possession, custody, or control of Government 

money or property and either— 

(i) fails to comply with a statutory or contractual obligation to disclose an overpayment about which the 

person is on actual notice, or 

(ii) intending to— 

(I) defraud the Government, or 

(II) knowingly convert the money or property, 

permanently or temporarily, to an unauthorized 

use, 

fails to deliver or return, or fails to cause the return or 

delivery of, the money or property, or delivers, returns, 

or causes to be delivered or returned less money or 

property than the amount due or owed, 

(D) 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, 

(E) knowingly buys, or receives as a pledge of an obligation or debt, Government money or property from an officer 

or employee of the Government, or a member of the Armed 

Forces, who lawfully may not sell or pledge the money or 

property, 

(F) 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 

(G) conspires to commit any violation set forth in any of 

subparagraphs (A) through (F), 

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

not less than $5,000 and not more than $10,000, plus 3 times 

the amount of damages that the Government or its administrative beneficiary sustains because of the act of that person, subject to paragraphs (2) and (3). 

(2) LESSER PENALTY IF DEFENDANT COOPERATES WITH INVESTIGATION.—In an action brought for a violation under paragraph (1), the court may assess not less than 2 times the 

amount of damages that the Government or its administrative 


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beneficiary sustains because of the act of the person committing 

the violation if the court finds that— 

(A) such person provided to those officials of the United 

States who are responsible for investigating false claims 

violations, all information known to the person about the 

violation within 30 days after the date on which the person 

first obtained the information; 

(B) such person fully cooperated with any Government investigation of the violation; and 

(C) at the time such person provided to the United States 

the information about the violation under subparagraph 

(A), no criminal prosecution, civil action, or administrative 

action had commenced with respect to such violation, and 

the person did not have actual knowledge of the existence 

of an investigation into such violation. 

(3) ASSESSMENT OF COSTS.—A person violating paragraph (1) 

shall, in addition to a penalty or damages assessed under paragraph (1) or (2), be liable to the United States Government for 

the costs of a civil action brought to recover such penalty or 

damages. 

(b) DEFINITIONS.—For purposes of this section— 

(1) the terms ‘‘known’’, ‘‘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 required; 

(2) the term ‘‘Government money or property’’ means— 

(A) money or property belonging to the United States 

Government; 

(B) money or property that— 

(i) the United States Government provides or has 

provided to a contractor, grantee, agent, or other recipient, or for which the United States Government will reimburse a contractor, grantee, agent, or other recipient; 

and 

(ii) is to be spent or used on the Government’s behalf 

or to advance a Government program; and 

(C) money or property that the United States holds in 

trust or administers for any administrative beneficiary; 

(3) the term ‘‘claim’’ includes any request or demand, whether 

under a contract or otherwise, for Government money or property; and 

(4) the term ‘‘administrative beneficiary’’ means any entity, 

including any governmental or quasi-governmental entity, on 

whose behalf the United States Government, alone or with others, serves as custodian or trustee of money or property owned 

by that entity. 

(c) STATUTORY CAUSE OF ACTION.—Liability under this section is 

a statutory cause of action all elements of which are set forth in this 

section. No proof of any additional element of common law fraud or 

other cause of action is implied or required for liability to exist for 

a violation of subsection (a). 


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(d) EXEMPTION FROM DISCLOSURE.—Any information that a person provides pursuant to subparagraphs (A) through (C) of subsection (a)(2) shall be exempt from disclosure under section 552 of 

title 5. 

(e) 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) * * * 

(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. The action shall be brought in the 

name of the Government. øThe action may be dismissed only if the 

court and the Attorney General give written consent to the dismissal and their reasons for consenting.¿ The action may be dismissed only with the consent of the court and the Attorney General. 

(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 Rule 4(d)(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. In the absence 

of a showing of extraordinary need, the written disclosure of any 

material evidence and information, and any other attorney work 

product, that the person bringing the action provides to the Government shall not be subject to discovery. 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. 

* * * * * * * 

(4) Before the expiration of the 60-day period or any extensions 

obtained under paragraph (3), the Government shall— 

(A) * * * 

ø(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.¿ 

(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, and, within 45 days after the Government 

provides such notice, shall either— 

(i) move to dismiss the action without prejudice; or 

(ii) notify the court of the person’s intention to proceed 

with the action and move the court to unseal the complaint, 

and any amendments thereto, so as to permit service on the 

defendant and litigation of the action in a public forum. 

A person who elects to proceed with the action under subparagraph 

(B)(ii) shall serve the complaint within 120 days after the person’s 

complaint is unsealed under such subparagraph. 

ƒ(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.≈ 

(5) When a person brings an action under this subsection, no person other than the Government may join or intervene in the action, 

except with the consent of the person who brought the action. In addition, when a person brings an action that is pled in accordance 


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with this subsection and section 3731(e), no other person may bring 

a separate action under this subsection based on the facts underlying a cause of action in the pending action. 

(c) RIGHTS OF THE PARTIES TO QUI TAM ACTIONS.—(1) * * * 

* * * * * * * 

(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. øIf 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.¿ An alternate remedy 

includes— 

(A) anything of value received by the Government from the 

defendant, whether funds, credits, or in-kind goods or services, 

in exchange for an agreement by the Government either to release claims brought in, or to decline to intervene in or investigate, the action initiated under subsection (b); and 

(B) anything of value received by the Government based on 

the claims alleged by the person initiating the action, if that 

person subsequently prevails on the claims. 

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, except that the person initiating the action may 

not obtain an award calculated on more than the total amount of 

damages, plus any fines or penalties, that could be recovered by the 

United States under section 3729(a). 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 an award of 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. 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 payment to a person under this paragraph or under paragraph (2) or 

(3) shall be made from the proceeds, and shall accrue interest, at 


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the underpayment rate under section 6621 of the Internal Revenue 

Code of 1986, beginning 30 days after the date the proceeds are paid 

to the United States, and continuing until payment is made to the 

person by the United States. Any such person shall also receive an 

amount for reasonable expenses which the court finds to have been 

ønecessarily¿ 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 øand shall be paid out of such proceeds¿. Such person shall also receive an amount for reasonable expenses 

which the court finds to have been ønecessarily¿ incurred, plus reasonable attorneys’ fees and costs. All such expenses, fees, and costs 

shall be awarded against the defendant. 

ø(3) Whether 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.¿ 

(3)(A) Whether or not the Government proceeds with the action, if 

the court finds that the action was brought by a person who either— 

(i) planned and initiated the violation of section 3729 upon 

which the action was brought, or 

(ii) derived his or her knowledge of 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, within the meaning of subsection (e)(4)(A), or that it disclosed privately to the 

person bringing the action in the course of its investigation into 

potential violations of section 3729, 

then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action that 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. 

The court shall direct the defendant to pay any such person an 

amount for reasonable expenses that the court finds to have been incurred, plus reasonable attorneys’ fees and costs. 

(B) 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 


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not prejudice the right of the United States to continue the action, 

represented by the Department of Justice. 

* * * * * * * 

(e) CERTAIN ACTIONS BARRED.—(1) * * * 

* * * * * * * 

ø(4)(A) No 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. 

ø(B) For 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.¿ 

(4)(A) Upon timely motion of the Attorney General of the United 

States, a court shall dismiss an action or claim brought by a person 

under subsection (b) if the allegations relating to all essential elements of liability of the action or claim are based exclusively on the 

public disclosure of allegations or transactions in a Federal criminal, civil, or administrative hearing, in a congressional, Federal administrative, or Government Accountability Office report, hearing, 

audit, or investigation, or from the news media. 

(B) For purposes of this paragraph, a ‘‘public disclosure’’ includes 

only disclosures that are made on the public record or have otherwise been disseminated broadly to the general public. An action or 

claim is ‘‘based on’’ a public disclosure only if the person bringing 

the action derived the person’s knowledge of all essential elements 

of liability of the action or claim alleged in the complaint from the 

public disclosure. The person bringing the action does not create a 

public disclosure by obtaining information from a request for information made under section 552 of title 5 or from exchanges of information with law enforcement and other Government employees if 

such information does not otherwise qualify as publicly disclosed 

under this paragraph. 

* * * * * * * 

ø(h) Any employee who is discharged, demoted, suspended, 

threatened, harassed, or in any other manner discriminated 

against in the terms and conditions of employment by his or her 

employer because of lawful acts done by the employee on behalf of 

the employee or others in furtherance of an 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 shall include reinstatement with the same seniority status 

such employee would have had but for the discrimination, 2 times 

the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees. An 

employee may bring an action in the appropriate district court of 

the United States for the relief provided in this subsection.¿ 


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(h) RELIEF FROM RETALIATORY ACTION.—Any person who is discharged, demoted, suspended, threatened, harassed, or in any other 

manner discriminated against in the terms or conditions of employment, or is materially hindered in obtaining new employment or 

other business opportunities, by any other person because of lawful 

acts done by the person discriminated against or others associated 

with that person— 

(1) in furtherance of an actual or potential action under this 

section, including investigation for, initiation of, testimony for, 

or assistance in an action filed or to be filed under this section, 

or 

(2) in furtherance of other efforts to stop one or more violations of section 3729, 

shall be entitled to all relief, from the person who has engaged in 

the discrimination, that is necessary to make the person whole. 

Such relief shall include reinstatement with the same seniority status such person would have had but for the discrimination, 2 times 

the amount of back pay or business loss, interest on the back pay 

or business loss, and compensation for any special damages sustained as a result of the discrimination, including litigation costs 

and reasonable attorneys’ fees. An action under this subsection may 

be brought in the appropriate district court of the United States for 

the relief provided in this subsection. 

(i) DAMAGES COLLECTED FOR FINANCIAL LOSSES SUFFERED BY

ADMINISTRATIVE BENEFICIARIES.— (1) IN GENERAL.—After paying any awards due one or more 

persons who brought an action under subsection (b), the Government shall pay from the proceeds of the action to any administrative beneficiary, as defined in section 3729(b), all amounts 

that the Government has collected in the action for financial 

losses suffered by such administrative beneficiary. Any remaining proceeds collected by the Government shall be treated in the 

same manner as proceeds collected by the Government for direct 

losses the Government suffers because of violations of section 

3729. 

(2) ALTERNATIVE REMEDIES.—Nothing in section 3729 or this 

section precludes administrative beneficiaries from pursuing 

any alternate remedies available to them for losses or other 

harm suffered by them that are not pursued or recovered in an 

action under this section, except that if proceedings for such alternate remedies are initiated after a person has initiated an 

action under subsection (b), such person shall be entitled to 

have such alternative remedies considered in determining any 

award in the action under subsection (b) to the same extent that 

such person would be entitled under subsection (c)(5) with respect to any alternate remedy pursued by the Government. 

§ 3731. False claims procedure 

ø(a) A subpena¿ (a) SERVICE OF SUBPOENAS.—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. 

ø(b) A civil action under section 3730 may not be brought— 

ø(1) more than 6 years after the date on which the violation 

of section 3729 is committed, or 


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ø(2) more 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.¿ 

(b) STATUTE OF LIMITATIONS; INTERVENTION BY THE GOVERNMENT.— 

(1) STATUTE OF LIMITATIONS.—A civil action under section 

3730 (a), (b), or (h) may not be brought more than 8 years after 

the date on which the violation of section 3729 or 3730(h) (as 

the case may be) is committed. 

(2) INTERVENTION.—If the Government elects to intervene and 

proceed with an action brought under section 3730(b), the Government may file its own complaint, or amend the complaint of 

the person who brought the action under section 3730(b), to 

clarify or add detail to the claims in which it is intervening and 

to add any additional claims with respect to which the Government contends it is entitled to relief. For purposes of paragraph 

(1), 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 Government’s claim arises out 

of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the person’s prior complaint. 

ø(c) In¿ (c) STANDARD OF PROOF.—In any action brought under 

section 3730, the øUnited States¿ plaintiff shall be required to 

prove all essential elements of the cause of action, including damages, by a preponderance of the evidence. 

ø(d) Notwithstanding¿ (d) ESTOPPEL.—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. 

(e) NOTICE OF CLAIMS.—In pleading an action brought under section 3730(b), a person shall not be required to identify specific 

claims that result from an alleged course of misconduct if the facts 

alleged in the complaint, if ultimately proven true, would provide 

a reasonable indication that one or more violations of section 3729 

are likely to have occurred, and if the allegations in the pleading 

provide adequate notice of the specific nature of the alleged misconduct to permit the Government effectively to investigate and defendants fairly to defend the allegations made. 

(f) VOID CONTRACT, AGREEMENTS, AND CONDITIONS OF EMPLOYMENT.— 

(1) IN GENERAL.—Any contract, private agreement, or private 

term or condition of employment that has the purpose or effect 

of limiting or circumventing the rights of a person to take otherwise lawful steps to initiate, prosecute, or support an action 

under section 3730, or to limit or circumvent the rights or remedies provided to persons bringing actions under section 3730(b) 


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and other cooperating persons under section 3729 shall be void 

to the full extent of such purpose or effect. 

(2) EXCEPTION.—Paragraph (1) shall not preclude a contract 

or private agreement that is entered into— 

(A) with the United States and a person bringing an action under section 3730(b) who would be affected by such 

contract or agreement specifically to settle claims of the 

United States and the person under section 3730; or 

(B) specifically to settle any discrimination claim under 

section 3730(h) of a person affected by such contract or 

agreement. 

§ 3732. False claims jurisdiction 

(a) * * * 

* * * * * * * 

(c) SERVICE ON STATE OR LOCAL AUTHORITIES.—With respect to 

any State or local government that is named as a co-plaintiff with 

the United States in an action brought under subsection (b), a seal 

on the action ordered by the court under section 3730(b) shall not 

preclude the Government or the person bringing the action from 

serving the complaint, any other pleadings, or the written disclosure 

of substantially all material evidence and information possessed by 

the person bringing the action on the law enforcement authorities 

that are authorized under the law of that State or local government 

to investigate and prosecute such actions on behalf of such governments. 

§ 3733. Civil investigative demands 

(a) IN GENERAL.— (1) ISSUANCE AND SERVICE.—Whenever the Attorney General 

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 may, before commencing a civil proceeding under section 

3730 or other false claims law, issue in writing and cause to 

be served upon such person, a civil investigative demand requiring such person— 

(A) * * * 

* * * * * * * 

(D) to furnish any combination of such material, answers, or testimony. 

øThe Attorney General may not 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 Generalø, 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 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 under this section may 

be shared with any a person bringing an action under section 

3730(b) if the Attorney General determines that it is necessary 

as part of any false claims law investigation. 


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(2) CONTENTS AND DEADLINES.— (A) * * * 

* * * * * * * 

(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 øor 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.¿ 

* * * * * * * 

(h) ORAL EXAMINATIONS.— 

(1) * * * 

* * * * * * * 

(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 

witness only, except that the Attorney Generalø, 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’ testimony. 

* * * * * * * 

(i) CUSTODIANS OF DOCUMENTS, ANSWERS, AND TRANSCRIPTS.— 

(1) * * * 

* * * * * * * 

ø(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.¿ 


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(3) USE OF MATERIAL, ANSWERS, OR TRANSCRIPTS IN FALSE

CLAIMS ACTIONS AND OTHER PROCEEDINGS.—Whenever any attorney of the Department of Justice has been designated to handle any false claims law investigation or proceeding, or any 

other administrative, civil, or criminal investigation, 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 investigation, case, or proceeding as such attorney determines to be required. Upon the completion of any such investigation, case, or proceeding, such attorney shall return to the 

custodian any such material, answers, or transcripts so delivered that have not passed into the control of a court, grand 

jury, or agency through introduction into the record of such 

case or proceeding. 

* * * * * * * 

(l) DEFINITIONS.—For purposes of this section— 

(1) * * * 

* * * * * * * 

(6) the term ‘‘custodian’’ means the custodian, or any deputy 

custodian, designated by the Attorney General under subsection (i)(1); øand¿ 

(7) the term ‘‘product of discovery’’ includes— 

(A) * * * 

* * * * * * * 

(C) any index or other manner of access to any item listed in subparagraph (A)ø.¿; and 

(8) the term ‘‘official use’’ means all lawful, reasonable uses 

in furtherance of an investigation, case, or proceeding, such as 

disclosures in connection with interviews of fact witnesses, settlement discussions, coordination of an investigation with a 

State Medicaid Fraud Control Unit or other government personnel, consultation with experts, and use in court pleadings 

and hearings. 

(m) DELEGATION.—The Attorney General may delegate any authority that the Attorney General has under this section. 

* * * * * * * 

DISSENTING VIEWS

INTRODUCTION

Since the False Claims Act was last amended in 1986, it has become one of the Government’s primary tools for recovering taxpayer 

dollars lost to waste, fraud, and abuse. As the Federal Government 

increases its spending through the stimulus bill and increased annual budgets, the importance of the FCA will increase as well. Congress thus has the responsibility to ensure that the FCA is functioning properly. 

Some of what is in H.R. 1788 will work toward that end. In particular, section 2 of the bill, which strengthens the Act’s liability 

provisions, will help the Government to root out fraud wherever 

the Federal Government commits taxpayer dollars. In the roughly 


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22 years since the 1986 amendments, cases have arisen in which 

liability under the FCA has been held not to exist even though 

false claims may have ultimately resulted in a loss to the Federal 

Government. 

Although some of the provisions in this bill may be beneficial, 

other provisions are highly problematic. While section 2 may favorably address some issues that have arisen since the 1986 amendments related to liability, the remaining sections of the bill are 

generally aimed at helping private qui tam plaintiffs and the qui 

tam plaintiffs’ bar without, in some instances, obvious benefits to 

the United States and the taxpayers. 

Certainly, suits brought by whistleblowers have been invaluable 

to the Federal Government’s efforts under the FCA. Whistleblower 

assistance has allowed the Government to uncover more fraud and 

pursue a larger number of cases than it otherwise would have been 

able to. That said, the qui tam provisions of this bill may lead to 

a greater number of lawsuits by qui tam plaintiffs with questionable motives who advance baseless claims, inadvertently make bad 

law, and distract limited federal resources from meritorious claims 

to frivolous ones. The amendments made by this bill will only serve 

to displace the reasoned regime that governs relationships between 

the Federal Government and recipients of federal funds. 

What is more, it is entirely unclear that an increased number of 

qui tam cases will lead to increased recoveries under the FCA. The 

Federal Government investigates every qui tam filing and has consistently declined to intervene in about 80% of the cases filed by 

private plaintiffs. This selectivity is indicative of genuine discernment. Of the $21.5 billion in FCA recoveries since 1986, only three 

percent was recovered in qui tam cases in which the Department 

of Justice declined to intervene. 

Put differently, it is suspect that the qui tam provisions in this 

bill will increase the Federal Government’s ability to recover taxpayer dollars. Rather, it is possible that these provisions will encourage private plaintiffs to file unfounded and parasitic lawsuits 

that benefit no one but the plaintiffs and their attorneys. 

By encouraging unfounded and parasitic qui tam suits, this bill 

will actually make it harder for the Government to recover funds 

under the FCA. These additional suits will add to the Justice Department’s burden and detract from its ability to focus on meaningful cases. Simply put, the qui tam provisions in this bill may, in 

fact, be counterproductive. 

The False Claims Act, like so many other laws, is about striking 

the proper balance between competing interests. The interests here 

are between allowing the United States to recover as much fraudulently obtained money as possible and ensuring that innocent recipients of federal funds are not hauled into court to defend lawsuits that are based on an overly broad law. We believe the FCA 

currently strikes that balance well. Although there may be room to 

improve the FCA, we must be mindful in seeking to make improvements to continue to strike the proper balance. Unfortunately, the 

changes proposed in H.R. 1788, if enacted, might well throw that 

balance off. 

The costs of Government programs and Government contracts 

are already inflated by complex rules that are unknown in private 

business transactions. This legislation will likely generate addiVerDate Nov 24 2008 23:02 May 05, 2009 Jkt 079006 PO 00000 Frm 00028 Fmt 6659 Sfmt 6601 E:\HR\OC\HR097.XXX HR097

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1131 U.S.C. §§ 3729(a)(1)N(3). 

2 31 U.S.C. § 3729(a). 

3See 31 U.S.C. § 3730. 4 United States v. Bornstein, 423 U.S. 303, 309 (1976). 5S. Rep. No. 99N345, at 23N24 (1986). 

6Of the $13.6 billion that has been recovered in lawsuits initiated by qui tam plaintiffs, only 

$432 million has come from cases in which the Government declined to intervene. Fraud Statistics 1986N2008, available at http://www.usdoj.gov/opa/pr/2008/November/fraud-statistics1986- 

2008.htm. 

tional costs for non-profits, hospitals, universities and businesses of 

all sizes; it will increase the burdens on the recipients of federal 

funds, remove safeguards against unfounded lawsuits brought by 

qui tam plaintiffs, and perhaps deter some from bidding on federal 

contracts, resulting in increased costs to the Government and the 

taxpayers. Thus, it appears that the benefits that its proponents 

argue H.R. 1788 may bring are outweighed by the costs that it will 

impose. 

BACKGROUND

The FCA, 31 U.S.C. §§ 3729–3733, is one of the Government’s 

primary tools for combating fraud on federally funded programs. 

The statute imposes liability on persons who (1) knowingly present 

false or fraudulent claims to the United States, (2) knowingly make 

false records or statements to get false or fraudulent claims paid, 

or (3) conspire to defraud the Government by getting a false or 

fraudulent claim paid.1 The statute provides for treble damages 

plus penalties of $5,000 to $10,000 for each false claim.2

In addition to allowing the Government to bring its own lawsuits, 

the FCA also permits private citizens, known as qui tam plaintiffs 

or ‘‘relators,’’ to hire attorneys and file actions asserting violations 

of the FCA on behalf of the United States. Actions brought by relators are filed under seal, giving the Department of Justice the opportunity to investigate the actions and decide whether to intervene in the lawsuits and take the lead in prosecuting them. If the 

Government declines to intervene, relators and their attorneys can 

proceed with their actions. The incentive for relators and their attorneys is financial—if their actions are successful, the relators receive up to 30 percent of the proceeds awarded, and the remainder 

goes to the U.S. Treasury.3

The FCA was enacted in 1863 to combat ‘‘the massive frauds perpetuated by large contractors during the Civil War.’’ 4 It has since 

been amended several times, most recently in 1986. The 1986 

amendments were intended in part ‘‘to encourage more private enforcement suits.’’ 5 Thus, since the 1986 amendments, the FCA has 

sought to balance the twin goals of encouraging prompt whistleblowing while discouraging claims that do not help the Government 

protect the public fisc. So far these goals have been met: total recoveries under the FCA have exceeded $21.5 billion, $13.6 billion 

of which has come from suits initiated by qui tam plaintiffs.6

DISCUSSION

The tremendous success the FCA has had over the past 22 years 

calls into question the need for reform—especially reform as sweeping as that encompassed in H.R. 1788. As stated above, certain 

parts of this legislation, especially section 2, will be beneficial to 

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7Letter from Keith B. Nelson, Principal Deputy Attorney General, Office of Legislative Affairs, to John Conyers, Jr. (July 15, 2008) (‘‘Justice Dept. Views Letter’’). 8Marcia G. Madsen & Cameron S. Hamrick, Proposed FCA Amendments: A Recipe for Government Gridlock (Part II), Federal Contracts Report (BNA) (April 21, 2009). 

ing in Government contracts and programs, and we support these 

proposals. On the other hand, much of what is in this legislation 

will unnecessarily impose significant burdens, for the benefit of qui 

tam plaintiffs, on entities that received federal funds with few, if 

any, countervailing benefits. Moreover, the legislation will 

strengthen the hand of qui tam plaintiffs at the expense of the 

Government and defendants to baseless actions. Therefore, it is our 

considered view that any benefits this bill will provide to the Federal Government’s efforts to combat fraud and waste in Government programs are outweighed by the costs and burdens of this 

legislation. 

A. More Qui Tam Lawsuits May not Lead to More FCA Recoveries 

Despite supporters’ claims that the FCA needs to be amended, 

there are several reasons to be skeptical of the need for amendment. First and foremost among those reasons is that the FCA has 

worked well in the 22 years since the 1986 amendments. According 

to the Department of Justice, ‘‘the FCA in its present form has 

worked well and we have seen no pressing need for major amendments.’’ 7

According to supporters of this legislation, reform is needed to 

ensure that relators can bring forth meritorious litigation. The 

amendments to the FCA contained in H.R. 1788 thus are intended 

to and certainly will encourage the filing of more cases under the 

FCA, especially by qui tam plaintiffs. It is not altogether clear, 

however, that more filings will lead to more recoveries. 

This result may seem counterintuitive, but we are confident it is 

correct. We come to this conclusion because, as it stands, the Government investigates every qui tam filing and consistently over 

time has declined to intervene in about 80% of the cases filed by 

relators. As suggested above, this represents genuine discernment 

by the Government. More than 97% of the amounts received in settlements and judgments in qui tam cases have come in the 20% of 

the matters in which the Government has intervened. In other 

words, fewer than 3% of recoveries have been derived from the 80% 

of the total investigative pool that the Justice Department has rejected. Indeed, last year (through September 30, 2008), the Government recovered about $1.043 billion in qui tam FCA cases; of that 

total roughly $1.037 billion came from qui tam cases in which the 

Justice Department intervened and only about $5.9 million came 

from relators litigating declined cases. As two experts on the FCA 

put it in a recent article, ‘‘when DOJ examines the case and decides not to intervene, the chances the relator actually has a meritorious case are very low.’’ 8

Accordingly, encouraging the filing of more FCA cases by relators 

and allowing these cases to avoid dismissal under traditional mechanisms, as this legislation would do, is unlikely to confer any sizeable benefit on the Government’s fraud fighting activities. Maximizing the filings of qui tam lawsuits, no matter how negligible the 

benefits, might be acceptable in the name of rooting out all fraud 

against the United States, except for the fact that unfounded and 


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9Memorandum from Kenneth E. Raske, President, Greater New York Hospital Association. 

parasitic FCA suits impose burdens on the Government, increase 

the costs of Government programs and contracts, and negatively affect the recipients of federal funds. 

B. Government Burden and Cost to Government 

As was discussed above, outside of the liability provisions contained in section 2 of this legislation, many of the other provisions 

are aimed at assisting qui tam plaintiffs. But, as is discussed 

throughout these views, many of these provisions will make it easier for qui tam plaintiffs to bring unfounded or parasitic actions. 

Unfounded FCA actions drain Government resources in at least 

four ways. First, they place a burden on agencies whose contracts 

or grants are at issue. Agencies are forced to expend resources— 

that would otherwise be available for agency programs—on document discovery and production of witnesses for depositions and 

trial. Thus, increasing the number of unfounded and parasitic FCA 

cases and making it more difficult for these cases to be dismissed 

will result in greater burdens on the agencies. 

Second, unfounded and parasitic qui tam cases take time and resources away from the Department of Justice, which has to review 

all qui tam filings regardless of their merit. One of the primary 

goals of the qui tam provisions is to help the Justice Department 

by supplementing its resources for recovering money fraudulently 

taken from the Federal Government. Accordingly, draining resources from the Department to deal with unfounded and parasitic 

qui tam cases runs counter to the purposes of the FCA. 

Third, unfounded and parasitic cases needlessly cost defendants 

money to litigate. The defendants in turn must pass this cost back 

to the taxpayer the next time they bid on a Government contract, 

request funding under a Government grant, or provide services 

that are paid for by a Government program. 

Fourth, unfounded and parasitic cases may have the effect of 

driving out of the market for federal services bidders that could do 

the work but fear the potential for litigation. This effect is most 

likely to be considered by small businesses, which are also disproportionately women- and minority-owned businesses. 

C. FCA Liability for Temporary Accounting Overpayments Will Burden Non-profits, Hospitals, and Universities 

H.R. 1788 will impose liability on recipients of federal funds for 

inadvertent retention of overpayments of Government funds, even 

if the recipients did not ‘‘knowingly’’ retain the overpayment. This 

change in the law will negatively impact non-profits, universities, 

and hospitals in particular. 

According to the Greater New York Hospital Association, ‘‘due to 

the nature of hospital payment systems and the complexity of the 

Government reimbursement operations, hospitals are constantly 

identifying and reconciling over- and underpayments in the course 

of normal business.’’ 9 Recipients of federal grants, such as universities, face similar problems with regard to over- and underpayments: ‘‘it is understood that during the term of a federally sponsored project there may at any given time be undercharges and 

overcharges, and university systems are designed to ensure that 


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10Letter from Robert M. Berdahl, President, Association of American Universities, to John 

Conyers, Jr., Chairman, U.S. House Committee on the Judiciary (July 15, 2008). 11 31 U.S.C. § 3730(e)(4)(A). 12 United States ex rel. Springfield Terminal Rwy. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 

1994). 13 Justice Dept. Views Letter Appendix at 9. 14 Id. 

any incorrect charges are adjusted, through cost transfers or otherwise, when they are detected.’’ 10 Put simply, non-profits, hospitals, 

and universities have processes in place to discover and to correct 

over- and underpayments. 

However, H.R. 1788 will allow relators to disrupt these systems 

with qui tam lawsuits based on what amount to temporary overpayments. And, because H.R. 1788 does not have a specific knowledge requirement with regard to its overpayment provision, these 

entities will be liable under the FCA even if the overpayments 

were inadvertent rather than the result of a conscious attempt to 

retain Government funds fraudulently. Hospitals, universities, and 

non-profits should be subject to the FCA just like any other recipient of federal funds; they should not, though, be subject to liability 

for temporary overcharges that are subject to correction through a 

reconciliation process. Moreover, these entities should not face treble damages and civil penalties for conduct that was merely negligent rather than ‘‘knowingly’’ undertaken. 

D. Evisceration of the Public Disclosure Bar Will Lead to Parasitic 

Lawsuits 

The FCA bars qui tam actions that are ‘‘based upon the public 

disclosure of allegations or transactions . . ., unless . . . the person bringing the action is an original source of the information.’’ 11

Congress designed the public disclosure bar to achieve the ‘‘golden 

mean between adequate incentives for whistle-blowing insiders 

with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute 

of their own.’’ 12 Thus, the public disclosure bar has ensured that 

the incentive given to qui tam plaintiffs (a share of any recovery) 

only goes to those plaintiffs that are truly deserving-whistleblowers 

who bring information regarding fraud to light. 

Despite the fact that the public disclosure bar has worked well 

since the 1986 amendments were adopted, H.R. 1788 would eviscerate the bar. According to the Justice Department, the bill ‘‘severely restricts the circumstances where the bar would apply in a 

way that would reward relators with no first hand knowledge and 

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

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

already is taking action.’’ 13 Furthermore, the Department believes 

that ‘‘[i]f these changes were implemented, a relator could file suit 

and reduce the taxpayers’ recovery even though he or she has not 

contributed anything new to the Government’s case.’’ 14

The likely effect of the changes the legislation makes to the public disclosure bar will be to kill the bar. While it is true that the 

Justice Department would still theoretically be able to seek dismissal of parasitic qui tam actions, according to testimony before 

the committee ‘‘in practice it does not have the resources or inclination to do so, particularly in light of the far more restrictive lanVerDate Nov 24 2008 23:02 May 05, 2009 Jkt 079006 PO 00000 Frm 00032 Fmt 6659 Sfmt 6601 E:\HR\OC\HR097.XXX HR097

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15 H.R. 4854, the ‘‘False Claims Act Correction Act’’: Hearing Before the H. Comm. on the Judiciary, 110th Cong. (2008) (testimony of Peter B. Hutt, II, Partner, Akin Gump Strauss Hauer 

& Feld LLP). 16 Id. 17Quinn, 14 F.3d at 649. 18 Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999) (quoting 

United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield, Inc., 

755 F. Supp. 1055, 1056N57 (S.D. Ga. 1990)). 19Proposals to Fight Fraud and Protect Taxpayers: Hearing Before the H. Comm. on the Judiciary, 111th Cong. (2009) (testimony of Marcia G. Madsen, Partner, Mayer Brown). 

guage in [H.R. 1788].’’ 15 Accordingly, ‘‘[r]elators and their attorneys will have no reason to fear dismissal, and, as the history of 

the qui tam provisions teaches, there will be a flood of cases asserting claims based largely, and sometimes exclusively, on information 

already known to the government.’’ 16 As the D.C. Circuit has 

noted, ‘‘overly generous qui tam provisions present the danger of 

parasitic exploitation of the public coffers, as exemplified by the notorious plaintiff who copied the information on which his qui tam 

suit was based from the government’s own criminal indictment.’’ 17

Compounding the problem, in addition to eviscerating the bar, 

the legislation goes a step further. The FCA currently caps a qui 

tam plaintiff’s share of any recovery at 10% if the lawsuit is based 

on certain public disclosures. H.R. 1788, however, will remove this 

cap, permitting parasitic whistleblowers to recover more than a 

10% share even where their case is based on public information. 

In short, this legislation will defeat the purpose of the public disclosure bar—defending the U.S. Treasury against parasitic qui tam 

actions brought by whistleblowers with nothing new to offer. 

E. Elimination of Pleading Requirements Under Rule 9(b) Will 

Lead to Unfounded Qui Tam Lawsuits 

H.R. 1788 exempts qui tam plaintiffs—but not the Department 

of Justice—from the requirement of Rule 9(b) of the Federal Rules 

of Civil Procedure that all persons asserting fraud actions in federal court must plead the elements of fraud with particularity. 

There is no basis for holding qui tam plaintiffs in FCA actions to 

a lower pleading standard than every other federal litigant. 

Rule 9(b) provides that ‘‘[i]n alleging fraud or mistake, a party 

must state with particularity the circumstances constituting fraud 

or mistake.’’ Rule 9(b) has four purposes: 

First, the rule ensures that the defendant has sufficient information to formulate a defense by putting it on notice of the 

conduct complained of. Second, Rule 9(b) exists to protect defendants from frivolous suits. A third reason for the rule is to 

eliminate fraud actions in which all the facts are learned after 

discovery. Finally, Rule 9(b) protects defendants from harm to 

their goodwill and reputation.18

In place of the Rule 9(b) standard, H.R. 1788 would allow qui 

tam plaintiffs to plead facts that merely demonstrate a ‘‘reasonable 

indication’’ that a violation of the FCA is ‘‘likely to have occurred.’’ 

The Committee received testimony that eliminating the Rule 9(b) 

standard for qui tam actions will encourage relators ‘‘to plead shallow speculative claims, knowing that the potential exists to obtain 

more information if the case can survive the discovery stage.’’ 19 InVerDate Nov 24 2008 23:02 May 05, 2009 Jkt 079006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6601 E:\HR\OC\HR097.XXX HR097

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20 United States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d 304, 309 (5th Cir. 

1999). 21 Id. 22 Justice Dept. Views Letter Appendix at 6. 23 Id. 24 Id. (citations omitted). 

deed, as the Fifth Circuit has written, ‘‘[a] special relaxing of Rule 

9(b) is a qui tam plaintiff’s ticket to the discovery process.’’ 20

Thus, the result of the legislation’s relaxation of the Rule 9(b) 

standard will be to unleash a flood of unfounded and speculative 

qui tam cases—cases that otherwise would be dismissed for failure 

to plead with particularity—in hopes that fraud will be uncovered 

during discovery. This is contrary to the purposes of the qui tam 

provisions of the FCA, which grant ‘‘a right of action to private citizens only if they have independently obtained knowledge of 

fraud.’’ 21

F. Alternative Remedy Provision Will Require U.S. Treasury to 

Fund Relators Even When the Recovery was not Based on the 

FCA 

This legislation will also allow qui tam plaintiffs an expanded relator’s share in ‘‘alternative remedies’’ the Government recovers 

from non-FCA actions, such as contract actions, other non-fraud actions, and even criminal proceedings—though the relator is not a 

party, and the proceeding does not involve liability for false claims. 

The Act’s current alternative remedy provision provides the United 

States with the ability to pursue false claims against a recipient of 

federal funds administratively rather than under the FCA, while 

simultaneously ensuring that the relator is entitled to any recovery 

for the FCA claims. The Department of Justice is concerned, however, that this ‘‘legislation’s proposed changes would unduly expand 

the scope of the alternative remedy provision, and permit a relator 

to recover in too many situations and in situations not contemplated by the FCA.’’ 22

The Department has opined that because a relator can continue 

his qui tam action even if the Government receives compensation 

on a non-fraud basis, ‘‘there is no need to pay a share of the Government’s non-fraud recoveries as a means of furnishing relators 

with appropriate incentives to disclose allegations of fraud.’’ 23 If 

the Government determines the conduct was not fraudulent and is 

repaid administratively, the purposes of the FCA are not furthered 

by requiring the Government to compensate the relator out of those 

administrative recoveries. As the Department has explained, 

The purpose of the FCA was to induce those with knowledge 

of fraud . . . to disclose that wrongdoing. Such an inducement 

is unnecessary where a company may owe money to the United 

States, but has done nothing to hide that fact (for example, the 

defendant has not knowingly submitted a false claim or knowingly retained an overpayment). The law should encourage employees of such a company to report the overpayment to their 

employer in the first instance, and should not encourage them 

to file a qui tam action against a company that has not engaged in fraud.24

The alternative remedy provision in H.R. 1788, however, will encourage employees to file qui tam actions even if they know their 


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25Letter from Robert M. Berdahl, President, Association of American Universities, to John 

Conyers, Jr., Chairman, U.S. House Committee on the Judiciary (April 20, 2009). 26 Id. 27Memorandum from Kenneth E. Raske, President, Greater New York Hospital Association. 28Letter from Multi-industry Coalition Opposed to H.R. 1788 to John Conyers, Jr. and Lamar 

Smith, U.S. House Committee on the Judiciary (April 21, 2009). 29 Id. 

company did nothing wrong, because they will be ensured a share 

of the administrative recovery. This backstop will, of course, encourage the filing of unfounded qui tam actions under the FCA. 

Simply put, the Government should not pay relators at taxpayer 

expense in situations where no violation of the FCA has occurred. 

Yet, that is precisely what the alternative remedy provision of H.R. 

1788 would do for the benefit of relators over the taxpayers. 

G. The Interests of the Broad Array of Entities that Receive Federal 

Funds 

In considering the wisdom of the changes H.R. 1788 will make 

to the FCA, it is important to take into account the input this Committee has received from those entities that will incur the costs of 

any frivolous, unfounded and/or parasitic qui tam suits that result 

from this legislation. Opposition to this legislation has been raised 

by associations representing a diverse group of entities. Among 

other groups, the following have come out against H.R. 1788: Association of American Universities, American Counsel of Engineering 

Companies, American Hospital Association, American Tort Reform 

Association, Association of American Medical Colleges, Greater 

New York Hospital Association, National Association of Manufacturers, Property Casualty Insurers Association of America, and the 

U.S. Chamber of Commerce. 

In a letter to members of the Judiciary Committee, the Association of American Universities, which represents 60 leading U.S. research universities that together perform 60 percent of all federally 

funded university-based research, expressed ‘‘strong reservations 

about the pending bill’s unintended consequences.’’ 25 The association further explained that ‘‘H.R. 1788, as currently drafted, will 

frustrate our members’ efforts to monitor their financial relationships with the Government through strong internal controls and 

well-established and rigorous compliance, audit and reconciliation 

processes.’’ 26

Moreover, the Greater New York Hospital Association noted that 

‘‘[a]s written, the bill would allow qui tam plaintiffs and their lawyers to profit at the expense of the Federal Treasury, the United 

States Department of Justice, and economically struggling hospitals in New York and around the country.’’ 27 Additionally, organizations such as the American Hospital Association, the American 

Health Care Association, and the U.S. Chamber of Commerce informed members of the Committee that they believe that this legislation ‘‘would expand the scope of liability under the statute, increase its financial penalties, and remove safeguards against unfounded qui tam lawsuits.’’ 28 These entities further explained that 

they ‘‘believe these amendments are unnecessary and will impose 

enormous burdens on non-profits, universities, hospitals, and small 

businesses.’’ 29


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REPUBLICAN AMENDMENTS

Mr. Issa offered three amendments to H.R. 1788 at mark up; 

none of Mr. Issa’s amendments was adopted. 

• Requiring employee disclosure. This amendment provided 

that employees had first to report suspected FCA violations 

to their employer’s compliance officer before filing a qui tam 

action under the FCA. If the employer did not take corrective 

action within 90 days, the employee would be free to file an 

FCA lawsuit. 

• Inevitable Discovery. This amendment provided that qui tam 

plaintiffs would not be entitled to a relator’s share if the Attorney General determined that the United States would 

have inevitably discovered the false claims that were the 

basis for the qui tam suit. This amendment would have protected taxpayer dollars from unnecessary relator share payouts where the relator simply beat the Department of Justice 

to the courthouse. 

• Avoidance of Prosecution. The amendment provided explicit 

guidance to the courts that in cases in which the relator had 

initiated or furthered the fraud that was the basis for the 

qui tam action, the court could reduce the relator’s share of 

any recovery by the value of the avoidance of prosecution. 

CONCLUSION

The proposed ‘‘corrections’’ to the False Claims Act contained in 

H.R. 1788 are a virtual rewrite of many provisions of the FCA. The 

result of this rewrite will be not only to extend the Act’s liability 

provisions to allow the Government to ensure that the FCA covers 

all Government spending, a change we support, but to allow qui 

tam plaintiffs and their attorneys unnecessarily to attempt to recover more money at the expense of the federal Treasury and the 

taxpayers. The bill’s qui tam provisions will needlessly divert resources from the Treasury and impose huge burdens on businesses 

of all sizes, hospitals, universities, and non-profits. 

H.R. 1788 includes many provisions that would help relators to 

increase their recoveries under the FCA, even though there is no 

evidence that Congress needs to provide additional incentives for 

relators. Instead, these provisions simply provide more money to 

relators at the expense of U.S. taxpayers and strengthen the hand 

of relators at the expense of the Justice Department. In sum, the 

benefits this legislation would provide to the Federal Government’s 

efforts at combating waste, fraud, and abuse by extending the Act’s 

liability provisions, will be outweighed by the burdens and costs 

the qui tam provisions in this bill will impose on the Federal Government itself and entities such as non-profits, hospitals, universities, and small businesses that receive federal funds. 

LAMAR SMITH. 

DARRELL E. ISSA. 

JIM JORDAN. 

Æ 


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