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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1788 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                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.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 30, 2009

 Mr. Berman (for himself, Mr. Sensenbrenner, Mr. Daniel E. Lungren of 
California, Mr. Conyers, and Mr. Cohen) introduced the following bill; 
          which was referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL

 
 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``False Claims Act Correction Act of 
2009''.

SEC. 2. LIABILITY FOR FALSE CLAIMS.

    Section 3729 of title 31, United States Code, is amended to read as 
follows:
``Sec. 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 
        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).
    ``(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.''.

SEC. 3. CIVIL ACTIONS FOR FALSE CLAIMS.

    (a) Actions by Private Persons Generally.--Section 3730(b) of title 
31, United States Code, is amended--
            (1) in paragraph (1), by striking the last sentence and 
        inserting the following: ``The action may be dismissed only 
        with the consent of the court and the Attorney General.'';
            (2) in paragraph (2), by inserting after the second 
        sentence the following: ``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.'';
            (3) in paragraph (4), by striking subparagraph (B) and 
        inserting the following:
            ``(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.''; and
            (4) by amending paragraph (5) to read as follows:
    ``(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 
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.''.
    (b) Rights of the Parties to Qui Tam Actions.--Section 3730(c)(5) 
of title 31, United States Code, is amended by striking the second 
sentence and inserting the following: ``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).''.
    (c) Award to Qui Tam Plaintiff.--Section 3730(d) of title 31, 
United States Code, is amended--
            (1) in paragraph (1)--
                    (A) in the first sentence, by inserting ``an award 
                of'' after ``receive'';
                    (B) by striking the second and third sentences and 
                inserting the following: ``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 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.''; and
                    (C) in the next to the last sentence, by striking 
                ``necessarily'';
            (2) in paragraph (2)--
                    (A) in the second sentence, by striking ``and shall 
                be paid out of such proceeds''; and
                    (B) in the third sentence, by striking 
                ``necessarily''; and
            (3) by amending paragraph (3) to read as follows:
    ``(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 
not prejudice the right of the United States to continue the action, 
represented by the Department of Justice.''.
    (d) Certain Actions Barred.--Section 3730(e)(4) of title 31, United 
States Code, is amended to read as follows:
    ``(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.''.
    (e) Relief From Retaliatory Actions.--Section 3730(h) of title 31, 
United States Code, is amended to read as follows:
    ``(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.''.
    (f) Relief to Administrative Beneficiaries.--Section 3730 of title 
31, United States Code, is amended by adding at the end the following 
new 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.''.

SEC. 4. FALSE CLAIMS PROCEDURE.

    (a) Statute of Limitations; Intervention by the Government.--
Section 3731(b) of title 31, United States Code, is amended to read as 
follows:
    ``(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.''.
    (b) Standard of Proof.--Section 3731(c) of title 31, United States 
Code, is amended--
            (1) by striking ``(c) In'' and inserting ``(c) Standard of 
        Proof.--In''; and
            (2) by striking ``United States'' and inserting 
        ``plaintiff''.
    (c) Notice of Claims; Void Contracts, Agreements, and Conditions of 
Employment.--Section 3731 of title 31, United States Code, is amended 
by adding at the end the following new subsections:
    ``(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) 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.''.
    (d) Conforming Amendments.--Section 3731 of title 31, United States 
Code, is amended--
            (1) in subsection (a), by striking ``(a) A subpena'' and 
        inserting ``(a) Service of Subpoenas.--A subpoena''; and
            (2) in subsection (d), by striking ``(d) Notwithstanding'' 
        and inserting ``(d) Estoppel.--Notwithstanding''.

SEC. 5. FALSE CLAIMS JURISDICTION.

    Section 3732 of title 31, United States Code, is amended by adding 
at the end the following new subsection:
    ``(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.''.

SEC. 6. CIVIL INVESTIGATIVE DEMANDS.

    (a) Civil Investigative Demands.--Section 3733(a) of title 31, 
United States Code, is amended--
            (1) in paragraph (1)--
                    (A) in the matter following subparagraph (D)--
                            (i) by striking ``The Attorney General may 
                        not delegate'' and all that follows through 
                        ``subsection.''; and
                            (ii) by striking ``, the Deputy Attorney 
                        General, or an Assistant Attorney General''; 
                        and
                    (B) by adding at the end the following: ``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.''; and
            (2) in paragraph (2)--
                    (A) in subparagraph (F), by striking ``or an 
                Assistant Attorney General designated by the Attorney 
                General''; and
                    (B) in subparagraph (G), by striking the second 
                sentence.
    (b) Procedures.--
            (1) Oral examinations.--Section 3733(h)(6) of title 31, 
        United States Code, is amended by striking ``, the Deputy 
        Attorney General, or an Assistant Attorney General''.
            (2) Custodians.--Section 3733(i)(3) of title 31, United 
        States Code, is amended to read as follows:
            ``(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.''.
    (c) Definitions.--Section 3733(l) of title 31, United States Code, 
is amended--
            (1) in paragraph (6), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (7), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(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.''.
    (d) Delegation of Authority.--Section 3733 of title 31, United 
States Code, is amended by adding at the end the following:
    ``(m) Delegation.--The Attorney General may delegate any authority 
that the Attorney General has under this section.''.

SEC. 7. EFFECTIVE DATE.

    (a) In General.--The amendments made by this Act shall take effect 
on the date of the enactment of this Act and, except as provided in 
subsection (b), shall apply to any case pending on, or filed on or 
after, that date.
    (b) Exceptions.--The following provisions of title 31, United 
States Code, as amended by this Act, shall apply only to cases filed on 
or after the date of the enactment of this Act:
            (1) Section 3729(a)(1)(C)(i), relating to the failure to 
        comply with a statutory or contractual obligation to disclose 
        an overpayment.
            (2) Section 3730(h), to the extent such section applies to 
        discrimination against a person because of lawful acts done by 
        others associated with that person.
            (3) Section 3731(b)(1).
                                 <all>
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