Special Investigations - Congressional Bill To Enhance The False Claims Act
These proposed amendments have far-reaching consequences for any company engaged in business either directly with the U.S. government or with one of its contractors or grantees.
A bill recently introduced in the House of Representatives would reverse a series of judicial decisions curtailing the reach of the federal Civil False Claims Act, extend the Act’s statute of limitations, and substantially ease restrictions on “qui tam” citizen suits.
H.R. 4854, the False Claims Act Correction Act of 2007, and a parallel measure introduced in the Senate, would extend the Act’s cause of action for treble damages to cases in which the government has provided money or property to a grantee, contractor, or other agent and the wrongful conduct of the defendant causes a loss of such funds. Several recent court decisions have dismissed such actions on the ground that no claim for payment had been presented to the government itself.
The bill provides that the statute of limitations, previously six years with a tolling provision that, if satisfied could extend the limitations period to ten years, would now be ten years in all cases. To ensure that the United States gets the full benefit of this extended period, the bill also states that in qui tam actions initiated by private citizens, any amended complaint ultimately filed by the U.S. relates back, for all purposes, to the date of filing of the citizen’s original complaint.
A provision with particular significance for health care providers states that a private citizen need not identify specific, individual claims if the facts alleged in the complaint would provide a “reasonable indication” that one or more violations of the Act “are likely to have occurred.” This provision would reverse court decisions that have dismissed qui tam actions involving alleged false claims in the Medicare and Medicaid programs on the grounds that the citizen plaintiff, though perhaps aware of a pattern of improper practices by an institutional health care provider, lacked specific and personal knowledge of dates, patient identities, medical services purportedly rendered and similar particulars.
The bill would limit the current Act’s prohibition on qui tam actions based on publicly disclosed information to cases in which the person bringing the action derived knowledge of “all the essential elements” of the case from public sources. Any case in which a public disclosure question arises could be dismissed only on motion of the government, not the defendant.
The potential use of civil investigative demands, seldom employed in the false claims context, is made easier by allowing delegation of the Attorney General’s authority to approve their issuance. The bill does not specify any limits on this delegation, but experience with similar provisions in other statutes strongly suggests that delegation outside the Department of Justice is highly improbable. More likely is a delegation to the Civil Assistant Attorney General and the United States Attorneys.
An enhanced whistle-blower protection measure provides that any contract or term or condition of employment purporting to limit the rights of any individual to pursue a qui tam action is declared void.
Prospects for passage are uncertain, but the bill warrants close monitoring to ensure that our clients can be given prompt, practical guidance. This Alert will be updated as the legislative process goes forward.
For more information please contact:
Mark Nagle
202.274.2972
Bryan Lavine
404.885.3170
DeWitt Rogers
404.885.3412
John West
804.697.1269