During a keynote address for the 2021 Federal Bar Association Qui Tam Conference, Senator Chuck Grassley (R-IA) discussed the need for reforms to the False Claims Act (“FCA”). The Senator’s remarks come on the eve of the 158th Anniversary of President Abraham Lincoln signing it into law on March 1, 1863.
After the Civil War, the False Claims Act continued to identify military contractors guilty of mismanagement and fraud. Sen. Grassley was the architect behind the 1986 amendments that turned the False Claims Act into America’s most important tool to uncover and punish fraud.
“The key to the False Claims Act’s success is that it allows whistleblowers to sue fraudsters on behalf of the federal government by standing in the shoes of the U.S. government,” Sen. Grassley remarked. “Since the 1986 amendments to False Claims Act, cases have recovered more than $64 billion for taxpayers,” he noted.
Since the inclusion of the qui tam provision, the detection, and prevention of fraud have risen exponentially. The FCA has long served as a powerful weapon against fraud and waste in government programs, from rancid Civil War rations to healthcare fraud scams. Billions of dollars have been recovered, and more whistleblowers have been vindicated under the FCA than any other federal law.
Sen. Grassley noted that for the FCA to remain strong, Congressional oversight is important. He said that “Courts have read a more stringent materiality standard than the text of the statute provides. And the Department of Justice has moved to dismiss dozens of cases under the incorrect interpretation that they have unfettered discretion to do that.”
Sen. Grassley is referencing a series of recent policies and decisions that have gone against Congress’s intentions and severely weakened the False Claims Act.
A 2018 Department of Justice (DOJ) policy, known as the Granston memo, encouraging actions to dismiss whistleblower cases before any court hearing on the merits, and
A section of the 2016 Supreme Court ruling in Universal Health Services, Inc. v. U.S. ex rel. Escobar. This section allows government contractors to escape liability for fraud by claiming that the government consented to the fraud, and it is therefore not material.
In his remarks, Sen. Grassley stated that in the interest of transparency, the DOJ must present evidence in a court of law to show a case lacks merit. He also said, “The Attorney General should state a legitimate reason for deciding not to pursue a case in court.”
The Senator touched on the massive surge of federal funding to provide relief to individuals and businesses amidst the COVID-19 crisis. Due to this increased government spending, opportunities and incentives for fraud are at an all-time high. Deterring this fraud and ensuring accountability and transparency in federal spending requires a strong False Claims Act. “Congress, the DOJ, and whistleblowers must remain very vigilant and must ensure billions of dollars don’t go to enrich fraudsters who are seeking to take advantage of the crisis,” Sen. Grassley said.
“Congress depends on the American public to be vigilant and to speak up if they see something happening that they know is wrong. Those who speak up and report a violation in accordance with federal law deserve federal whistleblower protections and backing of the federal government when they seek to expose fraud and to protect taxpayer dollars,” Senator Grassley concluded.