Bipartisan Amendment to the False Claims Act Would Put Burden Back on Fraudsters

Bipartisan Amendment to the False Claims Act Would Put Burden Back on Fraudsters

On July 26, 2021, Senators Chuck Grassley (R-Iowa), Richard Durbin (D-Ill.), Roger Wicker (R-Miss.), Patrick Leahy (D-Vt.), and John Kennedy (R-La.) proposed key amendments to the False Claims Act.  Their bill would force fraudsters to show by “clear and convincing evidence” that their actions were not “material” to the government’s decision to pay them.  Additionally, the bill would clarify existing provisions of the False Claims Act, including its anti-retaliation provisions.

The False Claims Act allows private individuals to sue businesses that defraud the government, and receive between 15% and 30% of the amount recovered.  The Act has helped the government (and individuals) recover billions of taxpayer dollars lost to fraud.  According to a recent study from Harvard Business School, the False Claims Act has resulted in over 12,000 lawsuits being filed, and over $50 billion of taxpayer money recovered.

In 2016, the Supreme Court issued a decision that had some unfortunate effects on the False Claims Act.  Universal Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  To violate the Act, the falsehood in the claim must be “material”—it must be capable of influencing the government’s payment decision. Some courts have misinterpreted Escobar to mean that the government’s decision to pay, in and of itself, is “strong evidence” that the fraudster’s lie was not material

Escobar made it too easy for fraudsters to get away with their crimes.  Fraudsters could argue that their fraud was not “material” simply because the government paid them.  If there was any evidence that someone in the government had caught a whiff of the fraud, and the government still paid, an action under the False Claims Act might fail.

The bipartisan bill would put an end to that.  It does not change the definition of “materiality,” but it shifts the burden of proof to the fraudsters.  If the bill passes, fraudsters can only rebut evidence of materiality by “clear and convincing evidence.”  That is a high burden to meet.  In short, it means that fraudsters can no longer point to the simple fact that they were paid.

The bill also clarifies the False Claims Act’s existing anti-retaliation provisions.  These provisions are already strong, allowing whistleblowers to be adequately compensated for the costs inherent in blowing the whistle.  However, the bill makes the provisions stronger, by clarifying that the False Claims Act’s anti-retaliation provisions apply to post-employment acts by the employer.  In other words, employers will not be able to blackball their former employees in retaliation for blowing the whistle.

The bill benefits citizens who have the ability to file suit under the False Claims Act.  And it will save taxpayer dollars.  Kennedy Vuernick fully supports the Senators’ efforts to improve the False Claims Act.

In the past decade, Kennedy Vuernick attorneys have been involved in False Claims Act recoveries totaling well over $100,000,000.  At Kennedy Vuernick, we use our nearly 30 years of combined experience as white-collar prosecutors—and well over 50 years of combined experience fighting fraud in general—to bring about justice for those who have been defrauded.

If you have information about fraudulent claims being submitted to the government, you may have a case under the False Claims Act.  You need attorneys with the skill and knowledge to help you pursue a recovery.  Call 201.636.9980 or email info@kvlawllc.com to find out if we are the right attorneys for you.