Bipartisan Amendments Aim to Strengthen False Claims Act
On July 25, a bipartisan group of senators, led by Senator Chuck Grassley (R-IA), introduced the False Claims Amendments Act of 2023. The bill makes a number of technical fixes to the False Claims Act (FCA) in order to ensure it remains the government’s most effective anti-fraud tool. Most notably, the FCA Amendments Act addresses a loophole that has arisen from judicial interpretations of the “materiality” requirement contained in the FCA.
“The False Claims Act is America’s number one fraud fighting law. These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals,” said leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto.
Under the FCA, recipients of government money can be held liable if they commit fraud that is “material” to the payment of a contract. The 2016 Supreme Court decision United Health Services v. United States ex rel. Escobar presented an interpretation of “materiality” which has allowed companies to escape liability by proving that the government still paid out the contract despite someone within the government being aware of the fraud.
The FCA Amendments Act does not change the current materiality standard in the FCA but offers guidance to courts specifying that there are reasons for the continued payment of contracts beyond that the fraud is not material. Other minor reforms offered by the FCA Amendments Act include clarifying that the FCA provides anti-retaliation protection to former employees and requiring a GAO study on the benefits and challenges of FCA enforcement efforts.
Senator Grassley championed the 1986 amendments which modernized the FCA. Since then, the law has allowed the government to recover over $72 billion from fraudsters.
