May 18, 2009. The U.S. Congress this evening passed S. 386, the Fraud Enforcement and Recovery Act of 2009 (FERA), legislation containing critically-needed amendments to the civil False Claims Act (FCA), 31 U.S.C. § 3729 et seq. The FCA is a law that provides the United States with a triple damage remedy when false claims and false statements are made to obtain federal funds. Primarily due to the so-called qui tam provisions of the FCA, which provide whistle blowers with a bounty for filing FCA cases on behalf of the United States, the federal government has recovered more than $20 billion in FCA cases since 1986. Attorney Shelley R. Slade, a partner with Vogel, Slade & Goldstein, LLP, a Washington D.C. law firm representing qui tam plaintiffs nationwide, testified in support of these changes before the Committee on the Judiciary of the U.S. House of Representatives.
FERA expands both the conduct made illegal by the FCA and the type of whistle blowing protected by the FCA. FERA’s amendments are designed to close loopholes in the FCA resulting from judicial misinterpretations and to ensure that this law remains a viable remedy to prosecute fraud against the Government in the 21st Century. President Obama has pledged to move quickly to sign FERA into law.
Among other things, FERA will amend the FCA so that it will expressly protect government funds disbursed to subcontractors and sub-grantees to the same extent it protects government funds disbursed to prime contractors and grantees. In addition, it will make it easier to prove the liability of those who avoid obligations arising from retention of a government overpayment, and those who file false claims for third party assets administered by the United States. With the federal government outsourcing an increasing number of inherently governmental functions, government spending at unprecedented levels, and Medicare on the edge of insolvency, these amendments to the FCA’s liability provisions are more badly needed than ever.
FERA also will expand the protection afforded whistle blowers. Employees and contractors who try to stop violations of the FCA will be protected from retaliation. Finally, FERA will substantially enhance the Department of Justice’s ability to investigate false claims on government programs. FERA accomplishes this by authorizing the Attorney General to delegate to DOJ attorneys the power to issue civil investigative demands (i.e., subpoenas) for testimony, documents and interrogatory answers in FCA investigation and cases. Line attorneys no longer will have to send every civil investigative demand to the Attorney General for his personal approval. In addition, FERA expressly authorizes DOJ attorneys to use the fruits of those subpoenas for a wide range of investigatory and litigation purposes.
In June 2008, Vogel, Slade & Goldstein attorney Shelley R. Slade provided key testimony in support of these changes before the Committee on the Judiciary of the U.S. House of Representatives. Among other things, Ms. Slade’s testimony focused on the critical role played by qui tam plaintiffs in uncovering and prosecuting fraud on government programs. Ms. Slade sits on the Board of Directors of the national, non-profit, public interest organization Taxpayers Against Fraud (TAF) whose mission is to combat fraud against the federal government and state governments through the promotion of the qui tam provisions of false claims laws, especially the federal FCA.