Background:

• The False Claims Act (FCA) is the U.S. Government’s main weapon against fraud on federally funded programs. It authorizes the Attorney General to recover treble damages and fines from anyone who submits or causes someone else to submit a false claim for payment to the Government. Current proposals offering “technical amendments” to the FCA, virtually rewrite of intent and spirit of the Act. Expanding the universe of claims – many of which would not involve truly false claims nor involve any loss to the Federal Treasury – will complicate management of Government programs, allow opportunistic plaintiffs to recover funds that should go to the Treasury, and impose huge burdens on non-profits, state and local governments, and small businesses.

AGC Message:

• It is Unreasonable to Extend the FCA Statute of Limitations from Six to Ten Years, Far Longer than Almost All Other Federal Limitations Periods. Extending this time period would not only encourage the proliferation of stale claims but could also create additional liability by allowing qui tam plaintiffs to delay filing a claim in order to increase their own recovery at the Government’s expense.
• The Bill Would Inappropriately Authorize Retroactive Application of Many of the Proposed Amendments to Pending and Past Cases. Applying the legislation retroactively, including applying it to actions that occurred prior to the effective date of the legislation, raises serious due process concerns. For example, the provisions eliminating public disclosure as a jurisdictional defense would unconstitutionally attach a new disability for prior conduct and the extension of the statute of limitations would impermissibly revive time-barred claims if applied retroactively.
• The Bill Would Create A New Breed of Class-Action Lawsuit. The bill would allow private individuals to file qui tam lawsuits against any person submitting claims to a grantee or other recipient of federal funds, even if no Government interest is involved, if the recipient has commingled these funds with its own.  The FCA would effectively displace state tort laws, imposing treble damages and penalties on fraud claims between private entities that are currently addressed by state fraud laws.
• The Bill Would Allow for the Recovery of “Damages” Even Where the Government Suffered No Loss. The bill would unfairly eliminate "loss" or "damages" as the basis for recovery under the False Claims Act and dramatically expand the way recoveries are calculated. The bedrock principle in measuring damages under the FCA has been to ensure that the Government recovers the actual damages it sustains because of the violation. The proposed change would entitle the Government to recover amounts in excess of any losses actually suffered and potentially benefit from enormous windfalls because it would be entitled to recover treble the amount of a contract or claim even where it suffered no loss at all.
• The Legislation Would Remove a Defendant’s Ability to Seek Dismissal of “Parasitic” Qui Tam Suits. The bill would eliminate the current Act’s “public disclosure” provision that safeguards against “parasitic” qui tam suits – which are based on information already known to the Government or reported in the news media.
• None of the Proposed Changes in the Legislation are in the Interests of the United States, its Citizens and Taxpayers, or the Businesses that are Partners with the Government. Instead, the legislation will raise companies’ cost of doing business, increase the Government’s cost of contracts, discourage large and small businesses from doing business with the Government and cause irreparable damage to the Government contracting process.