Whistle-blower law amendments debated in hearing

Senators backing amendments to the False Claims Act, which would give more opportunities for citizens to sue the government for fraud, heard testimony today from lawyers, a Department of Justice official and a private citizen whistle-blower at a Senate Judiciary Committee hearing.

Senate Bill 2041, sponsored by Sens. Charles E. Grassley (R-Iowa) and Dick Durbin (D-Ill.), would allow federal employees to sue the government for acts of fraud they discover in their official capacities, and then collect a portion of the proceeds for themselves.

It would also override a 2004 case that ruled whistle-blowers couldn’t sue quasi-government companies – private companies that receive partial or potentially even complete federal funding – under the FCA.

John Clark, a lawyer from San Antonio who represents whistle-blowers and who was a witness at the hearing, said these amendments help bring to light private companies that are “knowingly defrauding the United States.”

“With an increasing amount of our federal government’s operations ‘outsourced’ to private contractors, it is more important than ever that Congress clarify that the FCA is designed to protect federal assets – whether disbursed by a U.S. government official or by a third party,” Clark said in his written testimony.

John Boese, a DC lawyer representing quasi-government companies, such as defense contractors, had quite a different take on the amendments. He said the changes would unnecessarily broaden the law to allow anyone who receives federal money, even, for example, people receiving Social Security money, to sue under the act. He also noted federal employees would see this as an opportunity to seek personal financial gain rather than suing for the greater good of exposing government fraud.

Sen. Dick Durbin (D-Ill.), who is co-sponsoring the bill, was shocked by Boese’s opinion on the amendments. He said that Boese’s examples, such as the Social Security one, were too extreme.

Clark responded to Boese’s testimony as well, noting that Boese must be living a “fantasy” when he says it broadens the law. Clark said the amendments clarify and simplify issues that have come up in the FCA because of several recent cases.

Another important amendment to the law, according to Clark, would allow whistle-blowers to still sue under the FCA even after information about potential fraud has been covered in the media. Because of a 2007 ruling, a plaintiff must be the original source of all claims to file suit.