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Home » Food & Drug Regulation: Library » Newsbriefs

Obama Signs Bill Amending False Claims Act

Date Posted: May 21, 2009

On May 20 President Obama signed into law the Fraud Enforcement and Recovery Act of 2009, S. 386. Included in the legislation are amendments to the federal False Claims Act (FCA) intended to protect federal government funds disbursed to subcontractors to the same extent that the FCA protects funds distributed to prime contractors.

The Senate Judiciary Committee report accompanying the legislation (S. Rep. No. 111-10) states that these changes “clarify and correct erroneous interpretations of the law” stemming from the Supreme Court’s decision in Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008). Under that decision, the report states, to be liable under the FCA a subcontractor in a government contract who knowingly submits a false claim to a general contractor and is paid with government funds must have intended to defraud the government, not just the general contractor.

The legislation also seeks to address recent judicial interpretations of the statute’s so-called “presentment clause.” A 2004 federal appeals court decision held that FCA liability can attach only if the claim is presented to a government officer or employee — thereby limiting recovery for frauds committed by a government contractor when the funds are expended by a government grantee.

According to the report, the new legislation clarifies that FCA liability “attaches whenever a person knowingly makes a false claim to obtain money or property, any part of which is provided by the Government without regard to whether the wrongdoer deals directly with the Federal Government; with an agent acting on the Government’s behalf; or with a third party contractor, grantee, or other recipient of such money or property.”

The legislation also allows the attorney general to delegate to Department of Justice attorneys the power to issue civil investigative demands for testimony, documents and interrogatory answers in FCA investigations. Formerly all such civil investigative demands had to be personally approved by the attorney general. The new statute also provides that information obtained through the use of the civil investigative demands can be used in a range of federal investigations and prosecutions.

Additional information on the amendments to the False Claims Act will appear in a future issue of Thompson Publishing Group’s FDA Enforcement Manual newsletter.


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