On July 30, Senator Charles Grassley (R-IA) gave the keynote address at the National Whistleblower Center’s(NWC) National Whistleblower Day 2020 celebration. During his speech, Grassley announced proposed amendments to the False Claims Act (FCA). Grassley, a longtime champion of whistleblower rights, noted that the changes would strengthen the FCA and allow for more effective policing of government contract fraud. This need is especially pressing given the trillions of dollars the U.S. government is spending in response to the COVID-19 pandemic. “The False Claims Act has never been more important than it is right now,” Grassley said in a speech delivered on the Senate floor.
The FCA is America’s foundational whistleblower law. President Lincoln first signed the law during the Civil War in order to expose and punish fraudulent government contractors by allowing whistleblowers to pursue qui tam actions against fraudsters. Grassley was behind the key 1986 amendments, which strengthened the FCA. The efficacy of the FCA is undisputed, with recoveries of over $60 billion in taxpayer dollars in the past 30 years.
Grassley’s proposed amendments would reverse two recent setbacks to the FCA. First, it would reverse a 2018 Department of Justice (DOJ) policy, known as the Granston memo, which encourages DOJ attorneys to dismiss FCA cases brought by qui tam whistleblowers. Second, it would reverse a section of the 2016 U.S. Supreme Court ruling in Universal Health Services, Inc. v. U.S. ex rel. Escobar, which allows for the dismissal of FCA cases if the government had knowledge of the fraud.
Stephen M. Kohn, whistleblower attorney at the qui tam law firm Kohn, Kohn & Colapinto, wrote a piece detailing and arguing for the proposed changes. In the article, he writes, “the Granston memo is extremely troubling insomuch as it permits DOJ attorneys to seek dismissals in FCA cases which may be meritorious.” He added that it “also raises the specter of political and corrupt interference with the justice system.”
Regarding the Escobar ruling, Kohn noted that “because of the COVID-19 emergency, there will be many instances where it is absolutely necessary for the government to pay a claim despite possessing information related to a potential fraud.” He continued by adding that “if the government has no other means to secure these items, and lives are at stake, it would be a terrible mistake to permit the fraudulent contractor to escape FCA liability simply because the government chose to prioritize human life over money.”
The National Whistleblower Center released a statement in support of Grassley’s proposed amendments. John Kostyack, NWC Executive Director, said, “With these strengthening amendments, the False Claims Act will be the most effective law for combatting government contractor fraud at a time when action against these frauds is greatly needed. We must make sure that the American people suffering from this virus do not see their tax dollars diverted by those who would use fraud to profit at their expense.”