Senator: Pandemic Makes Anti-Fraud Law More Important Than Ever

A longtime Senate advocate for whistleblowers and strong oversight of agencies said on Wednesday that due to the historic spending for the coronavirus pandemic, the law that targets fraud against the federal government and in federal contracting is more important now than ever. 

Sen. Chuck Grassley, R-Iowa, spoke at the Federal Bar Association’s fourth annual Qui Tam Conference. Qui tam, a provision of the “The False Claims Act,” which was originally enacted during the Civil War, allows individuals or non-government organizations to file lawsuits on behalf of the government to disclose fraud that led to financial loss for the government. They can be awarded between 15% and 30% of the proceeds collected. Grassley co-authored updates to the act in 1986 and 2009.

“As the country continues to battle the global pandemic, the False Claims Act has never been more important than it is right now,” said Grassley at the virtual event. “The massive increases in government spending to address the COVID crisis have created new opportunities for fraudsters trying to cheat the government and steal the people’s money. As history has shown all of us, fraudsters thrive during times of crises and large-scale government spending.” 

He said it’s important the Justice Department, Congress and whistleblowers “remain very vigilant” due to the trillions of dollars spent in pandemic relief.

“Several False Claims Act cases are already starting to pile up in relation to the COVID-19 pandemic,” Grassley stated. Also, “earlier this year, the Department of Justice reported its first civil settlement resolving allegations of fraud against the Paycheck Protection Program of the CARES Act. I hope that is a sign of things to come.” 

In fiscal 2020, the Justice Department obtained over $2.2 billion in settlements and judgments from civil cases involving false claims and fraud against the government, of which over $1.6 billion arose from lawsuits filed under the qui tam provision of the False Claims Act. Of the $2.2 billion, over $1.8 billion was related to the health care industry. 

Recoveries “were the lowest they have been in 12 years,” likely due to pandemic disruptions, said the global law firm Gibson Dunn. However, “despite the global pandemic, closed courts, and the realities of remote work (including remote investigations and litigation), the government and qui tam relators still opened 922 new False Claims Act cases last year. This is the largest single-year total ever by a substantial margin and brings the total number of new FCA cases opened in the last five years to more than 4,100.” 

Brian Boynton, newly appointed acting assistant attorney general for the Justice Department’s Civil Division, also spoke at the conference and stressed the importance of the law. 

“The False Claims Act will play a very significant role in the coming years as the government grapples with the consequences of this pandemic,” he said. “The circumstances of the current pandemic may be novel, but the inevitable fraud schemes that it will produce will, in many cases, resemble misconduct that the False Claims Act has long been used to address.” 

Some examples of how this could play out are: “false representations regarding eligibility, misuse of program funds and false certifications pertaining to loan forgiveness,” Boynton noted. 

In July, Grassley proposed new amendments to the law to limit the Justice Department’s ability to dismiss complaints even over objections from “realtors,” the sources of the fraud claims (also referred to as whistleblowers). 

Eric Weisenburger, associate attorney for the law firm Dorsey & Whitney, wrote in a post last month that former Attorney General William Barr had a “well-documented distaste for the qui tam provisions.” The National Law Review explained in July that the Justice Department “has continued to act on a 2018 memo known as the ‘Granston memo,’ which encourages the dismissal of whistleblower cases prior to any court hearings.” Grassley has repeatedly expressed concerns over this.

Wednesday, the senator said he intends to introduce legislation based on his proposals, which would apply to pending cases and cases on appeal in addition to new ones, although he didn’t give a timeframe. With the massive pandemic spending, “we’ve got to have a strong False Claims Act in order to be able to make sure that we recover all the money that is fraudulently taken from the taxpayers,” Grassley said.