Iowa Senator Charles Grassley is at it again, this time coming out swinging in a full-throated defense of the False Claims Act (FCA). The Iowa Republican says that recent attempts by corporate lobbyists to alter the measure represent a serious attack on the single most effective anti-fraud legislation in the past several decades. Grassley intends to vigorously defend the FCA against anyone looking to make changes with the hope of preserving a program that has worked to allow whistleblowers to hold fraudulent government contractors accountable for their actions.
First things first, the False Claims Act was originally passed in the Civil War era, though it was significantly strengthened in 1987 by adding new teeth to the legislation and increasing penalties on those companies found to have defrauded the government. The original intention of the FCA was to act as a deterrent to fraud. It achieved this goal by allowing individuals to bring suit against companies doing business with the government. The whistleblowers that pointed out the waste and fraud were then rewarded for their efforts by walking away with a percentage of the total recovery. In some especially big cases, the Justice Department can even choose to intervene on the side of the whistleblower; something that makes it much more likely the plaintiff will prevail.
The False Claims Act has been a resounding success according to most experts. Grassley has noted that the FCA has resulted in the recovery of $42 billion, a serious sum of money by all measures. That being said, there is plenty more fraud lurking in the system just waiting to be rooted out. According to recent estimates, as much as $72 billion a year is wasted by the federal government due to fraud and abuse.
Despite the seeming effectiveness of the program, groups led by the Chamber of Commerce and other private corporations have hired lobbyists to petition Congress to rein in the FCA. Many have referred to these suggested changes as ways to "strengthen" the law, something Senator Grassley finds ridiculous.
Lobbyists have argued that the FCA encourages frivolous claims and fails to deter enough misconduct to make it worthwhile. The hope among those at the Chamber of Commerce is that the FCA can be rewritten to go easier on companies accused of fraud. One way of doing this is to insert a provision in the FCA that requires whistleblowers to first report the fraud internally before being allowed to file suit. The problem is that this and other reforms would succeed only in diminishing the number of people raising these cases, essentially scaring off any good leads before they even get started.
As Senator Grassley has said, Congress should be wary when the biggest violators of a law hire lobbyists to argue for "strengthening" it. The fact is the law is working exactly as it is supposed to and should not be tinkered with by lobbyists hired by those companies the FCA is designed to watch over. Hopefully, Senator Grassley succeeds in reminding his colleagues of the value of the FCA before any attempt is made to make changes to it.
Sources:
Big Business Launches a New Attack on Whistle-Blowers, by Paul Barrett, published at Businessweek.com on August 4, 2014.
Grassley Testimony on the Benefits of the False Claims Act, published at Grassley.Senate.gov on July 29, 2014.
