An Introduction to the Federal False Claims Act

John M. Parisi

Shamberg, Johnson & Bergman, Chartered

Since being substantially amended in 1986, the Federal False Claims Act, (31 U.S.C. §§ 3729-3733), has become the single most important tool the United States Government and individual U.S. taxpayers have to recover federal dollars stolen through fraud by those contracting with the federal government. This article will cover the basics of the federal False Claims Act's Qui Tam, or "whistleblower" provisions. It will attempt to answer, in basic terms, the procedural issues unique to the act; the types of cases that have been successfully pursued; and provide a statistical analysis of the success of the act since the 1986 amendments.[1]

In enacting the 1986 amendments to the Federal False Claims Act, Congress recognized that the Government alone, with its limited resources, was overmatched in the fight against rampant fraud. In response to widespread reports that the U.S. Treasury was being repeatedly bilked, in 1986 Congress rejuvenated a Civil War-era law-the False Claims Act. The 1986 amendments strengthened the False Claims Act's Qui Tam provisions, creating incentives for private citizens with evidence of fraud to commit their time and resources to supplement the Government's efforts. By doing so, Congress put into play a powerful public-private partnership for uncovering fraud against the federal fisc and obtaining the maximum recovery for American taxpayers. Qui Tam is short for a longer Latin phrase that is generally paraphrased as meaning "he who brings the action on behalf of himself as well as the king." The Qui Tam, or whistleblower provision is a relatively unique mechanism in the law that allows citizens with evidence of fraud against government contracts and government programs spending federal dollars to sue, on behalf of the federal government, to recover the stolen funds. As compensation for the risk and effort of filing a Qui Tam case, the citizen whistleblower or "relator" may be awarded a portion of the funds recovered.

The False Claims Act is about more than money. It is also about discouraging fraud and changing the culture of corporate America. As noted by Sen. Charles Grassley (R-IA) and Rep. Howard Berman (D-CA), the principal supporters of the 1986 amendments to the act:

"Studies estimate the fraud deterred thus far by the qui tam provisions runs into the hundreds of billions of dollars. Instead of encouraging or rewarding a culture of deceit, corporations now spend substantial sums on sophisticated and meaningful compliance programs. That change in the corporate culture -- and in the values-based decisions that ordinary Americans make daily in the workplace -- may be the law's most durable legacy."

Who the Law Applies To

The False Claims Act covers fraud involving any federally funded contract or program, with the exception of tax fraud. While many Qui Tam actions in the late 1980s and early 1990s involved Department of Defense contracts, in recent years most Qui Tam actions have been used to fight Medicare fraud and fraud against other federally funded health care programs. This trend may yet again shift as a result of increased military spending through government contractors as a result of the wars in Afghanistan and Iraq.

Limits on the False Claims Act

Though the False Claims Act is a powerful tool to combat fraud, it is a tool that is constrained by both the law and economics of litigation. The False Claims Act explicitly excludes tax fraud. Section 3729(e) states that the Act "does not apply to claims, records, or statements made under the Internal Revenue Code." The act also does not apply to current or former military personnel if they learned of the fraud during their service. Also, no action can be brought against a member of Congress, a member of the judiciary, or a senior executive branch official if the action is based on evidence or information known to the government when the action was brought.

For a civil case to be filed, the fraud has to reach a certain size, otherwise it is generally not worth it for the relator to risk his or her career to file suit, nor is it worth it for a law firm to take on the case and risk the loss of the enormous time and expense that a False Claims Act represents. Also, the potential of government intervention is affected by the potential size of the case. All things being equal, it is generally the goal of the relator to have the government intervene and take over the case. Although the government has far more resources than any law firm, those resources are not unlimited and in the post-911 world are stretched even thinner. The fact is that the government intervenes in less than one of every five Qui Tam cases filed. One of the considerations the government takes into account when deciding to intervene in an action is the amount of resources the cases will take and the likelihood of a recovery to justify that expenditure. Thus, taking on a small case with a financially weak defendant often may not make economic sense.

The act only applies to federal, not state or local, tax dollars. Although it does apply to federal money administered through a state program, such as Medicaid, the amount of federal participation in the funding of such a program is a consideration to keep in mind when assessing the potential case. Another important consideration is whether the state at issue has adopted a state false claims act that applies to the conduct at issue in the case. For example, Michigan recently enacted a state false claims act that only applies to Medicaid and would not be of benefit to a relator in a highway construction fraud case, even if state money was involved.

Frequently Asked Questions Regarding The False Claims Act

What does "Qui Tam" mean?

Qui Tam is an abbreviation from the Latin "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur" meaning "he who as well for the king as for himself sues in this matter." Qui Tam is also the technical legal term for the mechanism in the Federal False Claims Act that allows persons and entities with evidence of fraud against federal programs or contracts to sue the wrongdoer on behalf of the government.

There are a number of pronunciations of Qui Tam. The simplest, most pedestrian sounding, is key tam (rhymes with "ham"). Black's Law Dictionary suggests kweye (rhymes with "eye") tam. Others insist upon kweye tom (like the common name, but often said with an upper crust accent). And some say kwee (rhymes with "key") tam or kwee tom. Qui Tam enforcement dates back to the Middle Ages, and was a common mechanism for protecting the public fisc in Anglo-Saxon jurisprudence. America's first Continental Congress borrowed from this tradition and passed several Qui Tam statutes.
A modern Qui Tam action is one brought under the False Claims Act by a private plaintiff on behalf of the Federal Government (rather than by the government itself). The government has the right to intervene and join the action, or the government may decline intervention, in which case the private plaintiff may proceed on his or her own. The Qui Tam provisions in the False Claims Act include strong incentives both to report fraud against the government and to participate in the resulting litigation. These actions are also sometimes referred to as "whistleblower lawsuits." Because the action is brought in the name of, and on behalf of the government, the government has the right to intervene and join the Qui Tam action. The government may also decline intervention, in which case the private plaintiff may proceed on his/her own. The decision to proceed with a declined action is one that should be made only after careful consideration of the strengths and weaknesses of the case and a clear understanding of the government's reason for declining intervention.

A whistleblower that files suit under the False Claims Act is known as a relator, instead of a plaintiff. Technically, the United States (or the state in a state FCA case) is the plaintiff.

Where can the False Claims Act be found?

The False Claims Act can be found in the United States Code, Title 31, Sections 3729 through 3733 (31 U.S.C. §§ 3729-3733). It can also be found attached to this paper.

How old is the False Claims Act?

The False Claims Act, also known as the "Lincoln Law," dates back to the Civil War. Plagued by war profiteers selling the Union Army shoddy supplies at inflated prices, President Lincoln signed the False Claims Act into law in 1863. The original law included Qui Tam provisions that allowed private persons to sue those who defrauded the government and receive 50 percent of any recovery from the defendant.

The Qui Tam provisions were greatly weakened as a result of congressional amendments in 1943, and thereafter Qui Tam litigation became virtually nonexistent. However, in 1986, as more and more fraud went undetected and unaddressed (especially in the burgeoning defense industry), Sen. Charles Grassley (R., Iowa) and Rep. Howard Berman (D., California) joined forces to amend the law and strengthen the incentives for citizens to uncover and fight fraud as Qui Tam relators. The 1986 False Claims Act Amendments received widespread bi-partisan support and were signed into law by President Reagan.

The Federal False Claims Act, 31 U.S.C. §§ 3729-3733-sometimes referred to as "the whistleblower law"-was originally enacted in 1863 at the urging of President Abraham Lincoln, whose Union army was being routed by the rebels despite the rebels' inferior size and materials. At the time, many suppliers were defrauding the Union by, for example, selling it army crates filled with sawdust instead of muskets, and selling it the same cavalry horses two and three times. The government needed an incentive for private individuals to help combat fraud, and thus the False Claims Act was born.

Despite nearly a century of successful fraud suppression, the Qui Tam provisions were amended in 1943, in such a way as to eliminate much of the incentive for private individuals to bring suit. Indeed, the amendments abolished the guaranteed 50% share of the proceeds that the whistleblower was awarded under the 1863 act, and added procedural hurdles which prevented many cases from going forward. As a result, fraud against the government proliferated.

In 1986, President Ronald Reagan signed into law new amendments to the False Claims Act which restored the effectiveness of the Act. These amendments rejuvenated the Act, and have helped return billions of dollars to the treasury in the 15 years since their enactment. In addition, a strong False Claims Act undoubtedly deters much fraud before it occurs.

Under the Act, successful relators are entitled to at least 15% and up to 30% of the funds they help recover for the government. In addition, whistleblowers are protected from retaliation for activity relating to the Qui Tam action. Generally, in order for the most common FCA suit to be successful, a relator must prove by the preponderance of the evidence (more likely than not) that the defendant knowingly submitted a false claim for payment or approval to the government.

How much money has been returned to the U.S. Treasury as a result of Qui Tam lawsuits?

Since 1986, the False Claims Act settlements and judgments have totaled over $15 billion. In fiscal year 2009, the United States Department of Justice, reported $422 million was recovered under the False Claims Act.

Qui Tam Statistics
(as reported by DOJ: FY ending September 30, 2009)

•· Total amount recovered in Fiscal Year 2009 under the False Claims Act: $ 2,422,000,000 --. Of this amount, $1.9 billion was recovered under the Qui Tam provisions of the law.

•· Relator's share of the rewards in FY 2009: $254,794,000.

•· Total amount recovered under the False Claims Act since 1986: over $24,000,000,000.

•· Relator's share of the rewards since 1986: Over $2,477,000,000.

•· Total FCA amount recovered where there is an associated Qui Tam case, to date: $15,658,000,000.

•· Total FCA amount recovered by DOJ in cases that DOJ
entered or otherwise pursued: $15,186,000,000.

•· Total FCA amount recovered by relators in cases
declined by DOJ, to date: $472,000,000.

•· Total number of Qui Tam cases filed to date: 6,628

Total recoveries for Qui Tam by agency
DOD: $2.13 billion ($385 million to relators)
HHS: $11.508 billion ($1.796 billion to relators)

OTHER (Non DOD or HHS): $2 billion ($295 million to relators)

•· Cases filed by agency
DOD: 1,199
HHS: 3,587

NonDOD/NonHHS: 1,841

•· Relator award when DOJ intervened in or otherwise
pursued the case: $2.3 billion (average 16% of FCA recovery)

•· Relator award when government declined
to intervene: $82.38 million (average 25% of FCA recovery)

What types of activities are covered by the False Claims Act?

The primary activities that constitute violations under the False Claims Act are:

(1) knowingly presenting (or causing to be presented) to the Federal Government a false or fraudulent claim for payment;

(2) knowingly using (or causing to be used) a false record or statement to get a claim paid by the Federal Government;

(3) conspiring with others to get a false or fraudulent claim paid by the Federal Government; and

(4) knowingly using (or causing to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the Federal Government.

In general, the False Claims Act covers fraud involving any federally funded contract or program, with the exception of tax fraud.

What are examples of fraudulent activities prosecuted under the Act?

A broad array of scenarios can constitute False Claims Act violations. Some examples include the following: a contractor falsifies test results or other information regarding the quality or cost of products it sells to the government; a health care provider bills Medicare and Medicaid for services that were not provided or were unnecessary; or a grant recipient charges the government for costs not related to the grant. It is impossible to list all of the frauds that have been prosecuted under the False Claims Act, but the following list gives some idea of the scope of the false claims on the government that have been uncovered to date:

•· Billing for goods and services that were never delivered or rendered.

•· Billing for marketing, lobbying, or other non-contract related corporate activities.

•· Submitting false service records or samples in order to show better-than-actual performance.

•· Presenting broken or untested equipment as operational and tested.

•· Performing inappropriate or unnecessary medical procedures in order to increase Medicare reimbursement.

•· Billing for work or tests not performed.

•· Billing for premium equipment but actually providing inferior equipment.

•· Automatically running a lab test whenever the results of some other test falls within a certain range, even though the second test was not specifically requested.

•· Defective testing - Certifying that something has passed a test, when in fact it has not.

•· "Lick and stick" prescription rebate fraud and "marketing the spread" prescription fraud, both of which involve lying to the government about the true wholesale price of prescription drugs.

•· Unbundling - Using multiple billing codes instead of one billing code for a drug panel test in order to increase the amount of government health care program reimbursement.

•· Bundling - Billing more for a panel of tests when a single test was asked for.

•· Double billing - Charging more than once for the same goods or service.

•· Upcoding - Inflating bills by using diagnosis billing codes that suggest a more expensive illness or treatment.

•· Billing for brand - Billing for brand-named drugs when generic drugs are actually provided.

•· Phantom employees and doctored time slips - Charging for employees that were not actually on the job or billing for made-up hours in order to maximize reimbursements.

•· Upcoding employee work - Billing at doctor rates for work that was actually conducted by a nurse or resident intern.

•· Yield burning - skimming off the profits from the sale of municipal bonds.

•· Falsifying natural resource production records - Pumping, mining, or harvesting more natural resources from public lands than is actually reported to the government.

•· Being over-paid by the government for sale of a good or service and then not reporting that overpayment.

•· Misrepresenting the value of imported goods or their country of origin for tariff purposes.

•· False certification that a contract falls within certain guidelines (i.e. the contractor is a minority or veteran).

•· Billing in order to increase revenue instead of billing to reflect actual work performed.

•· Failing to report known product defects in order to be able to continue to sell or bill the government for the product.

•· Billing for research that was never conducted; falsifying research data that was paid for by the U.S. Government.

•· Winning a contract through kickbacks or bribes.

•· Prescribing a medicine or recommending a type of treatment or diagnosis regimen in order to win kickbacks from hospitals, labs, or pharmaceutical companies.

•· Billing for unlicensed or unapproved drugs.

•· Forging physician signatures when such signatures are required for reimbursement

from Medicare or Medicaid.

Does the False Claims Act cover government waste and mismanagement?

Although the Government undoubtedly loses millions of dollars each year through its own waste and mismanagement, as well as that of outsiders (e.g., government contractors), the False Claims Act does not provide a remedy for waste or mismanagement that does not rise to the level of fraud. The Act is aimed only at fraud committed against the Government.

What is the defendant's liability for violating the False Claims Act?

Violators of the False Claims Act are liable for three times the dollar amount that the government is defrauded (i.e., treble damages) and civil penalties of $5,500 to $11,000 for each false claim. The defendant is also liable for the relator's attorney fees and costs.

How can a private plaintiff receive an award for blowing the whistle under the False Claims Act?

Only by filing a Qui Tam lawsuit that results in a subsequent settlement or favorable judgment enables a private party to receive a recovery under the False Claims Act. In order to be eligible to recover any money under the Act, the relator must file a Qui Tam lawsuit. Merely informing the government about the False Claims Act violation is not enough. Further, the relator (i.e., the whistleblower that files a False Claims Act suit) receives an award only if the government recovers money from the defendant as a result of the allegations of fraud that are contained in the lawsuit.

How much money can a private plaintiff receive for bringing a Qui Tam action?

A relator (i.e., Qui Tam plaintiff) can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or settlement. If the government intervenes and joins an action brought by a relator, the relator generally is eligible to receive at least 15 percent, but not more than 25 percent, of the recovery, depending upon the relator's contribution to the prosecution of the action. If the government elects to decline intervention and the relator proceeds with the action on his/her own, the relator can receive between 25 and 30 percent of the recovery.

How is a Qui Tam action filed?

A Qui Tam complaint must be filed in Federal District Court in accordance with the Federal Rules of Civil Procedure. In addition, a copy of the Complaint, along with a written disclosure statement of substantially all material evidence and information in the relator's possession, must be served on the Attorney General of the United States and should also be served on the U.S. Attorney for the district in which the action is brought.

The Complaint must be filed in camera and under seal (and should be marked as such). Until the seal is lifted by the court, the Complaint and its contents must be kept strictly confidential. The Complaint must not be served on the defendant until the court so orders. If you or the client violates the seal provision of the False Claims Act, the Qui Tam suit could be dismissed.

What happens after a Qui Tam action is filed?

After the Qui Tam Complaint is filed under seal in Federal District Court and a copy of the Complaint and Disclosure Statement is served on the U.S. Attorney General (and also on the U.S. Attorney for the district), the case remains under seal for at least 60 days. The 60-day seal period is statutory and is often extended upon request of the government. It is not unusual for the seal period to last a year or more, with some cases remaining under seal for several years while the government conducts their investigation.

At the end of the seal period, the government chooses either to intervene and proceed with the action or to decline intervention. After the government decides whether to intervene and the seal period ends, the Complaint is served on the defendant. The lawsuit then proceeds generally in the same manner as any other federal civil litigation, except for the special issues raised by the Qui Tam concept.

If the government intervenes and proceeds with the action, the Department of Justice has primary responsibility for prosecuting the case. The relator has the right to continue as a party in the action and may participate in the litigation subject to certain limitations. The government may dismiss or settle the action over the relator's objections, but the court must first conduct a hearing on the proposed dismissal or settlement.

If the government declines to intervene, the relator has the right to conduct the litigation on his/her own. Even if you proceed with the action after a declination, the government may intervene at a later date upon a showing of good cause.

How long does a Qui Tam action take once the case is filed?

Because the FCA is a first-to-file statute, getting the action on file as soon as possible is of paramount concern. Once filed, the time from the filing of a Qui Tam action until its resolution varies greatly from case to case. As a general rule, a Qui Tam action will take several years before any money is paid to the relator.

What is the significance of the first-to-file provision of the False Claims Act?

The first-to-file provision bars any subsequent lawsuits based on the same allegations as an earlier action. Therefore, if the government or a private party has already filed a False Claims Act lawsuit based on the same allegations as the action you intend to file, the statute bars the second lawsuit. However, if your client's allegations are different from those of the earlier suit, the first-to-file rule may not apply. As noted above, because cases are filed under seal, and the seal often remains in force for several years, you will not be able to determine if a suit has already been filed addressing the fraud alleged in your client's Complaint. After the case is filed the DOJ or AUSA will often, but not always, inform you that another suit has been filed with the same or similar allegations. If the case is one that alleges fraud that occurred in several states, it is possible the DOJ will put you in contact with counsel that have filed in other jurisdictions.

What is the significance of the public disclosure bar?

Prior to the 1986 amendments to the FCA, if the government had any knowledge of the allegations of fraud contained in the relator's Complaint, the case was jurisdictionally barred from going forward because the fraud was deemed to be "publicly disclosed." Imposed by an amendment adopted by Congress in 1943, the public disclosure bar made it very difficult, if not impossible, to file most potential Qui Tam actions. The 1986 amendments to the Act specifically addressed this problem by more narrowly defining what is a public disclosure, and allowing a relator to go forward with the action following a public disclosure, if the relator was the original source of the public disclosure.

The act defines public disclosure in section 3730 (e)(4)(A) to include:

"the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information."

Thus, after the 1986 amendments, even if there has been a public disclosure of the allegations in the Complaint, a Qui Tam action is not barred if the relator is the original source of the public disclosure. This is a hotly contested issue in Qui Tam litigation, and there are numerous published cases addressing what constitutes a public disclosure and whether the original source exception applies under the facts of the case at issue. As with many aspects of the False Claims Act, these decisions are not uniform within the various Circuit Courts.

Does the relator have to report the fraud to the government before filing a Qui Tam action?

The short answer is that the False Claims Act does not require the relator to report the fraud to the government before filing a Qui Tam action. However, to avoid potential public disclosure problems, it is almost always a wise thing to do.

Can a Qui Tam action be brought if the potential relator has already informed the government about the fraud committed by the potential defendant?

Although the relator does not automatically lose the right to bring a Qui Tam action by going to the government before filing, no one can bring a Qui Tam suit based upon allegations or transactions which are the subject of a False Claims Act suit already filed by the government. Therefore, if your potential client has delivered their information to the government before coming to your office, and the government files a False Claims Act action before you file a Qui Tam suit, then the client has lost the right to bring a Qui Tam lawsuit. This result can be avoided by promptly filing the case after informing the government. In our practice a copy of the Complaint and Disclosure Statement is provided to the government and the case is then filed the same day.

Can the relator's identity be kept a secret?

There is no way to guarantee that the client's identity will not be disclosed. If a Qui Tam action is filed, the government will know the relator's identity. And if the government investigates, the relator's name will often be disclosed to the defendant as part of a partial unsealing of the case, where the government confronts the defendant about the allegations being made.

Also, although the defendant is not supposed to learn that a lawsuit has been filed during the pendancy of the seal period; in practice defendants often figure it out and try to identify the relator. After the seal period ends, when the government announces its decision regarding intervention and the Complaint is served on the defendant, the relator's identity will be revealed, if it had not been revealed already because of a partial unsealing.

The DOJ has recently adopted a formal policy of refusing to allow a Qui Tam action to be filed and then voluntarily dismissed during the seal period without having the case unsealed. While this does not make it a certainty that the relator's identity will be revealed to the defendant, it makes that much more likely to occur. The bottom line is there is no guarantee of anonymity.

Does the Act provide the whistleblower protections against employer retaliation?

Section 3730(h) of the False Claims Act, provides that any employee who is discharged, demoted, harassed, or otherwise discriminated against because of lawful acts by the employee in furtherance of an action under the Act is entitled to all relief necessary to make the employee whole. Such relief may include reinstatement, double back pay, and compensation for any special damages, including litigation costs and reasonable attorneys' fees. Be aware that the scope of whistleblower protection under Section 3730(h) is not the same in all Circuits.

The statute of limitations for a claim under section 3730(h) is not the same as the six year statute of limitations contained in the Qui Tam provisions of the statute. The Supreme Court recently held that the statute of limitations for whistleblower retaliation claims under section 3730(h) is the analogous state statute for similar state law causes of action. This means a much shorter statute of limitations will apply to a section 3730(h) claim, often a year or less, depending upon the applicable state law. State based wrongful discharge or employment discrimination actions can also be brought under the Federal Court's supplemental jurisdiction.

What is the relationship between the criminal investigation and the civil Qui Tam action?

Filing a Qui Tam action may, but does not necessarily, trigger a criminal investigation and prosecution by the government which could lead to criminal fines or jail time for the defendant(s). The criminal action is handled separately from the Qui Tam action, and you have even less control over it than the civil case. Your client may be asked to assist in the government's criminal action and you should discuss this with the client at the outset. Under the Act, if the defendant is found or pleads guilty in the criminal action, that is considered conclusive proof that the defendant violated the False Claims Act. Thus, a criminal conviction or plea establishes liability in the civil Qui Tam action.

Can a Qui Tam action be filed Pro Se?

Most courts that have addressed the issue have held that a Qui Tam case can not be filed Pro Se and must be filed by a lawyer because the claim belongs to the federal government, not the relator.

What is the usual fee in a Qui Tam action?

Most lawyers handling these cases do so on a 40% contingency fee, which is a percentage of the percentage the relator obtains from the government. In addition to the contingency fee, the Act provides that the defendant is responsible for paying the reasonable amount of the relator's attorney fees and litigation costs, which can include experts.

Are there any state False Claims Acts?

In addition to the Federal False Claims Act, several states have enacted false claims acts that work to discourage frauds perpetrated against state governments. The Deficit Reduction Omnibus Reconciliation Act of 2005 contains an incentive for states to enact a False Claims Act with provisions similar to those of the Federal Act. In an effort to bring down spiraling Medicaid costs, the federal government will increase the federal share of Medicaid payments to states that enact such legislation. States with False Claims Acts include: California, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Michigan, Nevada, Tennessee, Texas, and Virginia. It is important to keep these states in mind if you have a multistate case where a federal /state program, such as Medicaid, is involved. Given the incentive provided by Congress to the states in the Deficit Reduction Act, it is also important to keep abreast of any pending legislation in a state where you may be able to file a Qui Tam case.

How do I find out more information?

Additional information and help in understanding the FCA is available through Taxpayers Against Fraud, (TAF). http://www.taf.org/

There are also several treatises now available on the FCA including John T. Boese, Civil False Claims and Qui Tam Actions, Prentice Hall. (1993) and James B. Helmer, False Claims Act: Whistleblower Litigation, Matthew Bender, Third Edition (2002).

Appendix 1

FEDERAL FALSE CLAIMS ACT

31 USC 3729-3733

(As amended March 23, 2010, P.L. 111-148)

§ 3729. False claims

(a) Liability for certain acts.

(1) In general. Subject to paragraph (2), any person who--

(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

(C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

(D) has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;

(E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

(F) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or

(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,

is liable to the United States Government for a civil penalty of not less than $ 5,000 and not more than $ 10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-410), plus 3 times the amount of damages which the Government sustains because of the act of that person.

(2) Reduced damages. If the court finds that--

(A) the person committing the violation of this subsection furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information;

(B) such person fully cooperated with any Government investigation of such violation; and

(C) at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation,

the court may assess not less than 2 times the amount of damages which the Government sustains because of the act of that person.

(3) Costs of civil actions. A person violating this subsection shall also be liable to the United States Government for the costs of a civil action brought to recover any such penalty or damages.

(b) Definitions. For purposes of this section--

(1) the terms "knowing" and "knowingly"--

(A) mean that a person, with respect to information--

(i) has actual knowledge of the information;

(ii) acts in deliberate ignorance of the truth or falsity of the information; or

(iii) acts in reckless disregard of the truth or falsity of the information; and

(B) require no proof of specific intent to defraud;

(2) the term "claim"--

(A) means any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that--

(i) is presented to an officer, employee, or agent of the United States; or

(ii) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest, and if the United States Government--

(I) provides or has provided any portion of the money or property requested or demanded; or

(II) will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded; and

(B) does not include requests or demands for money or property that the Government has paid to an individual as compensation for Federal employment or as an income subsidy with no restrictions on that individual's use of the money or property;

(3) the term "obligation" means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment; and

(4) the term "material" means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.

(c) Exemption from disclosure. Any information furnished pursuant to subsection (a)(2) shall be exempt from disclosure under section 552 of title 5.

(d) Exclusion. This section does not apply to claims, records, or statements made under the Internal Revenue Code of 1986 [26 USCS §§ 1 et seq.].

(e) [Redesignated]

HISTORY:

(Sept. 13, 1982, P.L. 97-258, § 1, 96 Stat. 978; Oct. 27, 1986, P.L. 99-562, § 2, 100 Stat. 3153; July 5, 1994, P.L. 103-272, § 4(f)(1)(O), 108 Stat. 1362.)

(As amended May 20, 2009, P.L. 111-21, § 4(a), 123 Stat. 1621.)

§ 3730. Civil actions for false claims

(a) Responsibilities of the Attorney General. The Attorney General diligently shall investigate a violation under section 3729. If the Attorney General finds that a person has violated or is violating section 3729, the Attorney General may bring a civil action under this section against the person.

(b) Actions by private persons.

(1) A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.

(2) A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the Government pursuant to Rule 4(d)(4) of the Federal Rules of Civil Procedure. The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information.

(3) The Government may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal under paragraph (2). Any such motions may be supported by affidavits or other submissions in camera. The defendant shall not be required to respond to any complaint filed under this section until 20 days after the complaint is unsealed and served upon the defendant pursuant to Rule 4 of the Federal Rules of Civil Procedure.

(4) Before the expiration of the 60-day period or any extensions obtained under paragraph (3), the Government shall--

(A) proceed with the action, in which case the action shall be conducted by the Government; or

(B) notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.

(5) When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.

(c) Rights of the parties to qui tam actions.

(1) If the Government proceeds with the action, it shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action. Such person shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (2).

(2) (A) The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.

(B) The Government may settle the action with the defendant notwithstanding the objections of the person initiating the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. Upon a showing of good cause, such hearing may be held in camera.

(C) Upon a showing by the Government that unrestricted participation during the course of the litigation by the person initiating the action would interfere with or unduly delay the Government's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, impose limitations on the person's participation, such as--

(i) limiting the number of witnesses the person may call;

(ii) limiting the length of the testimony of such witnesses;

(iii) limiting the person's cross-examination of witnesses; or

(iv) otherwise limiting the participation by the person in the litigation.

(D) Upon a showing by the defendant that unrestricted participation during the course of the litigation by the person initiating the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.

(3) If the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action. If the Government so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts (at the Government's expense). When a person proceeds with the action, the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the Government to intervene at a later date upon a showing of good cause.

(4) Whether or not the Government proceeds with the action, upon a showing by the Government that certain actions of discovery by the person initiating the action would interfere with the Government's investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay such discovery for a period of not more than 60 days. Such a showing shall be conducted in camera. The court may extend the 60-day period upon a further showing in camera that the Government has pursued the criminal or civil investigation or proceedings with reasonable diligence and any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceedings.

(5) Notwithstanding subsection (b), the Government may elect to pursue its claim through any alternate remedy available to the Government, including any administrative proceeding to determine a civil money penalty. If any such alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under this section. Any finding of fact or conclusion of law made in such other proceeding that has become final shall be conclusive on all parties to an action under this section. For purposes of the preceding sentence, a finding or conclusion is final if it has been finally determined on appeal to the appropriate court of the United States, if all time for filing such an appeal with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.

(d) Award to qui tam plaintiff.

(1) If the Government proceeds with an action brought by a person under subsection (b), such person shall, subject to the second sentence of this paragraph, receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action. Where the action is one which the court finds to be based primarily on disclosures of specific information (other than information provided by the person bringing the action) relating to allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government [General] Accounting Office report, hearing, audit, or investigation, or from the news media, the court may award such sums as it considers appropriate, but in no case more than 10 percent of the proceeds, taking into account the significance of the information and the role of the person bringing the action in advancing the case to litigation. Any payment to a person under the first or second sentence of this paragraph shall be made from the proceeds. Any such person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.

(2) If the Government does not proceed with an action under this section, the person bringing the action or settling the claim shall receive an amount which the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than 25 percent and not more than 30 percent of the proceeds of the action or settlement and shall be paid out of such proceeds. Such person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.

(3) Whether or not the Government proceeds with the action, if the court finds that the action was brought by a person who planned and initiated the violation of section 3729 upon which the action was brought, then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action which the person would otherwise receive under paragraph (1) or (2) of this subsection, taking into account the role of that person in advancing the case to litigation and any relevant circumstances pertaining to the violation. If the person bringing the action is convicted of criminal conduct arising from his or her role in the violation of section 3729, that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. Such dismissal shall not prejudice the right of the United States to continue the action, represented by the Department of Justice.

(4) If the Government does not proceed with the action and the person bringing the action conducts the action, the court may award to the defendant its reasonable attorneys' fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.

(e) Certain actions barred.

(1) No court shall have jurisdiction over an action brought by a former or present member of the armed forces under subsection (b) of this section against a member of the armed forces arising out of such person's service in the armed forces.

(2) (A) No court shall have jurisdiction over an action brought under subsection (b) against a Member of Congress, a member of the judiciary, or a senior executive branch official if the action is based on evidence or information known to the Government when the action was brought.

(B) For purposes of this paragraph, "senior executive branch official" means any officer or employee listed in paragraphs (1) through (8) of section 101(f) of the Ethics in Government Act of 1978 (5 U.S.C. App.).

(3) In no event may a person bring an action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.

(4) (A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed-

(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;

(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or

(iii) from the news media,

unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

(B) For purposes of this paragraph, "original source" means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.'"

(f) Government not liable for certain expenses. The Government is not liable for expenses which a person incurs in bringing an action under this section.

(g) Fees and expenses to prevailing defendant. In civil actions brought under this section by the United States, the provisions of section 2412(d) of title 28 shall apply.

(h) Relief from retaliatory actions.

(1) In general. Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.

(2) Relief. Relief under paragraph (1) shall include reinstatement with the same seniority status that employee, contractor, or agent would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees. An action under this subsection may be brought in the appropriate district court of the United States for the relief provided in this subsection.

(3) Limitation on Bringing Civil Action. A civil action under this subsection may not be brought more than 3 years after the date when the retaliation occurred.

HISTORY:

(Sept. 13, 1982, P.L. 97-258, § 1, 96 Stat. 978; Oct. 27, 1986, P.L. 99-562, §§ 3, 4, 100 Stat. 3154, 3157; Nov. 19, 1988, P.L. 100-700, § 9, 102 Stat. 4638; May 4, 1990, P.L. 101-280, § 10(a), 104 Stat. 162; July 5, 1994, P.L. 103-272, § 4(f)(1)(P), 108 Stat. 1362.)

(As amended May 20, 2009, P.L. 111-21, § 4(d), 123 Stat. 1624.)

(As amended March 23, 2010, P.L. 111-148, § 10104.)

§ 3731. False claims procedure

(a) A subpena [subpoena] requiring the attendance of a witness at a trial or hearing conducted under section 3730 of this title may be served at any place in the United States.

(b) A civil action under section 3730 may not be brought--

(1) more than 6 years after the date on which the violation of section 3729 is committed, or

(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.

(c) If the Government elects to intervene and proceed with an action brought under 3730(b), the Government may file its own complaint or amend the complaint of a person who has brought an action under section 3730(b) to clarify or add detail to the claims in which the Government is intervening and to add any additional claims with respect to which the Government contends it is entitled to relief. For statute of limitations purposes, any such Government pleading shall relate back to the filing date of the complaint of the person who originally brought the action, to the extent that the claim of the Government arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of that person.

(d) In any action brought under section 3730 the United States shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence.

(e) Notwithstanding any other provision of law, the Federal Rules of Criminal Procedure, or the Federal Rules of Evidence, a final judgment rendered in favor of the United States in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the criminal proceeding and which is brought under subsection (a) or (b) of section 3730.

HISTORY:

(Sept. 13, 1982, P.L. 97-258, § 1, 96 Stat. 979; Oct. 27, 1986, P.L. 99-562, § 5, 100 Stat. 3158.)

(As amended May 20, 2009, P.L. 111-21, § 4(b), 123 Stat. 1623.)

§ 3732. False claims jurisdiction

(a) Actions under section 3730. Any action under section 3730 may be brought in any judicial district in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by section 3729 occurred. A summons as required by the Federal Rules of Civil Procedure shall be issued by the appropriate district court and served at any place within or outside the United States.

(b) Claims under State law. The district courts shall have jurisdiction over any action brought under the laws of any State for the recovery of funds paid by a State or local government if the action arises from the same transaction or occurrence as an action brought under section 3730.

(c) Service on State or local authorities. With respect to any State or local government that is named as a co-plaintiff with the United States in an action brought under subsection (b), a seal on the action ordered by the court under section 3730(b) shall not preclude the Government or the person bringing the action from serving the complaint, any other pleadings, or the written disclosure of substantially all material evidence and information possessed by the person bringing the action on the law enforcement authorities that are authorized under the law of that State or local government to investigate and prosecute such actions on behalf of such governments, except that such seal applies to the law enforcement authorities so served to the same extent as the seal applies to other parties in the action.

HISTORY:

(Added Oct. 27, 1986, P.L. 99-562, § 6(a), 100 Stat. 3158.)

(As amended May 20, 2009, P.L. 111-21, § 4(e), 123 Stat. 1625.)

§ 3733. Civil investigative demands

(a) In general.

(1) Issuance and service. Whenever the Attorney General, or a designee (for purposes of this section), has reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation, the Attorney General, or a designee, may, before commencing a civil proceeding under section 3730(a) or other false claims law, or making an election under section 3730(b), issue in writing and cause to be served upon such person, a civil investigative demand requiring such person--

(A) to produce such documentary material for inspection and copying,

(B) to answer in writing written interrogatories with respect to such documentary material or information,

(C) to give oral testimony concerning such documentary material or information, or

(D) to furnish any combination of such material, answers, or testimony.

The Attorney General may delegate the authority to issue civil investigative demands under this subsection. Whenever a civil investigative demand is an express demand for any product of discovery, the Attorney General, the Deputy Attorney General, or an Assistant Attorney General shall cause to be served, in any manner authorized by this section, a copy of such demand upon the person from whom the discovery was obtained and shall notify the person to whom such demand is issued of the date on which such copy was served. Any information obtained by the Attorney General or a designee of the Attorney General under this section may be shared with any qui tam relator if the Attorney General or designee determine it is necessary as part of any false claims act investigation.

(2) Contents and deadlines.

(A) Each civil investigative demand issued under paragraph (1) shall state the nature of the conduct constituting the alleged violation of a false claims law which is under investigation, and the applicable provision of law alleged to be violated.

(B) If such demand is for the production of documentary material, the demand shall--

(i) describe each class of documentary material to be produced with such definiteness and certainty as to permit such material to be fairly identified;

(ii) prescribe a return date for each such class which will provide a reasonable period of time within which the material so demanded may be assembled and made available for inspection and copying; and

(iii) identify the false claims law investigator to whom such material shall be made available.

(C) If such demand is for answers to written interrogatories, the demand shall--

(i) set forth with specificity the written interrogatories to be answered;

(ii) prescribe dates at which time answers to written interrogatories shall be submitted; and

(iii) identify the false claims law investigator to whom such answers shall be submitted.

(D) If such demand is for the giving of oral testimony, the demand shall--

(i) prescribe a date, time, and place at which oral testimony shall be commenced;

(ii) identify a false claims law investigator who shall conduct the examination and the custodian to whom the transcript of such examination shall be submitted;

(iii) specify that such attendance and testimony are necessary to the conduct of the investigation;

(iv) notify the person receiving the demand of the right to be accompanied by an attorney and any other representative; and

(v) describe the general purpose for which the demand is being issued and the general nature of the testimony, including the primary areas of inquiry, which will be taken pursuant to the demand.

(E) Any civil investigative demand issued under this section which is an express demand for any product of discovery shall not be returned or returnable until 20 days after a copy of such demand has been served upon the person from whom the discovery was obtained.

(F) The date prescribed for the commencement of oral testimony pursuant to a civil investigative demand issued under this section shall be a date which is not less than seven days after the date on which demand is received, unless the Attorney General or an Assistant Attorney General designated by the Attorney General determines that exceptional circumstances are present which warrant the commencement of such testimony within a lesser period of time.

(G) The Attorney General shall not authorize the issuance under this section of more than one civil investigative demand for oral testimony by the same person unless the person requests otherwise or unless the Attorney General, after investigation, notifies that person in writing that an additional demand for oral testimony is necessary.

(b) Protected material or information.

(1) In general. A civil investigative demand issued under subsection (a) may not require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony if such material, answers, or testimony would be protected from disclosure under--

(A) the standards applicable to subpoenas or subpoenas duces tecum issued by a court of the United States to aid in a grand jury investigation; or

(B) the standards applicable to discovery requests under the Federal Rules of Civil Procedure, to the extent that the application of such standards to any such demand is appropriate and consistent with the provisions and purposes of this section.

(2) Effect on other orders, rules, and laws. Any such demand which is an express demand for any product of discovery supersedes any inconsistent order, rule, or provision of law (other than this section) preventing or restraining disclosure of such product of discovery to any person. Disclosure of any product of discovery pursuant to any such express demand does not constitute a waiver of any right or privilege which the person making such disclosure may be entitled to invoke to resist discovery of trial preparation materials.

(c) Service; jurisdiction.

(1) By whom served. Any civil investigative demand issued under subsection (a) may be served by a false claims law investigator, or by a United States marshal or a deputy marshal, at any place within the territorial jurisdiction of any court of the United States.

(2) Service in foreign countries. Any such demand or any petition filed under subsection (j) may be served upon any person who is not found within the territorial jurisdiction of any court of the United States in such manner as the Federal Rules of Civil Procedure prescribe for service in a foreign country. To the extent that the courts of the United States can assert jurisdiction over any such person consistent with due process, the United States District Court for the District of Columbia shall have the same jurisdiction to take any action respecting compliance with this section by any such person that such court would have if such person were personally within the jurisdiction of such court.

(d) Service upon legal entities and natural persons.

(1) Legal entities. Service of any civil investigative demand issued under subsection (a) or of any petition filed under subsection (j) may be made upon a partnership, corporation, association, or other legal entity by--

(A) delivering an executed copy of such demand or petition to any partner, executive officer, managing agent, or general agent of the partnership, corporation, association, or entity, or to any agent authorized by appointment or by law to receive service of process on behalf of such partnership, corporation, association, or entity;

(B) delivering an executed copy of such demand or petition to the principal office or place of business of the partnership, corporation, association, or entity; or

(C) depositing an executed copy of such demand or petition in the United States mails by registered or certified mail, with a return receipt requested, addressed to such partnership, corporation, association, or entity at its principal office or place of business.

(2) Natural persons. Service of any such demand or petition may be made upon any natural person by--

(A) delivering an executed copy of such demand or petition to the person; or

(B) depositing an executed copy of such demand or petition in the United States mails by registered or certified mail, with a return receipt requested, addressed to the person at the person's residence or principal office or place of business.

(e) Proof of service. A verified return by the individual serving any civil investigative demand issued under subsection (a) or any petition filed under subsection (j) setting forth the manner of such service shall be proof of such service. In the case of service by registered or certified mail, such return shall be accompanied by the return post office receipt of delivery of such demand.

(f) Documentary material.

(1) Sworn certificates. The production of documentary material in response to a civil investigative demand served under this section shall be made under a sworn certificate, in such form as the demand designates, by--

(A) in the case of a natural person, the person to whom the demand is directed, or

(B) in the case of a person other than a natural person, a person having knowledge of the facts and circumstances relating to such production and authorized to act on behalf of such person.

The certificate shall state that all of the documentary material required by the demand and in the possession, custody, or control of the person to whom the demand is directed has been produced and made available to the false claims law investigator identified in the demand.

(2) Production of materials. Any person upon whom any civil investigative demand for the production of documentary material has been served under this section shall make such material available for inspection and copying to the false claims law investigator identified in such demand at the principal place of business of such person, or at such other place as the false claims law investigator and the person thereafter may agree and prescribe in writing, or as the court may direct under subsection (j)(1). Such material shall be made so available on the return date specified in such demand, or on such later date as the false claims law investigator may prescribe in writing. Such person may, upon written agreement between the person and the false claims law investigator, substitute copies for originals of all or any part of such material.

(g) Interrogatories. Each interrogatory in a civil investigative demand served under this section shall be answered separately and fully in writing under oath and shall be submitted under a sworn certificate, in such form as the demand designates, by--

(1) in the case of a natural person, the person to whom the demand is directed, or

(2) in the case of a person other than a natural person, the person or persons responsible for answering each interrogatory.

If any interrogatory is objected to, the reasons for the objection shall be stated in the certificate instead of an answer. The certificate shall state that all information required by the demand and in the possession, custody, control, or knowledge of the person to whom the demand is directed has been submitted. To the extent that any information is not furnished, the information shall be identified and reasons set forth with particularity regarding the reasons why the information was not furnished.

(h) Oral examinations.

(1) Procedures. The examination of any person pursuant to a civil investigative demand for oral testimony served under this section shall be taken before an officer authorized to administer oaths and affirmations by the laws of the United States or of the place where the examination is held. The officer before whom the testimony is to be taken shall put the witness on oath or affirmation and shall, personally or by someone acting under the direction of the officer and in the officer's presence, record the testimony of the witness. The testimony shall be taken stenographically and shall be transcribed. When the testimony is fully transcribed, the officer before whom the testimony is taken shall promptly transmit a copy of the transcript of the testimony to the custodian. This subsection shall not preclude the taking of testimony by any means authorized by, and in a manner consistent with, the Federal Rules of Civil Procedure.

(2) Persons present. The false claims law investigator conducting the examination shall exclude from the place where the examination is held all persons except the person giving the testimony, the attorney for and any other representative of the person giving the testimony, the attorney for the Government, any person who may be agreed upon by the attorney for the Government and the person giving the testimony, the officer before whom the testimony is to be taken, and any stenographer taking such testimony.

(3) Where testimony taken. The oral testimony of any person taken pursuant to a civil investigative demand served under this section shall be taken in the judicial district of the United States within which such person resides, is found, or transacts business, or in such other place as may be agreed upon by the false claims law investigator conducting the examination and such person.

(4) Transcript of testimony. When the testimony is fully transcribed, the false claims law investigator or the officer before whom the testimony is taken shall afford the witness, who may be accompanied by counsel, a reasonable opportunity to examine and read the transcript, unless such examination and reading are waived by the witness. Any changes in form or substance which the witness desires to make shall be entered and identified upon the transcript by the officer or the false claims law investigator, with a statement of the reasons given by the witness for making such changes. The transcript shall then be signed by the witness, unless the witness in writing waives the signing, is ill, cannot be found, or refuses to sign. If the transcript is not signed by the witness within 30 days after being afforded a reasonable opportunity to examine it, the officer or the false claims law investigator shall sign it and state on the record the fact of the waiver, illness, absence of the witness, or the refusal to sign, together with the reasons, if any, given therefor.

(5) Certification and delivery to custodian. The officer before whom the testimony is taken shall certify on the transcript that the witness was sworn by the officer and that the transcript is a true record of the testimony given by the witness, and the officer or false claims law investigator shall promptly deliver the transcript, or send the transcript by registered or certified mail, to the custodian.

(6) Furnishing or inspection of transcript by witness. Upon payment of reasonable charges therefor, the false claims law investigator shall furnish a copy of the transcript to the witness only, except that the Attorney General, the Deputy Attorney General, or an Assistant Attorney General may, for good cause, limit such witness to inspection of the official transcript of the witness' testimony.

(7) Conduct of oral testimony.

(A) Any person compelled to appear for oral testimony under a civil investigative demand issued under subsection (a) may be accompanied, represented, and advised by counsel. Counsel may advise such person, in confidence, with respect to any question asked of such person. Such person or counsel may object on the record to any question, in whole or in part, and shall briefly state for the record the reason for the objection. An objection may be made, received, and entered upon the record when it is claimed that such person is entitled to refuse to answer the question on the grounds of any constitutional or other legal right or privilege, including the privilege against self-incrimination. Such person may not otherwise object to or refuse to answer any question, and may not directly or through counsel otherwise interrupt the oral examination. If such person refuses to answer any question, a petition may be filed in the district court of the United States under subsection (j)(1) for an order compelling such person to answer such question.

(B) If such person refuses to answer any question on the grounds of the privilege against self-incrimination, the testimony of such person may be compelled in accordance with the provisions of part V of title 18 [18 USCS §§ 6001 et seq.].

(8) Witness fees and allowances. Any person appearing for oral testimony under a civil investigative demand issued under subsection (a) shall be entitled to the same fees and allowances which are paid to witnesses in the district courts of the United States.

(i) Custodians of documents, answers, and transcripts.

(1) Designation. The Attorney General shall designate a false claims law investigator to serve as custodian of documentary material, answers to interrogatories, and transcripts of oral testimony received under this section, and shall designate such additional false claims law investigators as the Attorney General determines from time to time to be necessary to serve as deputies to the custodian.

(2) Responsibility for materials; disclosure.

(A) A false claims law investigator who receives any documentary material, answers to interrogatories, or transcripts of oral testimony under this section shall transmit them to the custodian. The custodian shall take physical possession of such material, answers, or transcripts and shall be responsible for the use made of them and for the return of documentary material under paragraph (4).

(B) The custodian may cause the preparation of such copies of such documentary material, answers to interrogatories, or transcripts of oral testimony as may be required for official use by any false claims law investigator, or other officer or employee of the Department of Justice. Such material, answers, and transcripts may be used by any such authorized false claims law investigator or other officer or employee in connection with the taking of oral testimony under this section.

(C) Except as otherwise provided in this subsection, no documentary material, answers to interrogatories, or transcripts of oral testimony, or copies thereof, while in the possession of the custodian, shall be available for examination by any individual other than a false claims law investigator or other officer or employee of the Department of Justice authorized under subparagraph (B). The prohibition in the preceding sentence on the availability of material, answers, or transcripts shall not apply if consent is given by the person who produced such material, answers, or transcripts, or, in the case of any product of discovery produced pursuant to an express demand for such material, consent is given by the person from whom the discovery was obtained. Nothing in this subparagraph is intended to prevent disclosure to the Congress, including any committee or subcommittee of the Congress, or to any other agency of the United States for use by such agency in furtherance of its statutory responsibilities.

(D) While in the possession of the custodian and under such reasonable terms and conditions as the Attorney General shall prescribe--

(i) documentary material and answers to interrogatories shall be available for examination by the person who produced such material or answers, or by a representative of that person authorized by that person to examine such material and answers; and

(ii) transcripts of oral testimony shall be available for examination by the person who produced such testimony, or by a representative of that person authorized by that person to examine such transcripts.

(3) Use of material, answers, or transcripts in other proceedings. Whenever any attorney of the Department of Justice has been designated to appear before any court, grand jury, or Federal agency in any case or proceeding, the custodian of any documentary material, answers to interrogatories, or transcripts of oral testimony received under this section may deliver to such attorney such material, answers, or transcripts for official use in connection with any such case or proceeding as such attorney determines to be required. Upon the completion of any such case or proceeding, such attorney shall return to the custodian any such material, answers, or transcripts so delivered which have not passed into the control of such court, grand jury, or agency through introduction into the record of such case or proceeding.

(4) Conditions for return of material. If any documentary material has been produced by any person in the course of any false claims law investigation pursuant to a civil investigative demand under this section, and--

(A) any case or proceeding before the court or grand jury arising out of such investigation, or any proceeding before any Federal agency involving such material, has been completed, or

(B) no case or proceeding in which such material may be used has been commenced within a reasonable time after completion of the examination and analysis of all documentary material and other information assembled in the course of such investigation,

the custodian shall, upon written request of the person who produced such material, return to such person any such material (other than copies furnished to the false claims law investigator under subsection (f)(2) or made for the Department of Justice under paragraph (2)(B)) which has not passed into the control of any court, grand jury, or agency through introduction into the record of such case or proceeding.

(5) Appointment of successor custodians. In the event of the death, disability, or separation from service in the Department of Justice of the custodian of any documentary material, answers to interrogatories, or transcripts of oral testimony produced pursuant to a civil investigative demand under this section, or in the event of the official relief of such custodian from responsibility for the custody and control of such material, answers, or transcripts, the Attorney General shall promptly--

(A) designate another false claims law investigator to serve as custodian of such material, answers, or transcripts, and

(B) transmit in writing to the person who produced such material, answers, or testimony notice of the identity and address of the successor so designated.

Any person who is designated to be a successor under this paragraph shall have, with regard to such material, answers, or transcripts, the same duties and responsibilities as were imposed by this section upon that person's predecessor in office, except that the successor shall not be held responsible for any default or dereliction which occurred before that designation.

(j) Judicial proceedings.

(1) Petition for enforcement. Whenever any person fails to comply with any civil investigative demand issued under subsection (a), or whenever satisfactory copying or reproduction of any material requested in such demand cannot be done and such person refuses to surrender such material, the Attorney General may file, in the district court of the United States for any judicial district in which such person resides, is found, or transacts business, and serve upon such person a petition for an order of such court for the enforcement of the civil investigative demand.

(2) Petition to modify or set aside demand.

(A) Any person who has received a civil investigative demand issued under subsection (a) may file, in the district court of the United States for the judicial district within which such person resides, is found, or transacts business, and serve upon the false claims law investigator identified in such demand a petition for an order of the court to modify or set aside such demand. In the case of a petition addressed to an express demand for any product of discovery, a petition to modify or set aside such demand may be brought only in the district court of the United States for the judicial district in which the proceeding in which such discovery was obtained is or was last pending. Any petition under this subparagraph must be filed--

(i) within 20 days after the date of service of the civil investigative demand, or at any time before the return date specified in the demand, whichever date is earlier, or

(ii) within such longer period as may be prescribed in writing by any false claims law investigator identified in the demand.

(B) The petition shall specify each ground upon which the petitioner relies in seeking relief under subparagraph (A), and may be based upon any failure of the demand to comply with the provisions of this section or upon any constitutional or other legal right or privilege of such person. During the pendency of the petition in the court, the court may stay, as it deems proper, the running of the time allowed for compliance with the demand, in whole or in part, except that the person filing the petition shall comply with any portions of the demand not sought to be modified or set aside.

(3) Petition to modify or set aside demand for product of discovery.

(A) In the case of any civil investigative demand issued under subsection (a) which is an express demand for any product of discovery, the person from whom such discovery was obtained may file, in the district court of the United States for the judicial district in which the proceeding in which such discovery was obtained is or was last pending, and serve upon any false claims law investigator identified in the demand and upon the recipient of the demand, a petition for an order of such court to modify or set aside those portions of the demand requiring production of any such product of discovery. Any petition under this subparagraph must be filed--

(i) within 20 days after the date of service of the civil investigative demand, or at any time before the return date specified in the demand, whichever date is earlier, or

(ii) within such longer period as may be prescribed in writing by any false claims law investigator identified in the demand.

(B) The petition shall specify each ground upon which the petitioner relies in seeking relief under subparagraph (A), and may be based upon any failure of the portions of the demand from which relief is sought to comply with the provisions of this section, or upon any constitutional or other legal right or privilege of the petitioner. During the pendency of the petition, the court may stay, as it deems proper, compliance with the demand and the running of the time allowed for compliance with the demand.

(4) Petition to require performance by custodian of duties. At any time during which any custodian is in custody or control of any documentary material or answers to interrogatories produced, or transcripts of oral testimony given, by any person in compliance with any civil investigative demand issued under subsection (a), such person, and in the case of an express demand for any product of discovery, the person from whom such discovery was obtained, may file, in the district court of the United States for the judicial district within which the office of such custodian is situated, and serve upon such custodian, a petition for an order of such court to require the performance by the custodian of any duty imposed upon the custodian by this section.

(5) Jurisdiction. Whenever any petition is filed in any district court of the United States under this subsection, such court shall have jurisdiction to hear and determine the matter so presented, and to enter such order or orders as may be required to carry out the provisions of this section. Any final order so entered shall be subject to appeal under section 1291 of title 28. Any disobedience of any final order entered under this section by any court shall be punished as a contempt of the court.

(6) Applicability of Federal Rules of Civil Procedure. The Federal Rules of Civil Procedure shall apply to any petition under this subsection, to the extent that such rules are not inconsistent with the provisions of this section.

(k) Disclosure exemption. Any documentary material, answers to written interrogatories, or oral testimony provided under any civil investigative demand issued under subsection (a) shall be exempt from disclosure under section 552 of title 5.

(l) Definitions. For purposes of this section--

(1) the term "false claims law" means--

(A) this section and sections 3729 through 3732; and

(B) any Act of Congress enacted after the date of the enactment of this section [enacted Oct. 27, 1986] which prohibits, or makes available to the United States in any court of the United States any civil remedy with respect to, any false claim against, bribery of, or corruption of any officer or employee of the United States;

(2) the term "false claims law investigation" means any inquiry conducted by any false claims law investigator for the purpose of ascertaining whether any person is or has been engaged in any violation of a false claims law;

(3) the term "false claims law investigator" means any attorney or investigator employed by the Department of Justice who is charged with the duty of enforcing or carrying into effect any false claims law, or any officer or employee of the United States acting under the direction and supervision of such attorney or investigator in connection with a false claims law investigation;

(4) the term "person" means any natural person, partnership, corporation, association, or other legal entity, including any State or political subdivision of a State;

(5) the term "documentary material" includes the original or any copy of any book, record, report, memorandum, paper, communication, tabulation, chart, or other document, or data compilations stored in or accessible through computer or other information retrieval systems, together with instructions and all other materials necessary to use or interpret such data compilations, and any product of discovery;

(6) the term "custodian" means the custodian, or any deputy custodian, designated by the Attorney General under subsection (i)(1);

(7) the term "product of discovery" includes--

(A) the original or duplicate of any deposition, interrogatory, document, thing, result of the inspection of land or other property, examination, or admission, which is obtained by any method of discovery in any judicial or administrative proceeding of an adversarial nature;

(B) any digest, analysis, selection, compilation, or derivation of any item listed in subparagraph (A); and

(C) any index or other manner of access to any item listed in subparagraph (A); and

(8) the term "official use" means any use that is consistent with the law, and the regulations and policies of the Department of Justice, including use in connection with internal Department of Justice memoranda and reports; communications between the Department of Justice and a Federal, State, or local government agency, or a contractor of a Federal, State, or local government agency, undertaken in furtherance of a Department of Justice investigation or prosecution of a case; interviews of any qui tam relator or other witness; oral examinations; depositions; preparation for and response to civil discovery requests; introduction into the record of a case or proceeding; applications, motions, memoranda and briefs submitted to a court or other tribunal; and communications with Government investigators, auditors, consultants and experts, the counsel of other parties, arbitrators and mediators, concerning an investigation, case or proceeding.

HISTORY:

(Added Oct. 27, 1986, P.L. 99-562, § 6(a), 100 Stat. 3159.)
(As amended May 20, 2009, P.L. 111-21, § 4(c), 123 Stat. 1623.)

33 n 44

[1] The act has been more recently amended in 2009 and 2010 to further strengthen the ability of whistleblowers to combat fraud on the federal treasury. The text of the act is provided in the Appendix to these materials.