The FERA amendments affected both the substantive and procedural provisions of the FCA as follows:
Loosening or Elimination of the Intent Requirement: In Allison Engine Co. v. United States ex rel. Sanders, 128 S.Ct. 2123 (2008), the Supreme Court unanimously ruled that under two of the most commonly utilized provisions of the FCA (the former §§ 3729(a)(2) & (3)), the plaintiff had to establish that the defendant intended its false statement or record to result in a payment by the government. The amendments effectively overturned Allison Engine’s intent requirement.
Broadening of “Reverse” False Claims Liability: Under the prior version of the FCA, if a defendant receives an overpayment from the government, or otherwise owes the government money, the defendant was only liable if it “makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease” that obligation. The amendments greatly broadened this so-called “reverse false claims” provision by adding a clause that creates liability even where a defendant does not make a false record or statement. In particular, the amended subsection imposes liability where the defendant “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” § 3729(a)(1)(G). Though this provision will require interpretation by the courts, its plain meaning suggests that where an entity is overpaid by the government, realizes it has been overpaid, and takes no action to return that overpayment, it is liable under the amended FCA, whether it affirmatively conceals the overpayment or not.
Elimination of the Direct Presentment Requirement: Under subsection 3729(a)(1) of the pre-2009 FCA, “claims” were limited to requests or demands presented “to an officer or employee of the United States Government or a member of the Armed Forces of the United States.” Similarly, for purposes of the former subsection (a)(2), claims were limited to those “paid or approved by the Government.” Despite broader language elsewhere in the FCA, at least one circuit had interpreted these subsections strictly as requiring direct presentment of claims to an agent of the government. See United States ex. rel. Totten v. Bombardier, 380 F.3d 488 (D.C. Cir. 2004). Thus, where a false claim was made on a contractor, a state, or some other entity through which federal funds pass, the direct presentment requirement was not met, and FCA liability did not attach. The amendments effectively overturned Totten and similar cases. Specifically, the amendments extended the definition of “claim” to include any request or demand for money or property, “whether or not the United States has title to the money or property,” that “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” has provided, or will provide, “any portion of the money or property requested or demanded.” § 3729(b)(2)(A).
Broadening of Retaliation Provision: In the only amendment directly affecting the qui tam provisions of the FCA, Congress broadened the anti-retaliation provision of the FCA to protect “contractors” and “agents”; the prior version only covered “employees.” The FERA amendments also eliminated the requirement that the retaliatory acts be taken by the employer. § 3730(h).
Relation Back of Claims Added by the Government: The amendments confirmed that when the government intervenes and adds claims to the relator’s complaint, those new claims relate back to the filing of the relator’s complaint. § 3731(c).
Civil Investigative Demands: Under the former FCA, the Attorney General and only the Attorney General had the power to issue civil investigative demands (“CIDs”); CIDs describe such instruments as requests for documents, interrogatories, and depositions. In practice, this meant that this powerful investigative tool was almost never used (and this was particularly so under the Bush administration). The amendments changed this, allowing any “designee” of the Attorney General to issue CIDs. § 3733(a)(1).
Power to Share Information: The FERA amendments explicitly authorized the U.S. Department of Justice to share information obtained through its investigation with relators and with other federal, state, and local government agencies. § 3733(i)(2)(l). Under the former FCA, the extent of permissible sharing was unclear, and this uncertainty had led many government attorneys to err on the side of non-cooperation.