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Tuesday, August 4, 2009

Federal False Claims Act Amendments by False Claims Act Whistleblower Lawyer

Qui Tam Federal False Claims Act Whistleblower Lawsuits through the Federal False Claims Act allow whistleblowers to seek compensation on the government's behalf from companies and people that have defrauded taxpayers out of government money. With the sharp increase in Federal Government Spending has come the need to expand the Federal False Claims Act to prevent unethical wrongdoers from making false claims and false certifications to the government in order to steal millions and even billions of dollars from the United States Government.

American Recovery and Reinvestment Act of 2009 (February 2009)

In February 2009, the American Recovery and Reinvestment Act of 2009 was signed into law which includes significant new whistleblower provisions. Section 1553 of the Act prohibits any private employer or state or local government that receives any funds pursuant to the Act from retaliating against an employee who discloses, internally or externally, information that the employee reasonably believes constitutes evidence of one or more of a number of specified improper uses of stimulus funds, including gross mismanagement of an agency contract or grant, gross waste of covered funds, or an abuse of authority related to the implementation or use of covered funds. Section 1553 establishes procedures and damage remedies that are similar in some ways to those with which many employers are familiar under Section 806 of the Sarbanes-Oxley Act ("SOX"), but its whistleblower provisions go beyond the whistleblower protections of SOX in several respects.

Fraud Enforcement and Recovery Act of 2009 (May 2009)

In May 2009, the Fraud Enforcement and Recovery Act of 2009 was signed into law which makes important amendments to the country's most important tool for fighting fraud, the False Claims Act. This new Federal False Claim Act Legislation will protect hundreds of billions spent on government programs from fraud and government waste and expand the ability of whistleblowers to collect compensation.

This Act amends the False Claims Act to: (1) expand liability under such Act for making false or fraudulent claims to the federal government; and (2) apply liability under such Act for presenting a false or fraudulent claim for payment or approval (currently limited to such a claim presented to an officer or employee of the federal government). Requires persons who violate such Act to reimburse the federal government for the costs of a civil action to recover penalties or damages. The Act also modifies and expands provisions of the False Claims Act relating to intervention by the federal government in civil actions for false claims, sharing of information by the Attorney General with a claimant, retaliatory relief, and service upon state or local authorities in sealed cases.

The Act also redefines "claim" to include claims submitted "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." This language makes explicit the ability of Government and whistleblowers to pursue subcontractors and grantees. This expansion will create potential liability to health care providers and other businesses that contract with government programs including Medicaid and Medicare.

The Act also redefines "obligation" to include "an established duty, whether or not fixed," arising from a variety of relationships, and specifically includes obligations "arising from statute or regulation, or from the retention of any overpayment." This change allows the government and whistleblower to pursue violations of regulatory statutes with penalty provisions as False Claims Act Case and pursue false documents which are "material to an obligation to pay or transmit money...to the Government" regardless of whether a false claim has been submitted. For example, a government contractor who backdates records to support a claim already submitted could be liable under this expansion.

The Act also expand the anti-retaliation provisions from only employees to include "contractors and agents" who "act to stop one or more violations." This expanded protection could extend to contractors in government-funded managed care plans who take action to stop false reporting or illegal denial of service by the plan.

These expansions to the Federal False Claims Act should increase the number of Federal False Claims Act Lawsuits and allow the Federal Government to crack down on fraud and wasteful spending as well as recoup money that has been fraudulently obtained.

The Fraud Enforcement and Recovery Act also expands federal fraud laws to encompass independent mortgage companies, which are not currently covered by antifraud statutes that apply to traditional banks. Such independent mortgage companies originated approximately half of all subprime loans in 2005 and 2006. The bill defines a financial institution that will be covered by the fraud statutes as any business that finances or refinances mortgages. The Act expands the mortgage-related violations that are subject to both criminal and civil punishments. Additionally, the legislation makes it a crime to appraise a property falsely, an effort to prevent the purposeful inflation of home value appraisals that contributed to the housing bubble and the resulting housing crisis.

The Fraud Enforcement and Recovery Act strengthens protections against attempts to defraud the federal government, particularly through the Troubled Asset Relief Program and the economic stimulus package; expands the financial instruments that are covered by the securities fraud statute; and clarifies a money laundering statute. The Act provides $490 billion in spending for investigation and prosecution of mortgage fraud, securities fraud, and fraud cases involving federal economic assistance.

Federal False Claims Act and Qui Tam Lawsuits

For more information on the amended Federal False Claims Act or Qui Tam Federal False Claims Act Whistleblower lawsuits including the text of the amended Federal False Claims Act, please go to the following web page on Federal False Claims Act Amendments by Federal False Claims Act Whistleblower Lawyer, Jason Coomer.

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