Last-Minute Attempt to Add Proposed False Claims Act Amendments to Infrastructure Bill Falls Short

Last month we broke down significant proposed amendments to the False Claims Act related to materiality, discovery, and the government’s (c)(2)(A) dismissal authority, led by long-time whistleblower champion Senator Chuck Grassley (R-IA). We promised to keep you updated on any legislative developments. In a blink-and-you’ll-miss-it turn of events, the amendments appeared as Amendment 2435, the “Anti-Fraud Amendments Act”—and then disappeared from—the Senate’s $1 trillion infrastructure bill prior to the bill’s passage last week. Senator Grassley’s remarks introducing Amendment 2435 characterized it as “long needed improvements to combat fraud perpetrated against the Federal Government.”

Interestingly, the FCA amendments briefly incorporated into the infrastructure bill revised the proposed changes for materiality. The original proposed legislation states “the Government or relator may establish materiality by a preponderance of the evidence,” but “[a] defendant may rebut an argument of materiality . . . by clear and convincing evidence,” a framework that, as we discussed in our last post, is likely to generate considerable confusion if passed. Rather than clarify how this burden shifting provision would work, the infrastructure-bill version doubled-down on the high burden on the defendant to rebut materiality, stating the defendant “may rebut evidence of materiality . . . only by clear and convincing evidence that the Government regards the matter as immaterial.”

Although Amendment 2535’s proposed revisions to (c)(2)(A) and the anti-retaliation provision mirrored the original proposed amendments, it also tweaked the proposed revision regarding discovery cost-shifting. Under the new proposed language, the Government is still allowed to seek reimbursement of attorneys’ fees and costs for responding to discovery requests in non-intervened qui tam litigation, unless the requesting party can demonstrate that the information sought is “relevant and proportionate to the needs of the case.” Under the original language, the requesting party was required not only to show that the discovery requests were “relevant and proportionate” but also not “unduly burdensome to the Government.”

Although Senator Grassley was ultimately unsuccessful in his efforts to add his FCA amendments to the infrastructure bill, his attempt to do so underscores that he will continue to push hard for the amendments’ passage. We will be on the look-out for any effort to squeeze these changes into upcoming legislation. When we know something, you will too. Stay tuned.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.