Grassley and Bipartisan Group of Senators Introduce False Claims Amendments Act of 2021

This article features Government Accountability Project and was originally published here.

Earlier this year, a bipartisan group of senators led by Senator Chuck Grassley, introduced the False Claims Amendments Act of 2021 in an attempt to “beef up” the Act and help the government continue to combat fraud.

Under the False Claims Act, materiality is defined as having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property. Historically, this has been understood to mean that if the government was able to withhold payment or demand the return of payment, the fraud was material. However, the Escobar decision from the Supreme Court has created confusion among courts by stating that the government’s conduct after a claim is submitted is “strong evidence” that a requirement is not material to the government, which has resulted in companies accused of defrauding the government going on “fishing expeditions” to see if someone in the government was aware of the fraud to make the argument that the fraud was immaterial because no government action was taken.

Shifts the Burden of Proof

Therefore, this Act shifts the burden of proof to the defendant to prove by clear and convincing evidence that the government’s conduct, such as continued payment, was material. While perhaps a laudable goal, it isn’t certain what the impact of this provision will wind up being, as the bill doesn’t give any clarification on what is or is not considered “material.”


Additionally, to further reduce fishing expeditions, the defendant shall reimburse the government for costs associated with irrelevant, disproportional, or unduly burdensome discover upon a motion filed by the Department of Justice (DOJ) requesting such compensation.

Resolves a Circuit Split Over Dismissal Standard

The Act also clarifies that in for the DOJ to dismiss a relator’s claim, a hearing must be held that allows the realtor to have the opportunity to show that the reasons for dismissal are “fraudulent, arbitrary and capricious, or contrary to law.” This is an attempt by the Senate to resolve the circuit split over when the courts should grant the government’s motion to dismiss a qui tam complaint – some courts have adopted a standard giving the government an “unfettered right” to dismiss cases and others have adopted a “rational relation” standard, where the government has to show that the dismissal is rationally related to a valid government purpose.

Employee Retaliation Clarification

Finally, the Act clarifies that the existing anti-retaliation provisions of the False Claims Act apply to post-employment retaliation, not just current employees.

Retroactive Legislation

All changes included in the legislation would be applied not only to future litigation, but cases currently pending, to ensure that it covers the trillions of dollars spent on relief throughout the COVID-19 pandemic.

Support from Various Political Corners

In introducing the Act, Senator Chuck Grassley said, “The False Claims Act has clearly been the best tool to fight fraud against the government and recover lost taxpayer dollars. Tens of billions of dollars have been returned to the federal treasury since my updates of 35 years ago. The legislation we introduced today will help recoup even more money by clarifying confusion after the Escobar case. The Administrative False Claims Act will significantly improve the process for smaller claims. I look forward to pushing for these bills to become law, and continuing my work to protect taxpayers and whistleblowers who shine a light on fraud, waste and abuse. In light of the trillions of dollars that Congress has appropriated recently for COVID relief, these bills are needed, more than ever, to fight the significant amounts of fraud that we are already seeing.”

Senate Majority Whip Dick Durbin also supports the legislation, saying “This is an important bill which builds on previous efforts to recoup lost taxpayer dollars. I’m proud to join this bipartisan group of colleagues to introduce a bill that will bolster the government’s ability to fight fraud.”

“The False Claims Act Amendments of 2021 will crack down on those who leech dollars from American taxpayers’ pockets through legal loopholes. It will hold fraudsters accountable when their crimes cause investigations that waste taxpayer money. I am proud to partner with Sen. Grassley on this important legislation,” Senator John Kennedy said.

The bill is endorsed by Taxpayers Against Fraud, the National Whistleblower Center, the Project on Government Oversight, and the Government Accountability Project.

With such high-profile and seemingly broad bipartisan support, this is certainly a bill worth paying attention to.