U.S. Chamber of Commerce False Claims Act Reform Proposals

The False Claims Act (FCA) has been highly effective in rooting out government dishonesty and fraud. Since 1986, it has helped the government recover $30 billion from companies who took advantage of it. Despite the success of the FCA, the US Chamber of Commerce, through its Institute for Legal Reform, is now proposing changes – which are aimed at reducing the amount businesses will have to pay.

The ILR claims that the act isn’t effective in stopping government wrongs, while simultaneously bemoaning how well the FCA is doing through the billions it is collecting. It also claims that the government is using the possibilities of triple damages and exclusion from future government contracts combined with overbroad investigative powers to bully businesses into settlements.

Our firm strongly disagrees with these proposals. We think they’re not warranted and serve to insulate companies from wrongdoing. The reforms will encourage a conscious and voluntary disregard of the need to use reasonable care.

Self-Review as the Solution

The ILR’s proposal argues that the companies themselves are the best means of stopping fraud and wrong, adding that companies create “independent certified compliance programs.” As a reward for creating these programs, which will be monitored by third party auditors, the company will have reduced fines and penalties if wrong is proven – unless the company acted with specific intent to defraud (a very high standard).

Limiting Private Lawsuits

If these proposed changed get enacted, consider the ramifications.

  • If the company has its own compliance program, then the amount that the relators can recover will be reduced.
  • Employees will be required to file an internal report with the company 180 days before being allowed to file an external qui tam action.
  • Qui tam claims will be barred when the company has disclosed the allegations to an “appropriate governmental agency.”

Removing the Exclusion from Future Work Threat

The US Chamber of Commerce argues that the threat of exclusion from doing other government contract work should be minimized if the company has its own certified compliance program. Further, the Chamber notes the exclusion threat is too heavy a club and forces companies to settle when they really shouldn’t because they’re afraid of losing the work.

Additional Proposals

The reform suggestions include many other provisions that will make it more difficult to hold a wrongdoer responsible. Some key ones

  • Changing the standard from a preponderance of the evidence to a tougher standard of one of clear and convincing evidence
  • Allowing statutory damages only in cases where no damages are otherwise awarded
  • Placing restraints on the US Justice department as to how evidence is preserved and how it can be obtained

For a variety of reasons, including the fact that altering FCA guidelines will give whistleblowers  one more obstacle as they consider making a claim against the company that is doing the wrong, we strongly disagree with any move to enact FCA changes. Begelman & Orlow, P. C. stands firm when it comes to assisting whistleblowers. If you have a qui tam action you are considering pursuing, call our office at 866-627-7052 for a free consultation to discuss your case.


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