Over the past few days, we have examined a recent oversight committee hearing held by the U.S. House of Representatives through its Committee on Judiciary. Specifically, the Subcommittee on the Constitution and Civil Justice elicited testimony from several experts in the field of ethics and whistleblower laws, including several opinions in support of the False Claims Act in its current state – which assesses treble damages and up to $11,000 per violation against businesses caught engaging in intentional fraudulent conduct against the government.
In stark contrast to yesterday’s post, today we examine the testimony of the Chamber of Commerce’s David Ogden, an attorney dedicated to the idea that the best way to handle widespread corporate fraud is to set up internal compliance procedures wherein, if companies follow the protocol upon the revelation of fraud, a lighter penalty will be assessed. The following further examines Mr. Ogden’s position on the matter, which we have also discussed in previous posts following the Chamber’s written report on the current “issues” with the False Claims Act.
Testimony by Attorney David Ogden
Mr. Ogden began his rhetoric with the Subcommittee by reiterating that the Chamber was not trying to sell a “fantasy castle in the air,” nor was it trying to put the “fox in charge of the henhouse.” Rather, the Chamber reasoned that the False Claims Act and its damages provisions should be adjusted to reflect the relative culpability of the defendant, distinguishing between those corporations willing to come forward and self-report fraud, and those caught “red handed” by regulators and authorities. More specifically, the Chamber advocates for the following:
- Adding ‘Fairness’ to Damages: The Chamber points out that companies face treble damages without regard to whether the organization was intentionally defrauding the government, recklessly submitting false claims, or even maintained an internal compliance structure. The Chamber believes damages should be adjusted to differentiate between the “truly bad actors,” conduct not rising to the level of intentional fraud, and companies promptly reporting fraud upon discovery – the latter subject to 1.5 actual damages;
- Incentivizing Self-Reporting: Under this component, companies choosing to come forward with their own fraud would be protected from a subsequent qui tam action based on the same facts;
- Incentivizing Internal Reporting: The Chamber suggests that the current rules, which implement a first-to-file rule, dissuade potential reporters from exposing fraud for fear their claim will be “lost” to another employee able to file a lawsuit first. To remedy this issue, the Chamber suggests that any qui tam plaintiff who has not also internally reported the conduct at some point within the 180 days preceding the commencement of the lawsuit should have his whistleblower suit promptly dismissed. The Chamber opines that the 180-day window would give the corporation an opportunity to investigate the allegations and decide whether to self-report.
- Exclusion and Debarment: Exclusion from federal programs is often threatened as a means to effectuate settlement and encourage compliance. However, the Chamber believes this remedy should be limited solely to companies who have instituted internal compliance measures.
Aware of Fraud Against the Government? Contact a Whistleblower Attorney Today
Thankfully, the changes suggested by the Chamber of Commerce are just that: suggestions. The False Claims Act is alive and well, and imposes possible triple damages against any defendant found to be engaging in fraudulent conduct. If you would like to discuss a possible whistleblower lawsuit – wherein you could receive up to 30 percent of the ultimate settlement or judgment – contact Berger Montague today.