The False Claims Act: A Primer
The False Claims Act (FCA), 31 U.S.C. §§ 3729 - 3733 was enacted in 1863 by a Congress
concerned that suppliers of goods to the Union Army during the Civil War were defrauding the
Army. The FCA provided that any person who knowingly submitted false claims to the
government was liable for double the government’s damages plus a penalty of $2,000 for each
false claim. Since then, the FCA has been amended several times. In 1986, there were
significant changes to the FCA, including increasing damages from double damages to treble
damages and raising the penalties from $2,000 to a range of $5,000 to $10,000. The FCA has
been amended three times since 1986. Over the life of the statute it has been interpreted on
hundreds of occasions by federal courts (which sometimes issue conflicting interpretations of the
statute). The purpose of this primer is not to explain how the FCA evolved over the decades or
to discuss judicial interpretations of its provisions. Rather, in this primer we simply explain the
most significant elements of the FCA to give one new to the statute an introductory
understanding of the FCA and how it works. The complete text of the False Claims Act is
provided at the end of this primer.
Liability
The statute begins, in § 3729(a), by explaining the conduct that creates FCA liability. In very
general terms, §§ 3729(a)(1)(A) and (B) set forth FCA liability for any person who knowingly
submits a false claim to the government or causes another to submit a false claim to the
government or knowingly makes a false record or statement to get a false claim paid by the
government. Section 3729(a)(1)(G) is known as the reverse false claims section; it provides
liability where one acts improperly – not to get money from the government, but to avoid having
to pay money to the government. Section 3729(a)(1)(C) creates liability for those who conspire
to violate the FCA. Sections 3729(a)(1)(D), (E), and (F) are rarely invoked.
Damages and penalties
After listing the seven types of conduct that result in FCA liability, the statute provides that one
who is liable must pay a civil penalty of between $5,000 and $10,000 for each false claim (those
amounts are adjusted from time to time; the current amounts are $5,500 to $11,000) and treble
the amount of the government’s damages. Where a person who has violated the FCA reports the
violation to the government under certain conditions, the FCA provides that the person shall be
liable for not less than double damages.
The knowledge requirement
A person does not violate the False Claims Act by submitting a false claim to the government; to
violate the FCA a person must have submitted, or caused the submission of, the false claim (or
made a false statement or record) with knowledge of the falsity. In § 3729(b)(1), knowledge of
false information is defined as being (1) actual knowledge, (2) deliberate ignorance of the truth
or falsity of the information, or (3) reckless disregard of the truth or falsity of the information.
Definition of a claim
The FCA also defines what a claim is and says that it is a demand for money or property made
directly to the Federal Government or to a contractor, grantee, or other recipient if the money is
to spent on the government’s behalf and if the Federal Government provides any of the money
demanded or if the Federal Government will reimburse the contractor or grantee.
Tax claims exclusion
In § 3729(d), the FCA states that the statute does not apply to tax claims under the Internal
Revenue Code.
The qui tam provisions
The FCA allows private persons to file suit for violations of the FCA on behalf of the
government. A suit filed by an individual on behalf of the government is known as a “qui tam
action, and the person bringing the action is referred to as a “relator.”
a. Filing a qui tam complaint
The qui tam provisions begin at § 3730(b) of the FCA; § 3730(b)(1) states that a person may file
a qui tam action. Section 3730(b)(2) provides that a qui tam complaint must be filed with the
court under seal. The complaint and a written disclosure of all the relevant information known to
the relator must be served on the U.S. Attorney for the judicial district where the qui tam was
filed and on the Attorney General of the United States.
b. Government investigation
The qui tam complaint is initially sealed for 60 days. The government is required to investigate
the allegations in the complaint; if the government cannot complete its investigation in 60 days,
it can seek extensions of the seal period while it continues its investigation. The government
must then notify the court that it is proceeding with the action (generally referred to as
“intervening” in the action) or declining to take over the action, in which case the relator can
proceed with the action.
c. Rights of the parties in a qui tam action
If the government intervenes in the qui tam action it has the primary responsibility for
prosecuting the action. § 3730(c)(1). It can dismiss the action, even over the objection of the
relator, so long as the court gives the relator an opportunity for a hearing (§ 3730(c)(2)(A)) and it
can settle the action even if the relator objects so long as the relator is given a hearing and the
court determines that the settlement is fair. § 3730(c)(2)(B). If a relator seeks to settle or dismiss
a qui tam action, it must obtain the consent of the government. § 3730(b)(1). When the case is
proceeding, the government (§ 3730(c)(2)(C)) and the defendant (§ 3730(c)(2)(D)) can ask the
court to limit the relator’s participation in the litigation.
d. Award to the relator
If the government intervenes in the qui tam action, the relator is entitled to receive between 15
and 25 percent of the amount recovered by the government through the qui tam action. If the
government declines to intervene in the action, the relator’s share is increased to 25 to 30
percent. Under certain circumstances, the relator’s share may be reduced to no more than ten
percent. If the relator planned and initiated the fraud, the court may reduce the award without
limitation. The relator’s share is paid to the relator by the government out of the payment
received by the government from the defendant. If a qui tam action is successful, the relator also
is entitled to legal fees and other expenses of the action by the defendant. All of these provisions
are in § 3730(d) of the FCA. The FCA also provides that if the government chooses to obtain a
recovery from the defendant in certain types of proceedings other than the relator’s FCA suit,
this is known as an alternate remedy and the relator is entitled to the same share of the recovery
as if the recovery was obtained through the relator’s FCA suit. §3730(c)(5).
e. Statutory bars to qui tam actions
The FCA provides several circumstances in which a relator cannot file or pursue a qui tam
action:
1. The relator was convicted of criminal conduct arising from his or her role in the
FCA violation. § 3730(d)(3).
2. Another qui tam concerning the same conduct already has been filed (this is
known as the “first to file bar”). §3730(b)(5).
3. The government already is a party to a civil or administrative money
proceeding concerning the same conduct. §3730(e)(3).
4. The qui tam action is based upon information that has been disclosed to the
public through any of several means: criminal, civil, or administrative hearings in which the
government is a party, government hearings, audits, reports, or investigations, or through the
news media (this is known as the “public disclosure bar.”) §3730(e)(4)(A). There is an
exception to the public disclosure bar where the relator was the original source of the
information.
We repeat that this primer does not discuss every section of the False Claims Act and is not
intended to provide legal advice or take formal positions. It is intended only to provide a general
introduction to the False Claims Act to those new to the area.
Below is the complete text of the False Claims Act:
§ 3729. False claims
(a) LIABILITY FOR CERTAIN ACTS.—
(1) IN GENERAL.—Subject to paragraph (2), any person who—
(A) knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a
false record or statement material to a false or fraudulent;
(C) conspires to commit a violation of subparagraph (A), (B),
(D), (E), (F), or (G);
(D) has possession, custody, or control of property or money
used, or to be used, by the Government and knowingly
delivers, or causes to be delivered, less than all of that
money or property;
(E) is authorized to make or deliver a document certifying
receipt of property used, or to be used, by the Government
and, intending to defraud the Government, makes or
delivers the receipt without completely knowing that the
information on the receipt is true;
(F) knowingly buys, or receives as a pledge of an obligation or
debt, public property from an officer or employee of the
Government, or a member of the Armed Forces, who
lawfully may not sell or pledge property; or
(G) knowingly makes, uses, or causes to be made or used, a
false record or statement material to an obligation to pay or
transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or
decreases an obligation to pay or transmit money or
property to the Government,
is liable to the United States Government for a civil penalty of not
less than $5,000 and not more than $10,000, as adjusted by the
Federal Civil Penalties Inflation Adjustment Act of 1990 (28
U.S.C. 2461 note; Public Law 104-410), plus 3 times the amount
of damages which the Government sustains because of the act of
that person.
(2) REDUCED DAMAGES.—If the court finds that—
(A) the person committing the violation of this subsection
furnished officials of the United States responsible for
investigating false claims violations with all information
known to such person about the violation within 30 days
after the date on which the defendant first obtained the
information;
(B) such person fully cooperated with any Government
investigation of such violation; and
(C) at the time such person furnished the United States with the
information about the violation, no criminal prosecution,
civil action, or administrative action had commenced under
this title with respect to such violation, and the person did
not have actual knowledge of the existence of an
investigation into such violation,
the court may assess not less than 2 times the amount of damages
which the Government sustains because of the act of that person.
(3) COSTS OF CIVIL ACTIONS.—A person violating this subsection shall
also be liable to the United States Government for the costs of a
civil action brought to recover any such penalty or damages.
(b) DEFINITIONS.—For purposes of this section—
(1) the terms “knowing” and “knowingly”—
(A) mean that a person, with respect to information—
(i) has actual knowledge of the information;
(ii) acts in deliberate ignorance of the truth or falsity of
the information; or
(iii) acts in reckless disregard of the truth or falsity of
the information,; and
(B) require no proof of specific intent to defraud;
(2)
the term “claim”—
(A) means any request or demand, whether under a contract or
otherwise, for money or property and whether or not the United
States has title to the money or property, that—
(i) is presented to an officer, employee, or agent of the
United States; or
(ii) is made 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, and if the United
States Government —
(I) provides or has provided any portion of the
money or property requested or demanded;
or
(II) will reimburse such contractor, grantee, or
other recipient for any portion of the money
or property which is requested or demanded;
and
(B) does not include requests or demands for money or property
that the Government has paid to an individual as
compensation for Federal employment or as an income
subsidy with no restrictions on that individual’s use of the
money or property;
(3) the term “obligation” means an established duty, whether or not
fixed, arising from an express or implied contractual, grantor-
grantee, or licensor-licensee relationship, from a fee-based or
similar relationship, from statute or regulation, or from the
retention of any overpayment; and
(4) the term “material” means having a natural tendency to influence,
or be capable of influencing, the payment or receipt of money or
property.
(c) E
XEMPTION FROM DISCLOSURE.—Any information furnished pursuant to
subsection (a)(2) shall be exempt from disclosure under section 552 of title 5.
(d) E
XCLUSION.—This section does not apply to claims, records, or statements made
under the Internal Revenue Code of 1986.
§ 3730. Civil actions for false claims
(a) RESPONSIBILITIES OF THE ATTORNEY GENERAL.—The Attorney General diligently
shall investigate a violation under section 3729. If the Attorney General finds that
a person has violated or is violating section 3729, the Attorney General may bring
a civil action under this section against the person.
(b) ACTIONS BY PRIVATE PERSONS.—
(1) A person may bring a civil action for a violation of section 3729
for the person and for the United States Government. The action
shall be brought in the name of the Government. The action may
be dismissed only if the court and the Attorney General give
written consent to the dismissal and their reasons for consenting.
(2) A copy of the complaint and written disclosure of substantially all
material evidence and information the person possesses shall be
served on the Government pursuant to Rule 4(d)(4) of the Federal
Rules of Civil Procedure. The complaint shall be filed in camera,
shall remain under seal for at least 60 days, and shall not be served
on the defendant until the court so orders. The Government may
elect to intervene and proceed with the action within 60 days after
it receives both the complaint and the material evidence and
information.
(3) The Government may, for good cause shown, move the court for
extensions of the time during which the complaint remains under
seal under paragraph (2). Any such motions may be supported by
affidavits or other submissions in camera. The defendant shall not
be required to respond to any complaint filed under this section
until 20 days after the complaint is unsealed and served upon the
defendant pursuant to Rule 4 of the Federal Rules of Civil
Procedure.
(4) Before the expiration of the 60-day period or any extensions
obtained under paragraph (3), the Government shall—
(A) proceed with the action, in which case the action shall be
conducted by the Government; or
(B) notify the court that it declines to take over the action, in
which case the person bringing the action shall have the
right to conduct the action.
(5) When a person brings an action under this subsection, no person
other than the Government may intervene or bring a related action
based on the facts underlying the pending action.
(c) RIGHTS OF THE PARTIES TO QUI TAM ACTIONS.—
(1) If the Government proceeds with the action, it shall have the
primary responsibility for prosecuting the action, and shall not be
bound by an act of the person bringing the action. Such person
shall have the right to continue as a party to the action, subject to
the limitations set forth in paragraph (2).
(2) (A) The Government may dismiss the action notwithstanding
the objections of the person initiating the action if the
person has been notified by the Government of the filing of
the motion and the court has provided the person with an
opportunity for a hearing on the motion.
(B) The Government may settle the action with the defendant
notwithstanding the objections of the person initiating the
action if the court determines, after a hearing, that the
proposed settlement is fair, adequate, and reasonable under
all the circumstances. Upon a showing of good cause, such
hearing may be held in camera.
(C) Upon a showing by the Government that unrestricted
participation during the course of the litigation by the
person initiating the action would interfere with or unduly
delay the Government’s prosecution of the case, or would
be repetitious, irrelevant, or for purposes of harassment, the
court may, in its discretion, impose limitations on the
person’s participation, such as—
(i) limiting the number of witnesses the person may
call;
(ii) limiting the length of the testimony of such
witnesses;
(iii) limiting the person’s cross-examination of
witnesses; or
(iv) otherwise limiting the participation by the person in
the litigation.
(D) Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the
person initiating the action would be for purposes of
harassment or would cause the defendant undue burden or
unnecessary expense, the court may limit the participation
by the person in the litigation.
(3) If the Government elects not to proceed with the action, the person
who initiated the action shall have the right to conduct the action.
If the Government so requests, it shall be served with copies of all
pleadings filed in the action and shall be supplied with copies of all
deposition transcripts (at the Government’s expense). When a
person proceeds with the action, the court, without limiting the
status and rights of the person initiating the action, may
nevertheless permit the Government to intervene at a later date
upon a showing of good cause.
(4) Whether or not the Government proceeds with the action, upon a
showing by the Government that certain actions of discovery by
the person initiating the action would interfere with the
Government’s investigation or prosecution of a criminal or civil
matter arising out of the same facts, the court may stay such
discovery for a period of not more than 60 days. Such a showing
shall be conducted in camera. The court may extend the 60-day
period upon a further showing in camera that the Government has
pursued the criminal or civil investigation or proceedings with
reasonable diligence and any proposed discovery in the civil action
will interfere with the ongoing criminal or civil investigation or
proceedings.
(5) Notwithstanding subsection (b), the Government may elect to
pursue its claim through any alternate remedy available to the
Government, including any administrative proceeding to determine
a civil money penalty. If any such alternate remedy is pursued in
another proceeding, the person initiating the action shall have the
same rights in such proceeding as such person would have had if
the action had continued under this section. Any finding of fact or
conclusion of law made in such other proceeding that has become
final shall be conclusive on all parties to an action under this
section. For purposes of the preceding sentence, a finding or
conclusion is final if it has been finally determined on appeal to the
appropriate court of the United States, if all time for filing such an
appeal with respect to the finding or conclusion has expired, or if
the finding or conclusion is not subject to judicial review.
(d) AWARD TO QUI TAM PLAINTIFF.—
(1) If the Government proceeds with an action brought by a person
under subsection (b), such person shall, subject to the second
sentence of this paragraph, receive at least 15 percent but not more
than 25 percent of the proceeds of the action or settlement of the
claim, depending upon the extent to which the person substantially
contributed to the prosecution of the action. Where the action is
one which the court finds to be based primarily on disclosures of
specific information (other than information provided by the
person bringing the action) relating to allegations or transactions in
a criminal, civil, or administrative hearing, in a congressional,
administrative, or Government [General] Accounting Office report,
hearing, audit, or investigation, or from the news media, the court
may award such sums as it considers appropriate, but in no case
more than 10 percent of the proceeds, taking into account the
significance of the information and the role of the person bringing
the action in advancing the case to litigation. Any payment to a
person under the first or second sentence of this paragraph shall be
made from the proceeds. Any such person shall also receive an
amount for reasonable expenses which the court finds to have been
necessarily incurred, plus reasonable attorneys’ fees and costs. All
such expenses, fees, and costs shall be awarded against the
defendant.
(2) If the Government does not proceed with an action under this
section, the person bringing the action or settling the claim shall
receive an amount which the court decides is reasonable for
collecting the civil penalty and damages. The amount shall be not
less than 25 percent and not more than 30 percent of the proceeds
of the action or settlement and shall be paid out of such proceeds.
Such person shall also receive an amount for reasonable expenses
which the court finds to have been necessarily incurred, plus
reasonable attorneys’ fees and costs. All such expenses, fees, and
costs shall be awarded against the defendant.
(3) Whether or not the Government proceeds with the action, if the
court finds that the action was brought by a person who planned
and initiated the violation of section 3729 upon which the action
was brought, then the court may, to the extent the court considers
appropriate, reduce the share of the proceeds of the action which
the person would otherwise receive under paragraph (1) or (2) of
this subsection, taking into account the role of that person in
advancing the case to litigation and any relevant circumstances
pertaining to the violation. If the person bringing the action is
convicted of criminal conduct arising from his or her role in the
violation of section 3729, that person shall be dismissed from the
civil action and shall not receive any share of the proceeds of the
action. Such dismissal shall not prejudice the right of the United
States to continue the action, represented by the Department of
Justice.
(4) If the Government does not proceed with the action and the person
bringing the action conducts the action, the court may award to the
defendant its reasonable attorneys’ fees and expenses if the
defendant prevails in the action and the court finds that the claim
of the person bringing the action was clearly frivolous, clearly
vexatious, or brought primarily for purposes of harassment.
(e) C
ERTAIN ACTIONS BARRED.—
(1) No court shall have jurisdiction over an action brought by a former
or present member of the armed forces under subsection (b) of this
section against a member of the armed forces arising out of such
person’s service in the armed forces.
(2) (A) No court shall have jurisdiction over an action brought
under subsection (b) against a Member of Congress, a
member of the judiciary, or a senior executive branch
official if the action is based on evidence or information
known to the Government when the action was brought.
(B) For purposes of this paragraph, “senior executive branch
official” means any officer or employee listed in
paragraphs (1) through (8) of section 101(f) of the Ethics in
Government Act of 1978 (5 U.S.C. App.).
(3) In no event may a person bring an action under subsection (b)
which is based upon allegations or transactions which are the
subject of a civil suit or an administrative civil money penalty
proceeding in which the Government is already a party.
(4) (A) The court shall dismiss an action or claim under this
section, unless opposed by the Government, if substantially
the same allegations or transactions as alleged in the action
or claim were publicly disclosed--
(i) in a Federal criminal, civil, or administrative hearing, in
which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office,
or other Federal report, hearing, audit, or investigation: or
(iii) from the news media,
unless the action is brought by the Attorney General or the person
bringing the action is an original source of the information.
(B) For purposes of this paragraph, “original source” means an
individual who either (i) prior to a public disclosure under
subsection (e)(4)(a), has voluntarily disclosed to the
Government the information on which allegations or
transactions in a claim are based, or (2) who has knowledge
that is independent of and materially adds to the publicly
disclosed allegations or transactions, and who has
voluntarily provided the information to the Government
before filing an action under this section.
(f) GOVERNMENT NOT LIABLE FOR CERTAIN EXPENSES.—The Government is not
liable for expenses which a person incurs in bringing an action under this section.
(g) FEES AND EXPENSES TO PREVAILING DEFENDANT.—In civil actions brought under
this section by the United States, the provisions of section 2412(d) of title 28 shall
apply.
(h) RELIEF FROM RETALIATORY ACTIONS.
(1) IN GENERAL.—Any employee, contractor, or agent shall be entitled
to all relief necessary to make that employee, contractor, or agent
whole, if that employee, contractor, or agent is discharged,
demoted, suspended, threatened, harassed, or in any other manner
discriminated against in the terms and conditions of employment
because of lawful acts done by the employee, contractor, or agent
on behalf of the employee, contractor, or agent or associated others
in furtherance of other efforts to stop 1 or more violations of this
subchapter.
(2) R
ELIEF.—Relief under paragraph (1) shall include reinstatement
with the same seniority status that employee, contractor, or agent
would have had but for the discrimination, 2 times the amount of
back pay, interest on the back pay, and compensation for any
special damages sustained as a result of the discrimination,
including litigation costs and reasonable attorneys’ fees. An action
under this subsection may be brought in the appropriate district
court of the United States for the relief provided in this subsection.
§ 3731. False claims procedure
(a) A subpena [subpoena] requiring the attendance of a witness at a trial or hearing
conducted under section 3730 of this title may be served at any place in the United States.
(b) A civil action under section 3730 may not be brought—
(1) more than 6 years after the date on which the violation of section
3729 is committed, or
(2) more than 3 years after the date when facts material to the right of
action are known or reasonably should have been known by the
official of the United States charged with responsibility to act in
the circumstances, but in no event more than 10 years after the date
on which the violation is committed, whichever occurs last.
(c) If the Government elects to intervene and proceed with an action brought under
3730(b), the Government may file its own complaint or amend the complaint of a person who
has brought an action under section 3730(b) to clarify or add detail to the claims in which the
Government is intervening and to add any additional claims with respect to which the
Government contends it is entitled to relief. For statute of limitations purposes, any such
Government pleading shall relate back to the filing date of the complaint of the person who
originally brought the action, to the extent that the claim of the Government arises out of the
conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint
of that person.
(d) In any action brought under section 3730, the United States shall be required to
prove all essential elements of the cause of action, including damages, by a preponderance of the
evidence.
(e) Notwithstanding any other provision of law, the Federal Rules of Criminal
Procedure, or the Federal Rules of Evidence, a final judgment rendered in favor of the United
States in any criminal proceeding charging fraud or false statements, whether upon a verdict after
trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the
essential elements of the offense in any action which involves the same transaction as in the
criminal proceeding and which is brought under subsection (a) or (b) of section 3730.
§ 3732. False claims jurisdiction
(a) ACTIONS UNDER SECTION 3730.—Any action under section 3730 may be brought
in any judicial district in which the defendant or, in the case of multiple defendants, any one
defendant can be found, resides, transacts business, or in which any act proscribed by section
3729 occurred. A summons as required by the Federal Rules of Civil Procedure shall be issued
by the appropriate district court and served at any place within or outside the United States.
(b) C
LAIMS UNDER STATE LAW.—The district courts shall have jurisdiction over any
action brought under the laws of any State for the recovery of funds paid by a State or local
government if the action arises from the same transaction or occurrence as an action brought
under section 3730.
(c) SERVICE ON STATE OF LOCAL AUTHORITIES.—With respect to any State or local
government that is named as a co-plaintiff with the United States in an action brought under
subsection (b), a seal on the action ordered by the court under section 3730(b) shall not preclude
the Government or the person bringing the action from serving the complaint, any other
pleadings, or the written disclosure of substantially all material evidence and information
possessed by the person bringing the action on the law enforcement authorities that are
authorized under the law of that State or local government to investigate and prosecute such
actions on behalf of such governments, except that such seal applies to the law enforcement
authorities so served to the same extent as the seal applies to other parties in the action.
§ 3733. Civil investigative demands
(a) IN GENERAL.—
(1) ISSUANCE AND SERVICE.—Whenever the Attorney General, or a
designee (for purposes of this section), has reason to believe that
any person may be in possession, custody, or control of any
documentary material or information relevant to a false claims law
investigation, the Attorney General, or a designee, may, before
commencing a civil proceeding under section 3730(a) or other
false claims law, or making an election under section 3730(b),
issue in writing and cause to be served upon such person, a civil
investigative demand requiring such person—
(A) to produce such documentary material for inspection and
copying,
(B) to answer in writing written interrogatories with respect to
such documentary material or information,
(C) to give oral testimony concerning such documentary
material or information, or
(D) to furnish any combination of such material, answers, or
testimony.
The Attorney General may delegate the authority to issue civil
investigative demands under this subsection. Whenever a civil
investigative demand is an express demand for any product of
discovery, the Attorney General, the Deputy Attorney General, or
an Assistant Attorney General shall cause to be served, in any
manner authorized by this section, a copy of such demand upon the
person from whom the discovery was obtained and shall notify the
person to whom such demand is issued of the date on which such
copy was served. Any information obtained by the Attorney
General or a designee of the Attorney General under this section
may be shared with any qui tam relator if the Attorney General or
designee determine it is necessary as part of any false claims act
investigation.
(2) CONTENTS AND DEADLINES.—
(A) Each civil investigative demand issued under paragraph (1)
shall state the nature of the conduct constituting the alleged
violation of a false claims law which is under investigation,
and the applicable provision of law alleged to be violated.
(B) If such demand is for the production of documentary
material, the demand shall—
(i) describe each class of documentary material to be
produced with such definiteness and certainty as to
permit such material to be fairly identified;
(ii) prescribe a return date for each such class which
will provide a reasonable period of time within
which the material so demanded may be assembled
and made available for inspection and copying; and
(iii) identify the false claims law investigator to whom
such material shall be made available.
(C) If such demand is for answers to written interrogatories, the
demand shall—
(i) set forth with specificity the written interrogatories
to be answered;
(ii) prescribe dates at which time answers to written
interrogatories shall be submitted; and
(iii) identify the false claims law investigator to whom
such answers shall be submitted.
(D) If such demand is for the giving of oral testimony, the
demand shall—
(i) prescribe a date, time, and place at which oral
testimony shall be commenced;
(ii) identify a false claims law investigator who shall
conduct the examination and the custodian to whom
the transcript of such examination shall be
submitted;
(iii) specify that such attendance and testimony are
necessary to the conduct of the investigation;
(iv) notify the person receiving the demand of the right
to be accompanied by an attorney and any other
representative; and
(v) describe the general purpose for which the demand
is being issued and the general nature of the
testimony, including the primary areas of inquiry,
which will be taken pursuant to the demand.
(E) Any civil investigative demand issued under this section
which is an express demand for any product of discovery
shall not be returned or returnable until 20 days after a copy
of such demand has been served upon the person from
whom the discovery was obtained.
(F) The date prescribed for the commencement of oral
testimony pursuant to a civil investigative demand issued
under this section shall be a date which is not less than
seven days after the date on which demand is received,
unless the Attorney General or an Assistant Attorney
General designated by the Attorney General determines
that exceptional circumstances are present which warrant
the commencement of such testimony within a lesser period
of time.
(G) The Attorney General shall not authorize the issuance under
this section of more than one civil investigative demand for
oral testimony by the same person unless the person
requests otherwise or unless the Attorney General, after
investigation, notifies that person in writing that an
additional demand for oral testimony is necessary.
(b) P
ROTECTED MATERIAL OR INFORMATION.—
(1) I
N GENERAL.—A civil investigative demand issued under
subsection (a) may not require the production of any documentary
material, the submission of any answers to written interrogatories,
or the giving of any oral testimony if such material, answers, or
testimony would be protected from disclosure under—
(A) the standards applicable to subpoenas or subpoenas duces
tecum issued by a court of the United States to aid in a
grand jury investigation; or
(B) the standards applicable to discovery requests under the
Federal Rules of Civil Procedure, to the extent that the
application of such standards to any such demand is
appropriate and consistent with the provisions and purposes
of this section.
(2) E
FFECT ON OTHER ORDERS, RULES, AND LAWS.—Any such demand
which is an express demand for any product of discovery
supersedes any inconsistent order, rule, or provision of law (other
than this section) preventing or restraining disclosure of such
product of discovery to any person. Disclosure of any product of
discovery pursuant to any such express demand does not constitute
a waiver of any right or privilege which the person making such
disclosure may be entitled to invoke to resist discovery of trial
preparation materials.
(c) S
ERVICE; JURISDICTION.—
(1) BY WHOM SERVED.—Any civil investigative demand issued under
subsection (a) may be served by a false claims law investigator, or
by a United States marshal or a deputy marshal, at any place within
the territorial jurisdiction of any court of the United States.
(2) SERVICE IN FOREIGN COUNTRIES.—Any such demand or any
petition filed under subsection (j) may be served upon any person
who is not found within the territorial jurisdiction of any court of
the United States in such manner as the Federal Rules of Civil
Procedure prescribe for service in a foreign country. To the extent
that the courts of the United States can assert jurisdiction over any
such person consistent with due process, the United States District
Court for the District of Columbia shall have the same jurisdiction
to take any action respecting compliance with this section by any
such person that such court would have if such person were
personally within the jurisdiction of such court.
(d) SERVICE UPON LEGAL ENTITIES AND NATURAL PERSONs.—
(1) L
EGAL ENTITIES.—Service of any civil investigative demand issued
under subsection (a) or of any petition filed under subsection (j)
may be made upon a partnership, corporation, association, or other
legal entity by—
(A) delivering an executed copy of such demand or petition to
any partner, executive officer, managing agent, or general
agent of the partnership, corporation, association, or entity,
or to any agent authorized by appointment or by law to
receive service of process on behalf of such partnership,
corporation, association, or entity;
(B) delivering an executed copy of such demand or petition to
the principal office or place of business of the partnership,
corporation, association, or entity; or
(C) depositing an executed copy of such demand or petition in
the United States mails by registered or certified mail, with
a return receipt requested, addressed to such partnership,
corporation, association, or entity at its principal office or
place of business.
(2) NATURAL PERSONS.—Service of any such demand or petition may
be made upon any natural person by—
(A) delivering an executed copy of such demand or petition to
the person; or
(B) depositing an executed copy of such demand or petition in
the United States mails by registered or certified mail, with
a return receipt requested, addressed to the person at the
person’s residence or principal office or place of business.
(e) PROOF OF SERVICE.—A verified return by the individual serving any civil
investigative demand issued under subsection (a) or any petition filed under subsection (j) setting
forth the manner of such service shall be proof of such service. In the case of service by
registered or certified mail, such return shall be accompanied by the return post office receipt of
delivery of such demand.
(f) D
OCUMENTARY MATERIAL.—
(1) S
WORN CERTIFICATES.—The production of documentary material
in response to a civil investigative demand served under this
section shall be made under a sworn certificate, in such form as the
demand designates, by—
(A) in the case of a natural person, the person to whom the
demand is directed, or
(B) in the case of a person other than a natural person, a person
having knowledge of the facts and circumstances relating to
such production and authorized to act on behalf of such
person.
The certificate shall state that all of the documentary material
required by the demand and in the possession, custody, or control
of the person to whom the demand is directed has been produced
and made available to the false claims law investigator identified in
the demand.
(2) PRODUCTION OF MATERIALS.—Any person upon whom any civil
investigative demand for the production of documentary material
has been served under this section shall make such material
available for inspection and copying to the false claims law
investigator identified in such demand at the principal place of
business of such person, or at such other place as the false claims
law investigator and the person thereafter may agree and prescribe
in writing, or as the court may direct under subsection (j)(1). Such
material shall be made so available on the return date specified in
such demand, or on such later date as the false claims law
investigator may prescribe in writing. Such person may, upon
written agreement between the person and the false claims law
investigator, substitute copies for originals of all or any part of
such material.
(g) INTERROGATORIES.—Each interrogatory in a civil investigative demand served
under this section shall be answered separately and fully in writing under oath and shall be
submitted under a sworn certificate, in such form as the demand designates, by—
(1) in the case of a natural person, the person to whom the demand is
directed, or
(2) in the case of a person other than a natural person, the person or
persons responsible for answering each interrogatory.
If any interrogatory is objected to, the reasons for the objection shall be stated in the certificate
instead of an answer. The certificate shall state that all information required by the demand and
in the possession, custody, control, or knowledge of the person to whom the demand is directed
has been submitted. To the extent that any information is not furnished, the information shall be
identified and reasons set forth with particularity regarding the reasons why the information was
not furnished.
(h) ORAL EXAMINATIONS.—
(1) PROCEDURES.—The examination of any person pursuant to a civil
investigative demand for oral testimony served under this section
shall be taken before an officer authorized to administer oaths and
affirmations by the laws of the United States or of the place where
the examination is held. The officer before whom the testimony is
to be taken shall put the witness on oath or affirmation and shall,
personally or by someone acting under the direction of the officer
and in the officer’s presence, record the testimony of the witness.
The testimony shall be taken stenographically and shall be
transcribed. When the testimony is fully transcribed, the officer
before whom the testimony is taken shall promptly transmit a copy
of the transcript of the testimony to the custodian. This subsection
shall not preclude the taking of testimony by any means authorized
by, and in a manner consistent with, the Federal Rules of Civil
Procedure.
(2) PERSONS PRESENT.—The false claims law investigator conducting
the examination shall exclude from the place where the
examination is held all persons except the person giving the
testimony, the attorney for and any other representative of the
person giving the testimony, the attorney for the Government, any
person who may be agreed upon by the attorney for the
Government and the person giving the testimony, the officer before
whom the testimony is to be taken, and any stenographer taking
such testimony.
(3) WHERE TESTIMONY TAKEN.—The oral testimony of any person
taken pursuant to a civil investigative demand served under this
section shall be taken in the judicial district of the United States
within which such person resides, is found, or transacts business,
or in such other place as may be agreed upon by the false claims
law investigator conducting the examination and such person.
(4) TRANSCRIPT OF TESTIMONY.—When the testimony is fully
transcribed, the false claims law investigator or the officer before
whom the testimony is taken shall afford the witness, who may be
accompanied by counsel, a reasonable opportunity to examine and
read the transcript, unless such examination and reading are
waived by the witness. Any changes in form or substance which
the witness desires to make shall be entered and identified upon the
transcript by the officer or the false claims law investigator, with a
statement of the reasons given by the witness for making such
changes. The transcript shall then be signed by the witness, unless
the witness in writing waives the signing, is ill, cannot be found, or
refuses to sign. If the transcript is not signed by the witness within
30 days after being afforded a reasonable opportunity to examine
it, the officer or the false claims law investigator shall sign it and
state on the record the fact of the waiver, illness, absence of the
witness, or the refusal to sign, together with the reasons, if any,
given therefor.
(5) C
ERTIFICATION AND DELIVERY TO CUSTODIAN.—The officer before
whom the testimony is taken shall certify on the transcript that the
witness was sworn by the officer and that the transcript is a true
record of the testimony given by the witness, and the officer or
false claims law investigator shall promptly deliver the transcript,
or send the transcript by registered or certified mail, to the
custodian.
(6) F
URNISHING OR INSPECTION OF TRANSCRIPT BY WITNESS.—Upon
payment of reasonable charges therefor, the false claims law
investigator shall furnish a copy of the transcript to the witness
only, except that the Attorney General, the Deputy Attorney
General, or an Assistant Attorney General may, for good cause,
limit such witness to inspection of the official transcript of the
witness’ testimony.
(7) C
ONDUCT OF ORAL TESTIMONY.—
(A) Any person compelled to appear for oral testimony under a
civil investigative demand issued under subsection (a) may
be accompanied, represented, and advised by counsel.
Counsel may advise such person, in confidence, with
respect to any question asked of such person. Such person
or counsel may object on the record to any question, in
whole or in part, and shall briefly state for the record the
reason for the objection. An objection may be made,
received, and entered upon the record when it is claimed
that such person is entitled to refuse to answer the question
on the grounds of any constitutional or other legal right or
privilege, including the privilege against self-incrimination.
Such person may not otherwise object to or refuse to
answer any question, and may not directly or through
counsel otherwise interrupt the oral examination. If such
person refuses to answer any question, a petition may be
filed in the district court of the United States under
subsection (j)(1) for an order compelling such person to
answer such question.
(B) If such person refuses to answer any question on the
grounds of the privilege against self-incrimination, the
testimony of such person may be compelled in accordance
with the provisions of part V of title 18 [18 USCS §§ 6001
et seq.].
(8) W
ITNESS FEES AND ALLOWANCES.—Any person appearing for oral
testimony under a civil investigative demand issued under
subsection (a) shall be entitled to the same fees and allowances
which are paid to witnesses in the district courts of the United
States.
(i) CUSTODIANS OF DOCUMENTS, ANSWERS, AND TRANSCRIPTS.—
(1) DESIGNATION.—The Attorney General shall designate a false
claims law investigator to serve as custodian of documentary
material, answers to interrogatories, and transcripts of oral
testimony received under this section, and shall designate such
additional false claims law investigators as the Attorney General
determines from time to time to be necessary to serve as deputies
to the custodian.
(2) RESPONSIBILITY FOR MATERIALS; DISCLOSURE.—
(A) A false claims law investigator who receives any
documentary material, answers to interrogatories, or
transcripts of oral testimony under this section shall
transmit them to the custodian. The custodian shall take
physical possession of such material, answers, or
transcripts and shall be responsible for the use made of
them and for the return of documentary material under
paragraph (4).
(B) The custodian may cause the preparation of such copies of
such documentary material, answers to interrogatories, or
transcripts of oral testimony as may be required for official
use by any false claims law investigator, or other officer or
employee of the Department of Justice. Such material,
answers, and transcripts may be used by any such
authorized false claims law investigator or other officer or
employee in connection with the taking of oral testimony
under this section.
(C) Except as otherwise provided in this subsection, no
documentary material, answers to interrogatories, or
transcripts of oral testimony, or copies thereof, while in the
possession of the custodian, shall be available for
examination by any individual other than a false claims law
investigator or other officer or employee of the Department
of Justice authorized under subparagraph (B). The
prohibition in the preceding sentence on the availability of
material, answers, or transcripts shall not apply if consent is
given by the person who produced such material, answers,
or transcripts, or, in the case of any product of discovery
produced pursuant to an express demand for such material,
consent is given by the person from whom the discovery
was obtained. Nothing in this subparagraph is intended to
prevent disclosure to the Congress, including any
committee or subcommittee of the Congress, or to any
other agency of the United States for use by such agency in
furtherance of its statutory responsibilities.
(D) While in the possession of the custodian and under such
reasonable terms and conditions as the Attorney General
shall prescribe—
(i) documentary material and answers to interrogatories
shall be available for examination by the person
who produced such material or answers, or by a
representative of that person authorized by that
person to examine such material and answers; and
(ii) transcripts of oral testimony shall be available for
examination by the person who produced such
testimony, or by a representative of that person
authorized by that person to examine such
transcripts.
(3) USE OF MATERIAL, ANSWERS, OR TRANSCRIPTS IN OTHER
PROCEEDINGS
.—Whenever any attorney of the Department of
Justice has been designated to appear before any court, grand jury,
or Federal agency in any case or proceeding, the custodian of any
documentary material, answers to interrogatories, or transcripts of
oral testimony received under this section may deliver to such
attorney such material, answers, or transcripts for official use in
connection with any such case or proceeding as such attorney
determines to be required. Upon the completion of any such case
or proceeding, such attorney shall return to the custodian any such
material, answers, or transcripts so delivered which have not
passed into the control of such court, grand jury, or agency through
introduction into the record of such case or proceeding.
(4) CONDITIONS FOR RETURN OF MATERIAL.—If any documentary
material has been produced by any person in the course of any
false claims law investigation pursuant to a civil investigative
demand under this section, and—
(A) any case or proceeding before the court or grand jury
arising out of such investigation, or any proceeding before
any Federal agency involving such material, has been
completed, or
(B) no case or proceeding in which such material may be used
has been commenced within a reasonable time after
completion of the examination and analysis of all
documentary material and other information assembled in
the course of such investigation,
the custodian shall, upon written request of the person who
produced such material, return to such person any such material
(other than copies furnished to the false claims law investigator
under subsection (f)(2) or made for the Department of Justice
under paragraph (2)(B)) which has not passed into the control of
any court, grand jury, or agency through introduction into the
record of such case or proceeding.
(5) APPOINTMENT OF SUCCESSOR CUSTODIANS.—In the event of the
death, disability, or separation from service in the Department of
Justice of the custodian of any documentary material, answers to
interrogatories, or transcripts of oral testimony produced pursuant
to a civil investigative demand under this section, or in the event of
the official relief of such custodian from responsibility for the
custody and control of such material, answers, or transcripts, the
Attorney General shall promptly—
(A) designate another false claims law investigator to serve as
custodian of such material, answers, or transcripts, and
(B) transmit in writing to the person who produced such
material, answers, or testimony notice of the identity and
address of the successor so designated.
Any person who is designated to be a successor under this
paragraph shall have, with regard to such material, answers, or
transcripts, the same duties and responsibilities as were imposed by
this section upon that person’s predecessor in office, except that
the successor shall not be held responsible for any default or
dereliction which occurred before that designation.
(j) JUDICIAL PROCEEDINGS.—
(1) P
ETITION FOR ENFORCEMENT.—Whenever any person fails to
comply with any civil investigative demand issued under
subsection (a), or whenever satisfactory copying or reproduction of
any material requested in such demand cannot be done and such
person refuses to surrender such material, the Attorney General
may file, in the district court of the United States for any judicial
district in which such person resides, is found, or transacts
business, and serve upon such person a petition for an order of
such court for the enforcement of the civil investigative demand.
(2) P
ETITION TO MODIFY OR SET ASIDE DEMAND.—
(A) Any person who has received a civil investigative demand
issued under subsection (a) may file, in the district court of
the United States for the judicial district within which such
person resides, is found, or transacts business, and serve
upon the false claims law investigator identified in such
demand a petition for an order of the court to modify or set
aside such demand. In the case of a petition addressed to an
express demand for any product of discovery, a petition to
modify or set aside such demand may be brought only in
the district court of the United States for the judicial district
in which the proceeding in which such discovery was
obtained is or was last pending. Any petition under this
subparagraph must be filed—
(i) within 20 days after the date of service of the civil
investigative demand, or at any time before the
return date specified in the demand, whichever date
is earlier, or
(ii) within such longer period as may be prescribed in
writing by any false claims law investigator
identified in the demand.
(B) The petition shall specify each ground upon which the
petitioner relies in seeking relief under subparagraph (A),
and may be based upon any failure of the demand to
comply with the provisions of this section or upon any
constitutional or other legal right or privilege of such
person. During the pendency of the petition in the court, the
court may stay, as it deems proper, the running of the time
allowed for compliance with the demand, in whole or in
part, except that the person filing the petition shall comply
with any portions of the demand not sought to be modified
or set aside.
(3) P
ETITION TO MODIFY OR SET ASIDE DEMAND FOR PRODUCT OF
DISCOVERY
.—
(A) In the case of any civil investigative demand issued under
subsection (a) which is an express demand for any product
of discovery, the person from whom such discovery was
obtained may file, in the district court of the United States
for the judicial district in which the proceeding in which
such discovery was obtained is or was last pending, and
serve upon any false claims law investigator identified in
the demand and upon the recipient of the demand, a
petition for an order of such court to modify or set aside
those portions of the demand requiring production of any
such product of discovery. Any petition under this
subparagraph must be filed—
(i) within 20 days after the date of service of the civil
investigative demand, or at any time before the
return date specified in the demand, whichever date
is earlier, or
(ii) within such longer period as may be prescribed in
writing by any false claims law investigator
identified in the demand.
(B) The petition shall specify each ground upon which the
petitioner relies in seeking relief under subparagraph (A),
and may be based upon any failure of the portions of the
demand from which relief is sought to comply with the
provisions of this section, or upon any constitutional or
other legal right or privilege of the petitioner. During the
pendency of the petition, the court may stay, as it deems
proper, compliance with the demand and the running of the
time allowed for compliance with the demand.
(4) PETITION TO REQUIRE PERFORMANCE BY CUSTODIAN OF DUTIES.—
At any time during which any custodian is in custody or control of
any documentary material or answers to interrogatories produced,
or transcripts of oral testimony given, by any person in compliance
with any civil investigative demand issued under subsection (a),
such person, and in the case of an express demand for any product
of discovery, the person from whom such discovery was obtained,
may file, in the district court of the United States for the judicial
district within which the office of such custodian is situated, and
serve upon such custodian, a petition for an order of such court to
require the performance by the custodian of any duty imposed
upon the custodian by this section.
(5) J
URISDICTION.—Whenever any petition is filed in any district court
of the United States under this subsection, such court shall have
jurisdiction to hear and determine the matter so presented, and to
enter such order or orders as may be required to carry out the
provisions of this section. Any final order so entered shall be
subject to appeal under section 1291 of title 28. Any disobedience
of any final order entered under this section by any court shall be
punished as a contempt of the court.
(6) APPLICABILITY OF FEDERAL RULES OF CIVIL PROCEDURE.—The
Federal Rules of Civil Procedure shall apply to any petition under
this subsection, to the extent that such rules are not inconsistent
with the provisions of this section.
(k) DISCLOSURE EXEMPTION.—Any documentary material, answers to written
interrogatories, or oral testimony provided under any civil investigative demand issued under
subsection (a) shall be exempt from disclosure under section 552 of title 5.
(l) DEFINITIONS.—For purposes of this section—
(1) the term “false claims law” means—
(A) this section and sections 3729 through 3732; and
(B) any Act of Congress enacted after the date of the enactment
of this section [enacted Oct. 27, 1986] which prohibits, or
makes available to the United States in any court of the
United States any civil remedy with respect to, any false
claim against, bribery of, or corruption of any officer or
employee of the United States;
(2) the term “false claims law investigation” means any inquiry
conducted by any false claims law investigator for the purpose of
ascertaining whether any person is or has been engaged in any
violation of a false claims law;
(3) the term “false claims law investigator” means any attorney or
investigator employed by the Department of Justice who is charged
with the duty of enforcing or carrying into effect any false claims
law, or any officer or employee of the United States acting under
the direction and supervision of such attorney or investigator in
connection with a false claims law investigation;
(4) the term “person” means any natural person, partnership,
corporation, association, or other legal entity, including any State
or political subdivision of a State;
(5) the term “documentary material” includes the original or any copy
of any book, record, report, memorandum, paper, communication,
tabulation, chart, or other document, or data compilations stored in
or accessible through computer or other information retrieval
systems, together with instructions and all other materials
necessary to use or interpret such data compilations, and any
product of discovery;
(6) the term “custodian” means the custodian, or any deputy custodian,
designated by the Attorney General under subsection (i)(1);
(7) the term “product of discovery” includes—
(A) the original or duplicate of any deposition, interrogatory,
document, thing, result of the inspection of land or other
property, examination, or admission, which is obtained by
any method of discovery in any judicial or administrative
proceeding of an adversarial nature;
(B) any digest, analysis, selection, compilation, or derivation of
any item listed in subparagraph (A); and
(C) any index or other manner of access to any item listed in
subparagraph (A); and
(8) the term “official use” means any use that is consistent with the
law, and the regulations and policies of the Department of Justice,
including use in connection with internal Department of Justice
memoranda and reports; communications between the Department
of Justice and a Federal, State, or local government agency, or a
contractor of a Federal, State, or local government agency,
undertaken in furtherance of a Department of Justice investigation
or prosecution of a case; interviews of any qui tam relator or other
witness; oral examinations; depositions; preparation for and
response to civil discovery requests; introduction into the record of
a case or proceeding; applications, motions, memoranda and briefs
submitted to a court or other tribunal; and communications with
Government investigators, auditors, consultants and experts, the
counsel of other parties, arbitrators and mediators, concerning an
investigation, case or proceeding.