On Tuesday, January 31, 2012, the Department of Justice held a celebration commemorating the 25th anniversary of the 1986 amendments to the civil False Claims Act.  Attorney General Eric Holder, Assistant Attorney General (Civil) Tony West, Senator Patrick Leahy, and Congressman Howard Berman each spoke regarding their views on the importance of the Act and the watershed amendments.  Michael Hertz, Deputy Assistant Attorney General, then chaired a panel that discussed the importance and development of the FCA in the last 25 years.  I was grateful for the opportunity to present the views of defense counsel on that panel.

We were each given the opportunity to make a short opening statement regarding one or two important FCA developments since 1986.  My opening statement is set forth below, and we thought our readers may be interested in it.  

Remarks of John T. Boese

Fried Frank Harris Shriver & Jacobson LLP

Department of Justice 25th Anniversary Celebration of the

1986 Amendments to the False Claims Act

Robert F. Kennedy Department of Justice Building

 Great Hall

January 31, 2012

First, thanks for the invitation to speak in this setting.  As a young DOJ lawyer, I was in this Great Hall in late October of 1973, and I watched as Elliot Richardson and William Ruckelshaus explained to the assembled DOJ lawyers why they resigned rather than fire Archibald Cox in what was known as the "Saturday Night Massacre."  I was never prouder to be lawyer in the DOJ than I was that day, and I will carry that memory forever.

Since I left the Department, I have been an FCA defense lawyer, and I am proud of that.  I do good work for generally good people who are in trouble.  But it takes a certain amount of courage for Tony West, Mike Hertz, and Joyce Branda to invite someone like me to the birthday party.  They never know what I will put in the punch.

I have a hundred things I could talk about, but since 1986, there are two important things about the FCA that have changed dramatically, and two things that have remained remarkably the same.  All deserve mention.

First, the changes:

1.  When the FCA was amended in 1986, corporate compliance programs were in their infancy, if they existed at all.  The defense industry had a big head start. The Packard Commission had since 1981 been bullying the major aerospace contractors to institute real, powerful compliance programs, and most had done so.  The health and pharma communities were way behind—10 to 15 years in my view―but they are getting there.  Today, American corporate compliance programs are the best in the world.  And make no mistake, the False Claims Act is the stick that allows those programs to function as well as they do.

Does that mean they have no fraud issues?  Of course not.  No organization is perfect―not the Washington Post, not Taxpayers Against Fraud, not DOJ, and certainly not Congress.  We all have bad apples who commit bad acts.  But any organization must be judged not on its mistakes, but on how it responds to those mistakes.  And the FCA has been an invaluable tool that makes it impossible to cover up and ignore wrongdoing.  And that, generally, is good. 

2.  The second change is not so good:  The FCA has become the enforcement mechanism for virtually ALL federal regulatory programs.  Before 1986, the FCA enforced fraud.  Now, the Act is used to enforce the environmental laws, the Antikickback Statute, the Foreign Corrupt Practices Act, the labor laws, and virtually every other federal regulatory scheme other than taxes and securities.   That is very new, and in my view, very bad policy.

Now for what has not changed:

1.  Thirty billion dollars in FCA recoveries since 1986 is a lot of money.  But what was true in 1986 remains true today―very little of it is "earned" through trials and judgments and appeals.  Well over 99 percent is from settlements.  And while that is good for the U.S. Treasury, and in most cases, very good for defendants, I do not think it is good policy.  I am the worst offender.  I encourage early settlement because that is what protects my clients from the devastating damages, penalties, and collateral consequences an adverse FCA judgment heaps on a defendant.  I just wish the government had to prove its FCA legal and factual allegations in court more often and defend its positions before an impartial judge and jury.   I think the recoveries would be lower, but better, and more importantly, perceived as fairer by those subject to this law.

2.  One more thing has not changed over 25 years―the myth that the DOJ and US Attorney Offices are incapable of enforcing the FCA without private lawyers helping to enforce the law.  Do not misunderstand me:  The DOJ needs leads, it needs insiders, and it needs inside information, and whistleblowers and their private lawyers are invaluable for that purpose.  But to argue, as was argued before the 1986 amendments were passed, that DOJ is not tough enough, not smart enough, not staffed well enough, or not politically inclined to enforce this law, was wrong in 1986 and it is wrong today.

Thanks again for inviting me back.

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