Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.) have introduced the “Anti-Fraud Amendments Act,” as an amendment to the bipartisan infrastructure bill. This amendment (#2435) should be rejected by Senators.
The amendment would dramatically change the burden of proof standards in False Claims Act (FCA) cases. It would essentially require companies to prove their innocence, rather than requiring the government to prove its own case against defendants.
Specifically, the legislation requires defendants to disprove the plaintiff’s contention with a heightened “clear and convincing” standard of proof. In this way, the defendant’s burden to prove their innocence is higher than the plaintiff’s burden of proof to prove the defendant’s guilt. To make matters worse, this would apply retroactively to any FCA case that is pending on the date of enactment.
FCA cases are taken up when the government suspects a company has falsely billed the government, over-represented the amount of a delivered product, or under-stated an obligation to the government.
Adopting this new evidentiary standard ignores the views of a unanimous Supreme Court. Universal Health Servs. v. U.S. ex rel. Escobar explained that the FCA materiality element is “demanding” and “rigorous” because of its potentially penal application, detailing that the FCA “is not ‘an all-purpose antifraud statute’ or a vehicle for punishing garden-variety breaches of contract or regulatory violations.”
In this case, the Court required the government to prove that the alleged false claim “went to the very essence of the bargain,” but imposed no additional burden on defendants in these cases. Imposing a higher burden of proof for defendants than for plaintiffs in these cases is the opposite of what the SCOTUS attempted to achieve in Escobar.
While this amendment makes it more difficult for companies to defend themselves, it also shifts the cost of government discovery to defendants. It would require defendants to pay the government’s attorney fees and discovery costs unless the defendant proves that the information sought is “relevant, proportionate to the needs of the case, and not unduly burdensome.” As the National Law Review notes, this would “effectively require defendants to pay for the costs of government discovery in nearly every case because of the practical impossibility of proving a negative – the absence of an undue burden on the government.”
Not only is the policy concerning, but it has also not received proper debate. The Grassley-Leahy amendment is a combination of S. 2428 and S. 2429. Neither has received a hearing or a markup. This is especially concerning given how substantive the legal changes are in this amendment.
The Grassley-Leahy amendment would establish an evidentiary standard that is antithetical to both the aforementioned 2016 SCOTUS case and the principles which guide the function of our court system. If lawmakers are serious about protecting defendants’ presumption of innocence, a principle core to this country’s judicial system, they should oppose this amendment to the bipartisan infrastructure bill.