Grassley to Wrestle Justice Department

For more than 20 years, Sen. Charles E. Grassley (R-Iowa) has generally taken no prisoners when it comes to defending workers who blow the whistle on fraud.

But, at a hearing today, the pugnacious lawmaker will square off against an unusual combatant: the Justice Department, which opposes his plan to allow federal employees to use a powerful legal tool to recover money lost to misconduct and abuse.

"The ones apt to know more about fraud in government contracting than anyone else are government employees," Grassley said in an interview. "The only people who know where the skeletons are buried are government employees."

Officials at the Justice Department's Office of Legislative Affairs, however, have expressed concerns about Grassley's proposal, which would amend a Civil War-era statute designed to attack war profiteering. The change would explicitly empower federal workers to sue -- and collect a portion of the proceeds for themselves.

In a letter to lawmakers last week, Bush administration officials said that the statute already works well and that an overhaul is unnecessary.

The law, known as the False Claims Act, encourages whistle-blowers to file lawsuits seeking to recover money when the federal government is the victim of fraud or contracting overcharges. Under the law, plaintiffs sue on behalf of the government; on occasion, the Justice Department joins the case.

If they win, plaintiffs generally stand to reap 15 to 25 percent of the financial award.

The law has helped to return more than $20 billion to U.S. coffers over two decades, becoming "the government's best tool against fraud," said Sen. Patrick J. Leahy (D-Vt.).

But recent federal court decisions have interpreted the law narrowly or erected new hurdles for employees, prompting Grassley to introduce a slate of amendments.

The changes would give private-sector workers more leeway to raise accusations against pharmaceutical companies and defense contractors by clarifying what constitutes government funds for the purpose of the whistle-blower law. They would also make it easier for plaintiffs to sue even if word of the fraud leaks out, a situation that now halts most cases in their tracks.

The amendments have attracted bipartisan support on the Senate Judiciary Committee, which has invited representatives from the government and the legal community to sound off on Grassley's bill.

Among the witnesses is Tina Gonter, a former Defense Department employee who went on to work as a quality-control manager at a manufacturer of submarine parts. Gonter grew alarmed by what she saw as safety violations, including phony inspection paperwork. Ultimately, she hired a lawyer, spent years pursuing her case and settled for nearly $13 million. "There's more work to be done," she said in support of the bill.

But the Justice Department contends that some of Grassley's proposed changes would interfere with law enforcement investigations and give employees an improper incentive to hide fraud from colleagues, then sue to recover a share of the proceeds.

John T. Boese, a Washington lawyer who defends companies against whistle-blower lawsuits, said the bill would expose subcontractors and businesses that receive federal grants to greater liability. The proposal, he said, is not a correction but a significant expansion of an employee's right to sue.

Justice Department prosecutors are working their way through a backlog of 1,000 such false-claims cases. The government is dedicating "enormous resources to the investigation and prosecution of these cases," according to last week's letter from Brian A. Benczkowski, principal deputy assistant attorney general.