S. 4024 — Federal Taxpayer Funds Protection and Clawback Act

This section amends the False Claims Act (FCA) to (1) clarify in new 31 U.S.C. 3729(e) that a "claim" includes any request or demand for money or property originating, in whole or in part, from federal funds, including grant funds distributed through a state, local government, or other intermediary; (2) revise the definition of "person" in 31 U.S.C. 3729(b)(5) for actions involving federal pass-through funds to match 1 U.S.C. 1 but explicitly include a state or local government (or subdivision thereof) when the action is initiated by the Attorney General; and (3) establish new 31 U.S.C. 3730A requiring a state or state agency to remit to the Treasury 100% of federal funds at issue within 180 days of notice from the Attorney General or Inspector General when the Attorney General initiates or intervenes in an FCA civil action or qui tam suit under 3730. (Funds remitted under 3730A are held in escrow pending final judgment, settlement, or appeal exhaustion; they go to the Treasury general fund for deficit reduction if the government prevails or settles, or are returned to the state if dismissed or judgment favors the defendant. Thus, this enables mandatory interim recovery of federal funds without constituting an admission of liability, with the requirement non-waivable except by Congress.)

This section requires each state, as a condition of receiving federal funds, to certify that it agrees to abide by applicable requirements relating to inspections, audits, recordkeeping, and data sharing for federal awards under federal laws and regulations, including 2 CFR part 200 (i.e., Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards).

This section authorizes federal agencies and pass-through entities to impose specific conditions under 2 CFR 200.208 (or successor regulation) on recipients or subrecipients of federal awards who fail to comply with the U.S. Constitution, federal law, regulations, or award terms and conditions—unless otherwise specified in federal statute. If specific conditions do not remedy the noncompliance, the agency or pass-through entity may take one or more of the following actions: (1) temporarily withhold payments pending corrective action; (2) disallow costs for all or part of the activity associated with the noncompliance; (3) suspend or terminate the federal award in whole or in part; (4) initiate suspension or debarment proceedings under 2 CFR part 180 (or successor regulation) or recommend such proceedings; (5) withhold further federal funds, including new awards or continuation funding, for the project, program, recipient, or subrecipient; or (6) pursue other legally available remedies.

This section requires immediate recoupment by the United States, under claims settlement authority in 31 U.S.C. 3702, of all federal funds provided directly or indirectly to any recipient or subrecipient found by final agency determination or court judgment to have violated INA §274A (8 U.S.C. 1324a) (i.e., employment eligibility verification requirements prohibiting knowing hire or continued employment of unauthorized aliens). It further authorizes, after notice and hearing, permanent ineligibility to receive federal funds for entities subject to such recoupment.

This section provides a rule of construction clarifying that nothing in the Act limits (1) criminal prosecution under any federal or state law or (2) the authority of the United States to pursue additional civil or administrative remedies.