Georgia False Claim Act Law Shakes Up Doing Business With Government

New Georgia law completely changes the game for those conducting business with state and local government.

Governor Nathan Deal recently signed the Georgia Taxpayer Protection False Claims Act into law. This new law vastly changes the landscape for anyone who conducts business with Georgia’s state and local government, while also expanding the state’s original false claims law, the Georgia Medicaid False Claims Act. The False Claims Act gives sweeping authority to the Georgia government when seeking to recover damages and penalties from private contractors or subcontractors who present false claims to the government. Both houses of the Georgia legislature voted unanimously to approve the bill.

Following changes to the federal False Claims Act prompted by the enactment of the federal Fraud Enforcement and Recovery Act of 2009, the Patient Protection and Affordable Care Act of 2010 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the federal government began a review of the state false claims acts around the nation. During that review, the federal government found that Georgia’s Medicaid False Claims Act was not as aggressive as the revised federal False Claims Act. They determined that Georgia would no longer be eligible to receive the enhanced recovery monies unless the state strengthened its own false claims statutes.

Georgia’s Original False Claims Act Provisions

Georgia’s Taxpayer Protection False Claims Act originates from, and greatly expands on Georgia’s 2007 Medicaid False Claims Act. It specifically rectifies requirements stating that a False Claims Act must:

• contain provisions that establish liability to the state over Medicaid fraud,
• contain provisions rewarding and facilitating qui tam actions consistent with the federal False Claims Act,
• contain a requirement for filing an action under seal for 60 days during which the Attorney General may review the action, and
• contain a civil penalty at least as large as the federal False Claims Act

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Georgia’s previous False Claims Act restricted liability to those people who submit false claims to the Georgia Medicaid program. In addition to allowing the state to recover monies on their own behalf, the law provided rewards to whistleblowers for filing successful legal actions against violators.

Bringing the New Act Up to Speed

This new False Claims Act expands the reach of Georgia’s original false claims act beyond Medicaid-reimbursable services, creating new and significant liability for every industry doing business with the state of Georgia. The Taxpayer Protection False Claims Act now applies to any person or business who knowingly or recklessly submits a false claim to a government body of Georgia, including lesser political divisions like school boards and MARTA, regardless of whether the person or business actually intended to defraud the government.

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In addition to the legislation’s broad expansion of what defines a False Claims Act violation, the penalties for submitting these false claims are substantial. The civil penalties range from $5,500 to $11,000 for each false claim, treble damages, costs, expenses and attorneys’ fees. The new Georgia Taxpayer Protection False Claims Act authorizes the Attorney General to investigate potential violations and pursue cases for any instance of fraud, rather than just cases of Medicaid fraud, as the previous statute narrowly applied to. In addition,Georgia’s Attorney General has the power under this new False Claims Act to delegate his authority to district attorneys and other specified local officials.

In keeping with the directive to pursue fraud and abuse, the Inspector General for Georgia’s Department of Community Health investigated more than 2,600 cases of alleged Medicaid fraud committed in 2009 alone. The Medicaid False Claims Act entitles Georgia to an additional 10 percent monetary recovery in addition to its share of all Medicaid false claims proceeds.

Priority on Protecting the Whistleblower

What may be more important to the public, and to whistleblower attorneys, is that the new law broadens monetary incentives and protections for whistleblowers that file lawsuits alleging fraud. The False Claims Act is also lacking the requirement that an employee or whistleblower with knowledge of a false claim first report the claim internally through his or her corporate compliance program before hiring a whistleblower attorney or law firm and filing a False Claims Act action. One particularly questionable provision of the new Act possibly even authorizes employees, contractors and agents of a company to remove confidential and even privileged internal documents from their place of work and turn them over to their False Claims Act attorney to produce to the state.