In 2008, the State of New Jersey adopted the New Jersey False Claims Act (“New Jersey FCA”), its own version of the federal False Claims Act (“FCA”). A person or entity may be held liable under the New Jersey FCA for false claims submitted to New Jersey. Further, the Act allows private individuals who know about fraud against New Jersey to bring a qui tam case against the offending party on behalf of the State.
Like the federal FCA, the New Jersey FCA offers financial rewards to whistleblowers for bringing an action on behalf of the State. If the State decides to intervene in a case, the whistleblower may receive 15-25% of the recovery. If the State does not intervene and the whistleblower pursues the case on their own, they may receive 25-30% of the recovery.
New Jersey False Claims Act vs. Federal False Claims Act
While the New Jersey FCA is modeled after the federal FCA, there are differences in several key provisions between the two acts.
- Both the federal FCA and the New Jersey FCA impose liability on people who present fraudulent or false claims for payment to an officer or employee of the government. However, the New Jersey FCA also adds that people who present a false claim to an “agent of the State, or to any contractor, grantee, or other recipient of State funds” also violate the State’s false claims act. This includes presenting false claims to contractors, subcontractors, consultants, or other workers who have a direct or indirect contract with New Jersey.
- The New Jersey FCA and federal FCA also define the term “claim” differently. While both definitions include “a request or demand, under a contract or otherwise, for money [or] property,” the New Jersey FCA adds that a request for services can also violate the Act. This ensures that the New Jersey FCA applies to private contractors who provide services to the State.
- Violators of both the federal FCA and the New Jersey FCA must pay 3x the State’s damages, plus civil penalties. Additionally, the losing defendant has to pay the state prosecutor’s and whistleblower’s attorney fees. The New Jersey FCA takes this a step further by providing for joint and several liability for these penalties and damages. This means that each defendant involved in a whistleblower case shares responsibility for these payments-all violators are held accountable.
- Unlike the federal FCA, the New Jersey FCA includes a False Claims Prosecution Fund provision. This provision requires that the State Attorney General receives “10% of the proceeds in any action or settlement of the claim that it brings” and earmarks these funds for ongoing investigations and prosecutions of false claims under the New Jersey FCA.
- The New Jersey FCA, unlike the federal FCA, provides that the state government agency that is injured by a false claim is entitled to an award equal to the amount it was defrauded.
- While both the federal FCA and the New Jersey FCA allow a whistleblower to receive 15-25% of the recovery in a case where the government intervenes and 25-30% of the recovery in a case where the government does not intervene, the New Jersey FCA includes an additional provision. The New Jersey FCA does not limit a whistleblower’s share of the recovery when the government intervenes but the case is based in large part on the government’s own information. Instead, the reviewing court decides how much to award the whistleblower.
- Under the New Jersey FCA, the whistleblower’s attorney fees and costs are paid from the recovered proceeds before any other distribution occurs. Under the federal FCA, the whistleblower’s counsel fees and costs are paid by the defendant.
Previous New Jersey False Claims Act Settlements
The New Jersey Attorney General’s Office has prosecuted numerous qui tam cases, recovering funds for both the state government and New Jersey taxpayers:
- Accutest Corp.: In December 2015, environmental testing company Accutest Corp. agreed to pay New Jersey $2 million to resolve allegations that the company billed the government for testing work that did not comply with federal and state procedural standards, violating New Jersey’s False Claims Act.
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