Although – or perhaps because – Pennsylvania does not have a state False Claims Act, both the City of Philadelphia and Allegheny County (encompassing Pittsburgh) have municipal ordinances that address false claims. False Claims Ordinance, Phila. Mun. Code §§ 19-3601, et seq.; Allegheny CountyCode of Ordinances § 485-1, et seq. This post will discuss the Philadelphia ordinance.
Like the federal and state False Claims Acts (“FCA”), the Philadelphia False Claims Ordinance (“Ordinance”) covers false or fraudulent claims made on the City for payments, or false records or statements to conceal, avoid or decrease an obligation to pay or transmit money or property to the City.
Only claims (or groups of claims) for more than $10,000 can be filed. Also like other FCAs, the Philadelphia Ordinance allows either the government prosecutor (the City Solicitor, in Philadelphia) or a private individual to commence an action on behalf of the City. Phila. Code §§ 19-3603. The case is filed under seal, and the City is given a period of time to conduct an investigation.
Limitations on Actions by Private Individuals
The Philadelphia Ordinance varies from the typical FCA, however, because the private individual is only permitted to pursue the case after filing if the City Solicitor designates that person. Thus the City can decide to pursue the case on its own, or:
“[e]nter into an agreement with and designate the person who submitted the proposed civil complaint or, if that person is not an attorney, his or her attorney, to file a civil action for the person and the City, in the name of the City, … or (.3) Decline to commence a civil action and decline to designate the person who submitted the proposed complaint to commence a civil action.”
Id. at § 3603(2).
If an action initiated by a private individual is resolved by the City Solicitor, the individual is entitled to 10-25% of the proceeds. If the individual is designated to pursue the case on behalf of the City and the case is successfully resolved, the individual will be awarded between 15-30% of the proceeds. Id. at § 3603(8).
Other Provisions of the Philadelphia False Claims Ordinance
Individuals who take “lawful acts … in furtherance of an action under this Chapter, including investigation for, initiation of, testimony for, or other assistance in an action filed or to be filed under this Chapter” are protected from retaliation from their employers. Id. at § 3604. Two other interesting provisions of the Ordinance concern actions by government employees and an exclusion of actions pertaining to taxes. For government employees who discover information pertaining to false claims in the course of their employment, the employees can only bring actions if the information was reported to the City and the City failed to act on the information within six months. § 3603 (3)(d).
Although the False Claims Ordinance does not apply to tax matters, there is a separate provision in the Municipal Code that permits private individuals to file cases against entities for violations of the Wage Tax or Net Profits Tax laws. Phila. Mun. Code §§ 19-1509, et seq. Most of the provisions governing private individuals who file cases are the same as those under the False Claims Ordinance, including awards of part of the proceeds and protection against retaliation.
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As with any FCA action that you might be considering, you should contact an experienced attorney before you take any actions. There are many procedural requirements and possible pitfalls that require counsel with in-depth knowledge of this area of law.
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