The False Claims Act: A State Perspective

The federal False Claims Act, which has been around since the Civil War era, receives plentiful coverage through the media and blogosphere. However, few people realize that a majority of U.S. states have enacted similar or identical legislation to protect their citizens from fraud on the local level. It is not uncommon for state attorneys general to join with Department of Justice attorneys in filing claims for fraud using their own False Claims Act as a way to recover on behalf of their local constituents. To date, twenty-nine U.S. states have enacted a statute that either mimics or is closely related to the federal False Claims Act, and several other states are in the midst of proposing similar legislation.

How Do State FCA’s Compare?

State-level FCA cases vary in their effectiveness and strength. For instance, several states have opted to enact an FCA that deals strictly with Medicaid fraud and does not apply to other areas of misconduct. The federal FCA is expansive in that it applies to all industries and areas of fraud, including fraud against federal healthcare agencies. However, in states like Colorado, Connecticut, Iowa, Louisiana, Maryland, Michigan, New Hampshire, Texas, Washington, and Wisconsin, the FCA applies only to fraud involving Medicaid – a program administered jointly by the state and federal government.

Other states have been recognized for having FCA’s that are at least as strong as the federal FCA when it comes to recovering Medicaid money, and some statutes are even more punitive than the federal version. These states, including California, Hawaii, Illinois, Indiana, Massachusetts, Michigan, Nevada, New York, Rhode Island, Tennessee, Texas, Virginia, and Wisconsin, are eligible for a 20 to 35 percent increase in their share of any Medicaid recoveries recouped under the federal FCA.

Approximately twenty-two U.S. states do not currently have a False Claims Act, or something similar, in place yet. However, as we will discuss in the next section, these states are considering enacting similar legislation in light of the overwhelming success of the federal statute against Medicaid, Medicare, and other forms of fraud.

States to Consider FCA Legislation

In the state of West Virginia, which does not currently have an FCA on the books, much contention has arisen between citizens, politicians, lobbyists, and the legislature over whether an FCA should be enacted and, if so, the extent of its reach. In light of recent environmental issues plaguing the state, many residents and political pundits have demanded to know why the state does not have an FCA in place to help keep industries honest.

Currently, a draft FCA is making its way through the legislature; however, some feel the language as drafted would be too vague to enforce and could lead to an unprecedented number of lawsuits. As the President of the West Virginia Chamber of Commerce stated, the bill as drafted does not properly define “fraud” and allows for mere mistakes by corporations and businesses to be categorized as punishable fraudulent activity.

Conclusion

If you are considering filing a whistleblower lawsuit, discuss your case with a whistleblower attorney beforehand. This will help you eliminate unnecessary confusion as to where, how, and when to file your case, and will give you the encouragement you need to follow through with your allegations of misspending. For more information, contact Berger Montague right away.