Virginia Fraud Against Taxpayers Act

By Jonathan DeSantis

The Virginia Fraud Against Taxpayers Act (“VFATA”) is the state level counterpart to the federal False Claims Act for false claims in the Commonwealth of Virginia. While the federal statute concerns the presentation of false claims involving federal funds, the VFATA concerns the presentation of false claims involving state or local funds.

The Virginia General Assembly passed the VFATA in 2002 with an effective date of January 1, 2003.[1] The VFATA prohibits the following:

  1. knowingly presenting or causing to be presented a false or fraudulent claim;
  2. making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim; and
  3. several other related acts of misconduct involving false or fraudulent claims.[2]

“Claim” is broadly defined to include “any request or demand, whether under a contract or otherwise, for money or property” made to (1) a state agency, (2) a political subdivision of the state, or (3) a recipient of funds from the state or political subdivisions if the claim involves those funds.[3]

Generally speaking, if a claim is false or fraudulent and involves states or local funds, it violates the VFATA. A person or corporation who violates the VFATA must pay the Commonwealth between $5,500 and $11,000 for each VFATA violation, in addition to whatever actual damages were sustained as a result of the VFATA violation(s).[4]

Who Can File a Lawsuit Under the Virginia Fraud Against Taxpayers Act?

Either the Commonwealth itself or a private individual (known as a qui tam relator) may bring a lawsuit for violations of the VFATA.[5] When a qui tam relator initiates the lawsuit, the Commonwealth is provided an opportunity to investigate the claims and determine whether to formally participate or intervene in the lawsuit.[6]

Even if the Commonwealth does not intervene, a qui tam relator may continue to pursue the lawsuit.[7] If a qui tam relator is successful in the lawsuit after the Commonwealth decides not to intervene, he or she is entitled to receive between 25 and 30 percent of any recovery, in addition to his or her reasonable attorneys’ fees and costs.[8] A qui tam relator receives a lower amount (between 15 and 25 percent of any recovery) when the Commonwealth does intervene.[9]

Is the Virginia Fraud Against Taxpayers Act Similar to the Federal False Claims Act?

The VFATA is modelled after the federal False Claims Act.  Accordingly, “courts look to decisions interpreting the [federal False Claims Act] in considering actions brought under the VFATA.” [10] This is particularly relevant given that there are not many cases interpreting the VFATA. While the federal False Claims Act pertains to false claims involving federal funds and the VFATA pertains to false claims involving state funds, the statutes are otherwise very similar – there a few minor differences.

Generally speaking, claims under the VFATA are brought at the same time as claims under the federal False Claims Act. For example, Medicaid is a federal healthcare program for low income individuals and is jointly funded by federal and state funds.[11] Thus, if a doctor presents a false claim for payment to the Medicaid program, the false claim likely violates both the federal False Claims Act and the VFATA.[12] However, the VFATA applies broadly to any false claims involving state funds, and there is no requirement that a false claim also involve federal funds.

Contact Us to Learn More

For more than a decade, the Berger Montague Whistleblower, Qui Tam & False Claims Act Practice Group has represented whistleblowers in matters involving healthcare fraud, defense contracting fraud, IRS fraud, securities fraud, and commodities fraud. While the information on this blog is not legal advice, we would be more than happy to speak with you directly about your potential case. Any information you share with us will be treated with the highest level of confidentiality, and we will protect you every step of the way.

[1] Acts 2002, c. 842, eff. Jan. 1, 2003.

[2] Va. Code Ann. § 8.01-216.3(A).

[3] Va. Code Ann. § 8.01-216.2.

[4] Va. Code Ann. § 8.01-216.3(A).

[5] Va. Code Ann. §§ 8.01-216.4, 8.01-216.5.

[6] Va. Code Ann. § 8.01-216.5.

[7] Va. Code Ann. § 8.01-216.6(F) (“If the Commonwealth elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action.”).

[8] Va. Code Ann. § 8.01-216.7(B).

[9] Va. Code Ann. § 8.01-216.7(A).

[10] Phipps v. Agape Counseling & Therapeutic Servs., Inc., 2015 WL 2452448, at *4 (E.D. Va. May 21, 2015); see also United States v. Universal Health Servs., Inc., 2010 WL 4323082, at *2 (W.D. Va. Oct. 31, 2010) (similar).

[11] U.S. ex rel. DeCesare v. Americare In Home Nursing, 757 F. Supp. 2d 573, 577 (E.D. Va. 2010) (“Medicaid is a program providing federal funding for state medical services to the poor in participating states, including Virginia…”).

[12] See e.g. id.

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By | 2018-07-06T10:11:59+00:00 July 6th, 2018|False Claims Act Information|