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Can state False Claims Acts differ from the federal False Claims Act?
Can State False Claims Acts Differ from the Federal False Claims Act?
The short answer is yes, state False Claims Acts can and do differ from the federal False Claims Act (FCA) in some key ways. The federal FCA, which was enacted in 1863 to combat fraud against the federal government, allows whistleblowers to file qui tam lawsuits on behalf of the government against anyone submitting false claims. The federal FCA has become an important tool for combating healthcare fraud, defense contractor fraud, and other schemes to defraud the federal government.
Many states have enacted their own False Claims Acts modeled after the federal FCA to combat fraud against state programs like Medicaid. However, states have flexibility in drafting their laws, so state False Claims Acts often contain provisions that differ from the federal FCA. Some of the key potential differences include:
Scope of Coverage
The federal FCA covers fraud against the federal government, while state False Claims Acts apply to fraud against state programs. For example, a state False Claims Act would cover fraud against the state’s Medicaid program, while the federal FCA would not directly apply. Some states have “hybrid” laws that cover fraud against both state and federal funds.
Protected Whistleblowers
The federal FCA protects whistleblowers from retaliation, but only if they are employees. Some state laws offer broader anti-retaliation protection covering contractors or agents as well .
Statute of Limitations
The federal FCA has a statute of limitations requiring suits to be filed within 6 years of the alleged fraud . Some states have longer statutes of limitations – for example, 10 years in California and 12 years in Delaware. Longer statutes of limitations allow more time to uncover and prosecute fraud.
Burden of Proof
The federal FCA requires allegations of fraud to be proven by a “preponderance of the evidence,” meaning more likely than not. Some state laws, like New York’s, require a higher “clear and convincing evidence” standard .
Damages and Penalties
The federal FCA allows for treble damages – meaning damages equal to three times the amount of the false claim. Many state laws allow double or triple damages, but some states like Iowa cap damages at double the amount of the false claim . The federal FCA also imposes civil penalties between $5,500-$11,000 per false claim. Some state laws impose lower penalties – for example, $2,000-$10,000 per claim in Massachusetts.
Under the federal FCA, whistleblowers (called relators) can receive 15-30% of funds recovered by their qui tam lawsuits. Some state laws allow smaller relator shares – for example, up to 20% in Indiana or up to 25% in Nevada .
Public Disclosure Bar
The federal FCA prohibits qui tam lawsuits based on fraud that has already been publicly disclosed, unless the relator was an original source of the information. Some state False Claims Acts contain broader public disclosure bars that prohibit more types of suits, while others like California have no public disclosure bar.
As you can see, state False Claims Acts often differ from the federal FCA in ways that can impact the scope of liability, incentives for whistleblowers, and recoveries for fraud. States have flexibility to tailor their laws to their specific needs and policy goals. However, state laws do draw key concepts and structures from the time-tested federal FCA. Understanding the differences is important for anyone involved in investigating, reporting, or litigating fraud against state programs.
Key State False Claims Act Differences
| State | Notable Differences from Federal FCA |
|---|---|
| California | – No public disclosure bar – Allows recovery by whistleblowers even if government does not intervene |
| Delaware | – 12 year statute of limitations – Higher penalties up to $11,000 per claim |
| Massachusetts | – Lower penalties $2,000-$10,000 per claim – Allows private right of action for retaliation claims |
| New York | – Higher “clear and convincing” evidence standard – Broader protected whistleblower definition |
Key Takeaways
- States can model False Claims Acts after the federal FCA, but are free to modify provisions
- Key potential differences include scope, protections, burdens of proof, damages, and relator shares
- Understanding state law differences is crucial for prosecuting and defending fraud cases
- States enact variants to serve specific policy goals and needs
The federal False Claims Act has proven to be an invaluable tool for fighting fraud against the government. States have followed suit with their own False Claims Acts tailored to their needs. These state laws retain the core qui tam structure allowing whistleblowers to prosecute fraud on the government’s behalf. However, state legislatures have enacted certain variations that can significantly impact the scope and application of their False Claims Acts. Companies doing business with state governments and whistleblowers considering qui tam suits under state False Claims Acts need to understand these key differences from the federal law.
References
Comparison of State False Claims Acts | The National Law Review
The False Claims Act: A Primer | Department of Justice
State False Claims Acts: An Iowa Perspective | Iowa Fiscal Partnership