State False Claims Acts
Under the federal False Claims Act, a whistleblower may bring an action in the name of the United States against an individual or a business for false claims made to the federal government. Combating fraud, however, is also important at the state level. Since the early 2000s, many states have recognized the important public policy benefits of the FCA and enacted their own false claims acts to recover money fraudulently obtained by defendants from state funds.States with a False Claims Act Containing a Qui Tam Provision
Twenty-Nine states and the District of Columbia currently have a false claims act that contains a qui tam provision that empowers a whistleblower both to initiate a state false claims act and to seek recovery of a portion of a settlement or judgment. While most of these state statutes closely resemble the federal FCA and apply to any type of government contract or business relationship, eleven of them only apply to false claims submitted that relate to the state’s medical assistance programs. These states are: Colorado, Connecticut, Georgia, Louisiana, Maryland, Michigan, New Hampshire, Oklahoma, Texas, Washington, and Wisconsin.
Seven states have enacted a false claims act but have not included a qui tam provision. Therefore, whistleblowers in these states cannot file state FCA lawsuits, though they can still pursue federal FCA violations. These states include: Arkansas, Kansas, Mississippi, Missouri, Nebraska, Oregon, and Utah. Notably, the state false claims acts in Arkansas Mississippi, Missouri, and Nebraska only apply to fraud involving Medicaid or other state healthcare programs. In addition, Arkansas and Missouri have enacted legislation that awards whistleblowers up to 10% for providing evidence that leads to the recovery of state funds.
Fourteen states have yet to pass either a false claims act or a qui tam statute. While these states are lacking an important tool for fighting fraud, they have passed generic Medicaid anti-fraud statutes which criminalize the submission of false or fraudulent Medicaid claims. A few of them also include provisions to protect whistleblowers from retaliation. Importantly, whistleblowers in these states can still file a federal False Claims Act case against individuals or businesses whom they believe have defrauded the federal government. In an effort to deter fraud and share in the recovery of large False Claims Act settlements and judgments, many of these states are presently considering legislative proposals to enact a state False Claims Act.
In 2005, Congress passed the Deficit Reduction Act (“DRA”) of 2005. The DRA offered states a financial incentive to pass a false claims act that mirrors the federal FCA, along with its trademark qui tam provision. The financial incentive comes in the form of a 10% bonus recovery given to the states from settlements and judgments involving federal FCA cases in which the Medicaid program was defrauded. In order to be eligible for this 10% bump, state false claims acts must be at least as strong as their federal counterpart. This determination is made by the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) along with the Department of Justice (“DOJ”). Currently, HHS has certified sixteen states as having false claims acts at least as strong as the federal FCA, including California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Iowa, Massachusetts, Minnesota, Montana, New York, Rhode Island, Tennessee, Texas, and Washington.
The information about state FCA statutes above and elsewhere on this web site is believed to be accurate as of the date of its posting. Nonetheless, attorneys and qui tam relators should review this information before relying on it.