State False Claims Statutes

State-False-Claims-Statutes-baum-hedlund-law

Currently, 29 states and the District of Columbia have false claims statutes containing qui tam provisions permitting private citizens to bring whistleblower lawsuits on behalf of the state and share in any successful recovery. In most of these states, whistleblowers are entitled to an award of 15% to 25% of the amounts recovered by the state in the event the state joins the lawsuit. If the state does not intervene, the whistleblower may be entitled to 25% to 30% of the amount recovered. (In California, these percentages are 15% to 33% if the state joins and 25% to 50% if the whistleblower proceeds alone.) In some states, the false claims act statutes apply only to Medicaid and health care fraud.  In others, the laws have a broader reach.

The number of states with such laws has grown considerably since 2005, when Congress, in response to growing Medicaid fraud, passed legislation that rewarded states with laws modeled on the federal False Claims Act. Under the Deficit Reduction Act (DRA) of 2005, states with false claims act statutes that meet certain requirements are permitted to keep a significantly larger share of any money recovered as a result of state action taken in Medicaid fraud cases. (Medicaid expenses are shared by the states and the federal government, so both share in the recovery.) One of those requirements is that the state law “must contain provisions that are at least as effective in rewarding and facilitating qui tam actions for false or fraudulent claims as those described in 31 U.S.C. 3730-3732.” (31 U.S.C. 3730-3732 refers to the Federal False Claims Act.) Since the passage of the DRA, an additional 13 states have passed false claims act laws with qui tam provisions.

California | Colorado | Connecticut | Delaware | Florida | Georgia | Hawaii | Illinois | Indiana | Iowa | Louisiana | Maryland | Massachusetts |Michigan | Minnesota | Montana | Nevada | New Hampshire | New Jersey | New Mexico | New York | North Carolina | Oklahoma | Rhode Island | Tennessee | Texas | Virginia | Washington | Wisconsin | District of Columbia

In addition to the 29 state laws with qui tam provisions, there are two states, Arkansas and Missouri,  that offer rewards to whistleblowers even though they are not permitted to file their own qui tam lawsuits.  In one state, Maryland, qui tam actions may only proceed if the state joins the lawsuit.

Arkansas | Missouri

There is a good deal of variance from state to state regarding protection for whistleblowers. In nearly all of the states that have false claims statutes with qui tam provisions, the laws protect both state employees and employees of private companies against retaliation by their employers. Although this is also true in many states that do not permit the filing of qui tam lawsuits, there are exceptions.  In some states, false claims laws protect only public employees from retaliation by their employers. However, there are usually legal remedies available even for whistleblowers who are employees in the private sector, particularly when they are reporting violations of law for the benefit of the public.

From time to time, false claims act legislation is introduced in states that currently do not permit the filing of qui tam lawsuits. In 2014, for example, a false claims act bill that would have allowed qui tam actions was rejected in the West Virginia legislature. The same year similar legislation was defeated in Mississippi. Though the state laws linked here are relatively current, recent developments in each state should be checked to keep abreast of new statutes and amendments to current laws.