In addition to claims brought under the federal False Claims Act (“FCA”), each state has its own version of the FCA. For example, in California, since 1987, the state’s version of the FCA is found in its Government Code (8000-22980) and enforced by the State of California Department of Justice’s False Claims Unit of the Corporate Fraud Section. California’s Attorney General has an enforcement unit that is tasked with investigating claims. Indeed, each year investigations result in the recovery of hundreds of millions of dollars.
Similar to its federal counterpart, the California FCA grants the Attorney General power to bring civil enforcement actions. These actions may result in the recovery of triple damages and related civil penalties against any entity or person that:
(2) makes or uses a false statement or document to obtain money or property; and
(3) from the State of California.
In addition, it is also forbidden to avoid paying or transmitting money or property to the State of California if the entity or person knew of this oversight.
Any entity or person that brings the claim is often called a “qui tam” relator or whistleblower. “Qui tam” is a type of lawsuit that gives the plaintiff (or relator) bringing the action on behalf of the government a part of the recovery with the rest going to the government payer. When such a lawsuit is filed, it is confidential (under seal) to allow the Attorney General or local prosecuting authority to investigate the allegations. After the investigation is complete, the Attorney General decides whether to intervene or decline to intervene. If the Attorney General declines to intervene, the whistleblower may still proceed with bringing the claim against the alleged violator. Such whistleblower is also protected against any form of retaliation. (See more information here: https://oag.ca.gov/cfs/falseclaims).
Often in FCA claims, the company settles with the government, and the qui tam relator, for a financial sum. Entities are also liable if they submitted false claims to intermediary government contractors who pay on behalf of the government such as Medicare Administrative Contractors. The relator may be an internal company employee or an external party such as a contractor or competitor.
The first step in filing a qui tam lawsuit is when a whistleblower, through his or her attorney, files a Complaint under seal (non-public). Alongside the Complaint to the court, the government branch involved receives a copy and an opportunity to investigate the claims confidentially. It then has a period of time to decide whether to intervene and prosecute the case, intervene and dismiss the case, or decline to intervene and allow the qui tam whistleblower to proceed independently. If the government intervenes, and there’s a recovery through trial or settlement, the qui tam whistleblower will receive 15 to 25 percent. Alternatively, if the government declines to intervene, and the qui tam whistleblower proceeds alone, he or she would receive between 25 to 30 percent of the recovery.
Retaliation Protections in California’s FCA
California whistleblowers may not be fired in retaliation for complaining or reporting violations or illegalities that they reasonably believe to be unlawful or fraudulent. Complaints about, or the reporting of, illegal or dishonest conduct to law enforcement agencies is protected under California’s statutes such as the Whistleblower Protection Act, and the common law doctrine of wrongful termination in violation of public policy. To support the California FCA, California has several laws that protect whistleblowers that go further than their federal counterparts. In fact, Labor Code Section 1102.5 prohibits retaliation against employees who “blow the whistle” by notifying a government agency on, or refuse to participate in, an activity that would violate any laws or regulations in the workplace. This law was greatly expanded in the past several years by extending protection to employees who report suspected behavior not only externally to public entities but specifically internally to a person with authority over the employee or to another employee with the authority to investigate, discover or correct the reported activity. There are also specific laws that prohibit retaliation against employees who report to a government entity any fraudulent billing improperly submitted to the government for reimbursement.