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California Governor Brown Signs False Claims Act Bill

On September 27, 2012, Governor Brown signed the California False Claims Act into law in order to conform with the federal False Claims Act (“FCA”). The FCA is aimed at imposing liability on companies that defraud the government. The Act includes a qui tam provision which allows individuals, such as employees, contractors and agents unaffiliated with the government, to report fraudulent activity without fear of adverse employment actions. Such whistleblowing provisions encourage individuals to come forward with information; in fact, the federal government has recovered more than $22 billion dollars since 1987 under the FCA.

Back in August, the California Assembly passed its revised state version of the Act in an effort align itself more closely with federal law. States, such as California, stand to gain a financial incentive when they make their state false claim laws at least as effective as the federal FCA in rewarding and facilitating relators’ (the individuals reporting fraudulent activity) lawsuits for false claims to the state Medicaid program. Such behavior qualifies states under the federal Deficit Reduction Act of 2005 (“DRA”) for an additional 10 percent share of the amount recovered using the state law.  

Some of the major provisions of the updated California act include:

  • A broader definition of what constitutes a “claim” under the Act;
  • A statute of limitations which, if the Attorney General files a complaint in intervention, the statute of limitation will relate back to the filing date of the relator’s complaint;
  • An expansion of the anti-retaliation provisions that includes protection for contractors and agents, as well as employees; and

An allowance for the Attorney General to override the public disclosure bar (which generally prohibits qui tam actions based on publicly known information) where the relator is the “original source” of the information.