BREAKING NEWS – CALIFORNIA ASSEMBLY PASSES AMENDMENTS TO THE CALIFORNIA FALSE CLAIMS ACT
In breaking news this month, Califoria is in the process of amending California’s False Claims Act (Cal. Gov’t Code §§ 12650-12656). The bill has now gone to the desk of Gov. Jerry Brown where it should be promptly signed.
The amendments largely conform the CA FCA to the federal False Claims Act (“FCA”) by expanding liability under the CA FCA and the rights of qui tam relators. States have a financial incentive to enact state false claims laws that are at least as effective as the FCA in rewarding and facilitating relator’s lawsuits for false claims to the state Medicaid program. By doing so, states qualify under the federal Deficit Reduction Act of 2005 (“DRA”) for an additional 10 percent share of the amount recovered using the state law.
As most regular readers know, California was the first state to pass a state false claims act, doing so in 1989. California’s FCA, however, does not meet the requirements of the DRA, which means California does not qualify for the extra ten percent. Most of the amendments made by AB 2492 seems aimed at correcting this definciency, but there is still a problem.
The problem is this — there is still no alternate remedy provision in the new California False Claims Act. As regular readers know, in false claims act litigation, the relator and his or her lawyer are required to serve a disclosure statement on the government prior to filing the qui tam case under seal. The disclosure statement must fully inform the government on the nature of the relator’s claims. After serving the disclosure, the relator then files the case under seal and serves it on the government (again) but not on the defendant.
As should be obvious, the government has a large amount of information in hand through the qui tam case. The alternate remedy provision protects the relator and his or her lawyer if the government chooses to pursue criminal or administrative remedies based on the information the relator provided instead of pursuing the qui tam claim.
But California has no such provision and it looks to me like the amended CFCA still doesn’t have one. So California still will not qualify for the DRA-based 10% incentive payment.