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Every state wants a False Claims Act, but not every state has the political will to pass one…

With all of the legislative activity this year on the Virginia Fraud Against Taxpayers Act,  I haven’t had much of a chance to look at other state legislative activity.  I ran across this article the other day, however, and I wanted to pass it along.

Apparently Ohio Attorney General Mike DeWine is pushing for an Ohio False Claims Act.  That is good news in and of itself, but it appears he has a long way to go.  In the legislative session that began in January, a False Claims Act bill was not introduced.  

I have commented previously on this blog about states without false claims acts and the mysterious reasons why they fail to enact them.  The federal government and 26 states have false claims act legislation–and no state that has even enacted one has gone back and done away with it.  Much to the contrary–and I always say this in my testimony before various state legislatures–when you look at Virginia’s amazing recoveries and the success stories of other states, I can’t imagine what further evidence a legislature wants to see. 

It looks like Arizona is at least one step closer to passing a FCA statute.  There, a battle is currently raging in over passage of The Arizona False Claims Act.  I don’t know how much it will help, but I was asked to send an email to one Rep. Farnsworth, so I did.  Here is the text of the email I sent to Rep. Farnsworth this past week:

Dear Rep. Farnsworth:

My name is Zach Kitts and I am writing about HB 2674 and HB 2629, which I understand constitute
the Arizona False Claims Act. I am lawyer in private practice here in Virginia, and I focus my
practice on state and federal qui tam litigation. I would be happy to speak with you about
this, or to submit further written support for the Arizona False Claims Act.

Simply put, passage of an FCA statute should be the first thing the legislature focuses on. I
have several reasons for saying that.

I wanted to tell you about our experience in the Commonwealth with false claims legislation.
In assessing how an Arizona FCA might work, there is no need for speculation. We have the
example of Virginia and other states.

In Virginia, our state FCA passed unanimously in 2002 and became law on Jan. 1, 2003. I can
say with certainty that the law is an unparalleled success. No one can argue with Virginia’s
results. In the three‐year period from FY 2007‐FY 2009, Virginia recovered on average more
than $228 million per year from our award winning Medicaid Fraud Control Unit. Virginia
recovers more than $5 million per employee of our state MFCU.

In this email, I will not spend too much time refuting arguments often made against this legislation. Instead, I would like to invite you to ask me if you have any further questions. I do want to assure you, however, that there is not a state in the Union that is more business-friendly than Virginia.

Virginia has no additional employment-related statutes of any kind. There is no class-action mechanism. We have a medical malpractice cap. We have a cap on punitive damages. In short, we have every sort of traditional “business-friendly” legislation there is.

My reason for saying all of this is that I can promise you that if false claims legislation created frivolous litigation, it would not have lasted eight years in Virginia.

I also want to emphasize for you the importance of matching the federal statute word for word. There is no reason to change anything from the current version of the federal FCA, and those states that have tried have
had disastrous results. For example, I was invited to Maryland last year by the Lt. Governor to help try and get the Maryland FCA passed. The Maryland legislature tried to tinker with the statute and make it “Maryland style.” (Their words, not mine).

Now, roughly a year later, it is most likely that no Maryland FCA cases have been filed under seal. That is because they tinkered with the statute and made it unattractive to qui tam lawyers in private practice. The importance of the qui tam provisions of state FCAs cannot be overstated.

Why are the qui tam provisions of the statute so important?

Compliance with the requirements of any law or rule are governed by the same general requirements. In no particular order they are as

(1) the likelihood that transgressions of the law or command will be detected;
(2) the likelihood that observed transgressions will be prosecuted;
(3) the substance of the behavior the law forbids;
(4) the nature and quality of the evidence required to
prove a violation; and
(5) the severity of the potential sanctions.

Government is quite capable of addressing factors three through five, but it needs assistance with the first two. That is the real power of the qui tam provisions of the statute. The qui tam provisions of state FCA legislation enables law enforcement to work hand in hand with the outside lawyers to further the interests of the Commonwealth. That is just one reason that the qui tam provisions are so vital.

I also wanted to mention that I think the best bet is to match the federal False Claims Act word for word. That is smart for many reasons, not the least of which is that the federal FCA has a matured, well-developed body of jurisprudence behind it. You incorporate that 148 plus years of judicial interpretation by matching the federal statute.

I will be happy to answer any questions you might have. Please feel free to ask.