My apologies for missing this last week, but on August 28, 2009, North Carolina Governor Beverly Perdue signed the North Carolina False Claims Act into law, making North Carolina, by my count, the 26th state to pass a state false claims act. Congratulations to all those who worked so hard to pass this legislation.
But that is not all–North Carolina added her own twist to this historic occasion. Namely, to the best of my knowledge, North Carolina became the first state to pass a state false claims act with liability provisions identical to the new federal False Claims Act. I invite anyone to correct me if I am wrong.
The North Carolina Department of Justice, of course, immediately faces the same difficult situation faced by many states to enact a state false claims act. Starting December 1, 2009, North Carolina Attorney General Roy Cooper will have this fantastic new weapon in his arsenal, but he will have no one in his office with experience using the statute in contexts other than health care. Even worse, given the current economic climate, General Cooper will probably not have the funds necessary to hire new staff to get the North Carolina False Claims Act off the ground.
If I could offer two pieces of unsolicited advice to General Cooper, I would tell him the following: first, please do not view the North Carolina False Claims Act as just a whistleblower statute. Rather, see it for what it is–the single most important affirmative civil enforcement tool any Attorney General has ever had. General Cooper, this is a means to protect the public fisc.
To that end, my second piece of advice would be that you not sit back and wait for the whistleblowers to come to you. You should bring in outside counsel to represent the state and bring affirmative civil enforcement claims on behalf of the state. The right outside counsel will be wiling to work with you to identify existing claims on behalf of the state; once these claims are identified, the same outside counsel can prosecute those claims on behalf of the state.
Such representation could be done on a contingency-fee basis, and thus would not cost North Carolina anything at all–it would literally be found money. And by the way, some of that found money could be set aside to hire permanent staff once the ball gets rolling.
It is important to bring in outside counsel, because attorneys with experience in state false claims act prosecutions know where the hot spots for false claims are located, and we know where the taxpayer’s hard earned dollars are being lost. Outside counsel with state false claims act experience can use that experience to identify claims that North Carolina is more or less certain to have.
In addition to generating money, the attorneys in the North Carolina Department of Justice would get a first-hand chance to work with experienced FCA lawyers, and to see how state prosecutions work.
There are many types of false claims act claims that are specific to states, and there is no reason to delay–North Carolina should retain outside counsel and start recovering its money on December 1, 2009; there is simply no reason to wait.