As regular readers are aware, the Federal False Claims Act has been amended and improved recently on three occasions, starting with the March 2009 FERA Amendments. All of the changes were for the better, and all of them were based on experience with the 1986 amendments to the FCA.
Back in 2002 when Virginia passed the VFATA, the General Assembly did the smart thing and adopted the Federal FCA word-for-word. This is the smart thing for many different reasons–perhaps most important, when you adopt the Federal False Claims Act’s language, you incorporate 147-plus years of judicial interpretations for your state court’s judges to rely on.
With the recent amendments, however, the VFATA is out of synch with the federal statute, and Virginia’s taxpayers are not protected by the very best tools. So, without a doubt, amendments to the Virginia Fraud Against Taxpayers Act were always in the cards.
We held off with Virginia legislation last year because it appeared further changes to the Federal FCA were likely. That turned out to be a good move, because indeed in March of 2010 further changes were made, and now the Commonwealth can get all of the updates with one fell swoop.
Thus, I am please to announce that state Sen. Jill Vogel has introduced SB1262 in the state Senate and that Delegate Greg Habeeb will be sponsoring this legislation in the House of Delegates.
SB1262 modernizes the Virginia Fraud Against Taxpayers Act for the 21st Century. In the 1986, the drafters of the Federal False Claims Act broke new ground, and it is only reasonable to expect that after 24 years of experience with the statute, some things would become apparent that were not apparent initially.
Among the changes made by SB1262 are these, all of which mirror the federal government’s changes to the Federal FCA:
==> A correction of the Allison Engine decision by the United States Supreme Court, which held that a false invoice or record must be presented directly to the Commonwealth itself, rather than to a subcontractor or a grantee of the Commonwealth.
==> Changes to a number of key definitions in the Virginia Fraud Against Taxpayers Act; of particular importance are the new definitions of the words “material” and “claim.”
==>The power to dismiss a case based on the public disclosure bar is placed in the hands of the Virginia Attorney General, which is where it belonged all along. The new public disclosure bar reads “the Court shall dismiss an action or claim under this section, unless opposed by the Commonwealth, if substantially the same allegations or transactions alleged in the action or claim were publicly disclosed.” The underlined portion is new, and gives the AG the power to decide if the relator beings something to the table such that he or she should be allowed to share in the recovery.
The “original source” exception to the public disclosure bar is expanded by the SB1262 to include any relator who can add “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions … “
==>SB1262 makes it clear for the first time that retention of overpayments by the Commonwealth is unlawful; currently, the statute is very clear about what happens to those who take an affirmative step to get (or keep) money of the Commonwealth to which they are not entitled, but the amendments make it clear that even without an affirmative step, there is no “finders keepers” rule when it comes to money belonging to the Commonwealth.
==> The conspiracy section of the VFATA (Virginia Code 8.01-216.3(A)(3)) is amended to make a conspiracy to violate any portion of the VFATA unlawful. (Currently, it is only unlawful to conspire to violate 8.01-216.3(A)(1).
==>The Virginia Attorney General finally has the ability to share materials obtained from the Civil Investigative Demand with other departments of government and, if the AG deems it necessary, with the qui tam relator and is or her lawyers.
There is no word yet on when hearings will be held, but I strongly encourage all of my readers to contact their Delegate and state Senator and urge them to support SB1262.
Updates will follow…..