West Virginia False Claims Act Advances in the 2014 Legislative Session
As regular readers know, tracking state false claims act legislation is one of the most important things we do here at vaquitamlaw.com. The power of state false claims act legislation to prevent fraud on state governments and to return money to a state’s public fisc is not in question, and ultimately I believe every state will have a state false claims act. I was very happy to see that the West Virginia False Claims Act made it out of Committee this week.
State legislative battles seem to have died down a bit in the last couple of years. In my opinion, this is largely because most states now have some form of FCA. In fact, the next state to pass a false claims law will become the 30th state to join what I call the “Deficit–Reduction Club.”
There are a couple of states currently considering state FCA legislation this session, but by far the most interesting opportunity is in West Virginia. This week, H.B. 4001 (also known as the West Virginia False Claims and Taxpayer Protection Act of 2014) was passed out of the House of Delegates Committee on the Judiciary.
The legislative battle also appears to have gotten rather personal. Del. Stephen Skinner (D-Jefferson County) is the chief sponsor of the bill and has spoken in favor of it. Del. Paul Espinosa, on the other hand, is against it:
Delegate Paul Espinosa, R-Jefferson, said business organizations have considered the bill “sue and settle” legislation that could lead to frivolous lawsuits, which could cost businesses, Espinosa said.
“While the premise behind the legislation to prevent improper activity by a business is certainly noble, the concern is that the effect of this legislation as it is written would make it very easy for individuals to sue a business,” Espinosa said. “The businesses would have to defend the suit at considerable expense or settle the lawsuit to avoid that expense.”
Sound familiar anyone? I think it does. None of these arguments from Del. Espinosa will be any surprise to regular readers of this blog — this is the Chamber of Commerce party line. When I testify before state legislatures on state FCA laws, I always take special care to tell the state delegates and senators to ask the friendly Chamber lobbyist the questions that the Chamber of Commerce cannot answer.
If state false claims laws are unfriendly to businesses, why do all of the most business-friendly states have these laws?
A few years back, a group called American Legislative Exchange Committee (or ALEC) started the disingenious lobbying strategy of calling state FCAs bad for business. Other notable lobbyists took note and began using this ruse. This is baloney folks, I don’t know any other way to put it, but it is baloney that has apparently gained some acceptance in West Virginia.
The simple fact, as documented again and again on this blog, is that all of the most business-friendly states have state false claims laws. The Commonwealth cherishes her status as one of the top 5 business-friendly states as ranked by Pollina, Forbes and the U.S. Chamber of Commerce. If West Virginia’s legislators look to the facts they will see this argument for what it is — a brazen cheap-shot aimed at the spot where it will hurt the most.
In the case of West Virginia that would be the state’s consistently poor business ranking. Unfortunately for West Virginia, the same rankings that consider Virginia to be one of the most business-friendly states almost always rank West Virginia as one of the least business-friendly states. It is worth noting that anti-FCA lobbyists use this argument if — and only if — the state they are lobbying has a poor business ranking.
That is indeed unfortunate and the legislature is right to be concerned about it, but passing a state false claims law is not going to hurt their business-rankings and it won’t hurt business either. In fact, as discussed on his blog before, state qui tam laws help to foster a business-friendly climate in a number of different ways.
To be fair, passing a state FCA statute also is not going to drag West Virginia from the bottom of the business rankings to the top, but it is sure as hell not going to hurt either…just ask Virginia, Texas, North Carolina, New Hampshire, and all of the other top states for business.
Before concluding this post, I would be remiss if I didn’t point out that much thanks is owed to Taxpayers Against Fraud Education Fund Director Patrick Burns for his testimony and hard work on this issue…only a few weeks ago, it looked as if the West Virginia False Claims Act would be tabled and left to wither on the vine…
Stay tuned folks there will hopefully be more news to come.
