Does California Have a False Claims Act?
Yes, California has its own False Claims Act known as the California False Claims Act (CFCA). This act empowers private citizens to take legal action on behalf of the state against individuals or companies who have committed fraud against the government. Its main objective is to hold accountable those who misuse public funds.
The CFCA also provides legal protection and allows whistleblowers to receive a portion of the damages recovered.
What does the California False Claims Act Say?
A Private Citizen who is aware of fraud against the State of California can be bring a claim on behalf of the State. Cal Gov. Code §12651, the California False Claims Act, mirrors the federal FCA is several ways:
Under the California FCA, as is the case under the federal act, liability is attached to the following actions:
- submitting a false claim for payment to the state;
- creating or making use of a false record material to a false claim;
- conspiring to commit either of these two violations;
- failing to deliver all property owed to the State;
- creating or submitting a false receipt;
- making a false purchase;
- making a reverse false claim
Private Citizens: A private citizen who is aware of fraud against the State of California is able to bring a claim on behalf of the State.
Initial Sealing Period: Once an action is brought under the California FCA, it remains under seal for 60 days, as it would under the federal FCA.
Anti Retaliation Provision: An employee is entitled to the reinstatement of employee is entitled to the reinstatement of their position, two times the amount of backpay, interest on back pay, and compensation for any damages sustained due to discrimination.
Does the California False Claims Act Have a Qui Tam Provision?
Yes, the California False Claims Act does contain a qui tam provision. This provision allows private individuals, known as relators or whistleblowers, to file lawsuits on behalf of the state against entities that have committed fraud. These individuals could potentially receive a percentage of the recovered damages as a reward for their role in uncovering the fraud.
The qui tam provision of the CFCA serves as a powerful tool in the fight against fraud, encouraging citizens to actively safeguard public funds.
Does the California False Claims Act Have an Anti-Retaliation Provision?
The California False Claims Act (CFCA) includes an anti-retaliation provision to protect whistleblowers from retaliation for exposing government fraud. Employers are prohibited from taking adverse actions against employees who lawfully disclose information or participate in false claims actions. This provision strengthens the CFCA’s effectiveness in combating fraud and supports courageous employees who stand against fraudulent practices.
How is the California False Claims Act different from the Federal False Claims Act?
Unlike the Federal False Claims act, California FCA includes an “inadvertent false claims” provision:
If a party inadvertently/ unknowingly submits a false claim to the State [or political subdivision] and thereafter discovers said claim was false, they must report the false claim to the government within a reasonable time period, otherwise the party can potentially be held liable under the California FCA. Meanwhile, there is no “inadvertent false claims provision” in the federal FCA.
What are the Financial Rewards for whistleblowers under the California False Claims Act?
Under the California FCA, financial rewards to whistleblowers range from 25-50% when the government intervenes and from 25-30% when the government does not intervene. On the other hand, under the federal FCA, financial rewards to whistleblowers range from 15-33% when the government intervenes and from 15-25% when the government does not intervene.
What are some big cases that have been a result of THE CalifOrnia False Claims Act?
Bank of America: In 1998, Bank of America paid $187.5 million to settle allegations that the company violated the California False Claims Act by keeping unclaimed bond proceeds from the state of California, as well as more than 1,000 cities, counties, and state public agencies.
Tenet Healthcare: In June 2006, Tenet Healthcare agreed to pay $900 million after allegedly violating the CFCA by manipulating outlier payments to Medicare, in addition to kickbacks, upcoding, and bill padding.
BP Energy Company: In January 2018, after violating the CFCA by allegedly providing false and misleading information to conceal overpricing while overcharging California cities, counties, universities, and government agencies on natural gas purchases over a decade, BP Energy agree to pay $102 million.
What is the Text of the California False Claims Act?
(a) Any person who commits any of the following enumerated acts in this subdivision shall have violated this article and shall be liable to the state or to the political subdivision for three times the amount of damages that the state or political subdivision sustains because of the act of that person. A person who commits any of the following enumerated acts shall also be liable to the state or to the political subdivision for the costs of a civil action brought to recover any of those penalties or damages, and shall be liable to the state or political subdivision for a civil penalty of not less than five thousand five hundred dollars ($5,500) and not more than eleven thousand dollars ($11,000) for each violation, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101–410 Section 5, 104 Stat. 891, note following 28 U.S.C. Section 2461.
(1) Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval.
(2) Knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim.
(3) Conspires to commit a violation of this subdivision.
(4) Has possession, custody, or control of public property or money used or to be used by the state or by any political subdivision and knowingly delivers or causes to be delivered less than all of that property.
(5) Is authorized to make or deliver a document certifying receipt of property used or to be used by the state or by any political subdivision and knowingly makes or delivers a receipt that falsely represents the property used or to be used.
(6) Knowingly buys, or receives as a pledge of an obligation or debt, public property from any person who lawfully may not sell or pledge the property.
(7) Knowingly makes, uses, or causes to be made or used a false record or statement material to an obligation to pay or transmit money or property to the state or to any political subdivision, or knowingly conceals or knowingly and improperly avoids, or decreases an obligation to pay or transmit money or property to the state or to any political subdivision.
(8) Is a beneficiary of an inadvertent submission of a false claim, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the state or the political subdivision within a reasonable time after discovery of the false claim.
(b) Notwithstanding subdivision (a), the court may assess not less than two times and not more than three times the amount of damages which the state or the political subdivision sustains because of the act of the person described in that subdivision, and no civil penalty, if the court finds all of the following:
(1) The person committing the violation furnished officials of the state or of the political subdivision responsible for investigating false claims violations with all information known to that person about the violation within 30 days after the date on which the person first obtained the information.
(2) The person fully cooperated with any investigation by the state or a political subdivision of the violation.
(3) At the time the person furnished the state or the political subdivision with information about the violation, no criminal prosecution, civil action, or administrative action had commenced with respect to the violation, and the person did not have actual knowledge of the existence of an investigation into the violation.
(c) Liability under this section shall be joint and several for any act committed by two or more persons.
(d) This section does not apply to any controversy involving an amount of less than five hundred dollars ($500) in value. For purposes of this subdivision, “controversy” means any one or more false claims submitted by the same person in violation of this article.
(e) This section does not apply to claims, records, or statements made pursuant to Division 3.6 (commencing with Section 810) of Title 1 or to workers’ compensation claims filed pursuant to Division 4 (commencing with Section 3200) of the Labor Code.
(f) This section does not apply to claims, records, or statements made under the Revenue and Taxation Code.
(g) This section does not apply to claims, records, or statements for the assets of a person that have been transferred to the Commissioner of Insurance, pursuant to Section 1011 of the Insurance Code.
(Amended by Stats. 2017, Ch. 121, Sec. 1. (SB 387) Effective January 1, 2018.)
(a) Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of that employee’s, contractor’s, or agent’s employment because of lawful acts done by the employee, contractor, agent, or associated others in furtherance of an action under this section or other efforts to stop one or more violations of this article.
(b) Relief under this section shall include reinstatement with the same seniority status that the employee, contractor, or agent would have had but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, and, where appropriate, punitive damages. The defendant shall also be required to pay litigation costs and reasonable attorney’s fees. An action under this section may be brought in the appropriate superior court of the state.
(c) A civil action under this section shall not be brought more than three years after the date when the retaliation occurred.
(Amended by Stats. 2021, Ch. 50, Sec. 113. (AB 378) Effective January 1, 2022.)