Does Massachusetts Have a False Claims Act?
Yes, Massachusetts does have its own False Claims Act. This legislation, officially known as the Massachusetts False Claims Act (MFCA), is similar to the federal False Claims Act (FCA). It encourages whistleblowers to report fraudulent activities or claims against the state government and provides legal protection and potential financial rewards for those who do.
Does the Massachusetts False Claims Act Have a Qui Tam Provision?
Mass. Gen. Laws ch. 12 § 5C provides that a relator or private citizen has the ability to bring a civil action for a violation of the Massachusetts False Claims Act on behalf of themselves and the commonwealth or another political subdivision.
The qui tam provision allows private citizens, often employees of the organization in question, to file a lawsuit on behalf of the state government against entities that are allegedly defrauding the government. If the lawsuit is successful, these whistleblowers, also known as qui tam relators, may receive a portion of the recovered funds as a reward for their efforts. This provision plays a critical role in identifying and penalizing fraudulent activities against the government.
Does the Massachusetts False Claims Act Have an Anti-Retaliation Provision?
Yes, the Massachusetts False Claims Act (MFCA) does include an anti-retaliation provision. This segment of the legislation provides robust protection to whistleblowers against retaliation from their employers.
If an employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee in furtherance of an action under the MFCA, they are entitled to relief measures.
These may include reinstatement with the same seniority status, 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, among other potential remedies.
HOW IS THE MASSACHUSETTS FALSE CLAIMS ACT DIFFERENT FROM THE FEDERAL FALSE CLAIMS ACT?
The Massachusetts and Federal False Claims Acts differ significantly when it comes to the Qui Tam action’s initial sealing period. While under Federal law, Qui Tam complaints come with a 60-day confidentiality period, Massachusetts legislation extends this to 120 days. This longer time frame provides additional protection and investigation time before the complaint is made public.
Furthermore, the Massachusetts FCA offers a broader scope for recovery. It permits reparations for fraudulent claims that financially impact not only the Commonwealth but also extends to any of its political subdivisions, thereby encompassing counties, cities, and school districts.
WHAT ARE THE FINANCIAL REWARDS FOR WHISTLEBLOWERS UNDER THE MASSACHUSETTS FALSE CLAIMS ACT?
The Massachusetts False Claims Act offers substantial financial rewards for whistleblowers, known legally as ‘relators’, to incentivize the reporting of fraudulent actions against the government.
If the government decides to intervene and takes over the lawsuit, the whistleblower is entitled to receive between 15% and 25% of the proceeds of the action or settlement of the claim. If the government doesn’t intervene and the whistleblower continues the lawsuit on their own, they can receive a larger share, ranging from 25% to 30%.
In both scenarios, the whistleblower can also recover reasonable expenses, including attorney’s fees and costs, incurred in bringing the action.
WHAT ARE SOME BIG CASES THAT HAVE BEEN A RESULT OF THE MASSACHUSETTS FALSE CLAIMS ACT?
Merck: In December 2011, Merck & Co. agreed to pay $24 million to settle Massachusetts’ Medicaid fraud claims.
Massachusetts Eye and Ear: In 2023, Massachusetts Eye & Ear agreed to pay Over $5.7 Million to Resolve False Claims Act Allegations
South Bay Mental Health Center, Inc: In 2021, South Bay Mental Health Center, Inc. agreed pay $25 million for allegedly causing fraudulent claims to be submitted to the state’s Medicaid Program, known as MassHealth.
What is the text of the Massachusetts False Claims Act?
Section 5B. (a) Any person who: (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 subsection; (4) knowingly presents, or causes to be presented, a claim that-includes items or services resulting from a violation of section 1128B of the Social Security Act, 42 U.S.C. 1320a–7b, or section 41 of chapter 118E; (5) has possession, custody or control of property or money used, or to be used, by the commonwealth or a political subdivision thereof and knowingly delivers, or causes to be delivered, to the commonwealth or a political subdivision thereof less than all of that property or money; (6) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the commonwealth or a political subdivision thereof and, with the intent of defrauding the commonwealth or a political subdivision thereof, makes or delivers the receipt without completely knowing that the information on the receipt is true; (7) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the commonwealth or a political subdivision thereof, who may not lawfully sell or pledge such property; (8) enters into an agreement, contract or understanding with an official of the commonwealth or a political subdivision thereof knowing the information contained therein is false; (9) knowingly makes, uses or causes to be made or used a false record or statement material to an obligation to pay or to transmit money or property to the commonwealth or a political subdivision thereof, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the commonwealth or a political subdivision thereof; or (10) is a beneficiary of an inadvertent submission of a false claim to the commonwealth or a political subdivision thereof, or is a beneficiary of an overpayment from the commonwealth or a political subdivision thereof, and who subsequently discovers the falsity of the claim or the receipt of overpayment and fails to disclose the false claim or receipt of overpayment to the commonwealth or a political subdivision by the later of: (i) the date which is 60 days after the date on which the false claim or receipt of overpayment was identified; or (ii) the date any corresponding cost report is due, if applicable, shall be liable to the commonwealth or political subdivision for a civil penalty of not less than $5,500 and not more than $11,000 per violation, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101–410 section 5, 104 Stat. 891, note following 28 U.S.C. section 2461, plus 3 times the amount of damages, including consequential damages, that the commonwealth or a political subdivision thereof sustains because of such violation. A person violating sections 5B to 5O, inclusive, shall also be liable to the commonwealth or a political subdivision thereof for the expenses of the civil action brought to recover any such penalty or damages including, without limitation, reasonable attorneys’ fees, reasonable expert fees and the costs of investigation, as set forth below. Costs recoverable under said sections 5B to 5O, inclusive, shall also include the costs of any review or investigation undertaken by the attorney general, or by the state auditor or the inspector general in cooperation with the attorney general.
(b) Notwithstanding subsection (a), if the court finds that: (1) the person committing the violation of subsection (a) furnished an official of the office of the attorney general responsible for investigating a false claims law violation with all the information known to such person about the violation within 30 days after the date on which the person first obtained the information; (2) such person fully cooperated with any commonwealth investigation of such violation; and (3) at the time such person furnished the commonwealth with the information about the violation, no civil action or administrative action had commenced under sections 5B to 5O, inclusive, or no criminal prosecution had commenced with respect to such violation, and such person did not have actual knowledge of the existence of an investigation into such violation, the court may assess not less than 2 times the amount of damages, including consequential damages, that the commonwealth or a political subdivision thereof sustains because of the act of that person.
(c) A corporation, partnership or other person shall be liable to the commonwealth under sections 5B to 5O, inclusive, for the acts of its agent where the agent acted with apparent authority, regardless of whether the agent acted, in whole or in part, to benefit the principal and regardless of whether the principal adopted or ratified the agent’s claims, representation, statement or other action or conduct.
(d) Sections 5B to 5O, inclusive, shall not apply to claims, records or statements made or presented to establish, limit, reduce or evade liability for the payment of tax to the commonwealth or other governmental authority.
(e) A person who has engaged in conduct described in subsection (a) prior to payment shall only be entitled to payment from the commonwealth of the actual amount due less the excess amount falsely or fraudulently claimed.
Section 5C. (1) The attorney general shall investigate violations under sections 5B to 5O, inclusive, involving state funds or funds from any political subdivision. If the attorney general finds that a person has violated or is violating said sections 5B to 5O, inclusive, the attorney general may bring a civil action in superior court against the person.
(2) An individual, hereafter referred to as relator, may bring a civil action in superior court for a violation of said sections 5B to 5O, inclusive, on behalf of the relator and the commonwealth or any political subdivision thereof. The action shall be brought in the name of the commonwealth or the political subdivision thereof. The action may be dismissed only if the attorney general gives written reasons for consenting to the dismissal and the court approves the dismissal. Notwithstanding any general or special law to the contrary, it shall not be a cause for dismissal or a basis for a defense that the relator could have brought another action based on the same or similar facts under any other law or administrative proceeding.
(3) When a relator brings an action under said sections 5B to 5O, inclusive, a copy of the complaint and written disclosure of substantially all material evidence and information the relator possesses shall be served on the attorney general pursuant to Rule 4(d) (3) of the Massachusetts Rules of Civil Procedure. The complaint shall be filed under seal and shall remain so for 120 days after service upon the attorney general. Notwithstanding any other general or special law or procedural rule to the contrary, service on the defendant shall not be required until the period provided in paragraph (5). The attorney general may, for good cause shown, ask the court for extensions during which the complaint shall remain under seal. Any such motions may be supported by affidavits or other submissions under seal. The attorney general may elect to intervene and proceed with the action on behalf of the commonwealth or political subdivision within the 120–day period or during any extension, after the attorney general receives both the complaint and the material evidence and information. Any information or documents furnished by the relator to the attorney general in connection with an action or investigation under said sections 5B to 5O, inclusive, shall be exempt from disclosure under section 10 of chapter 66.
(4) Before the expiration of the initial 120 day period or any extensions obtained under paragraph (3), the attorney general shall; (i) assume control of the action, in which case the action shall be conducted by the attorney general; or (ii) notify the court that he declines to take over the action, in which case the relator shall have the right to conduct the action.
(5) If the attorney general decides to proceed with the action, the complaint shall be unsealed and served promptly thereafter. The defendant shall not be required to respond to any complaint filed under said sections 5B to 5O, inclusive, until 20 days after the complaint is unsealed and served upon the defendant pursuant to rule 4 of the Massachusetts rules of civil procedure.
(6) When a relator brings an action pursuant to this section, no person other than the attorney general may intervene or bring a related action based on the facts underlying the pending action.
(7) With respect to any federal, state or local government that is named as a co-plaintiff with the commonwealth in an action brought pursuant to sections 5B to 5O, inclusive, a seal on the action ordered by the court under paragraph (3) shall not preclude the commonwealth or the relator from serving the complaint, any other pleadings or the written disclosure of substantially all material evidence and information possessed by the relator on the law enforcement authorities that are authorized under the law of that federal, state or local government to investigate and prosecute such actions on behalf of such governments, except that such seal shall apply to the law enforcement authorities so served to the same extent as the seal applies to other parties in the action.
Section 5J. (1) No employer shall make, adopt or enforce any rule, regulation or policy preventing an employee, contractor or agent from disclosing information to a government or law enforcement agency or from acting to further efforts to stop 1 or more violations of sections 5B to 5O, inclusive. No employer shall require as a condition of employment, during the term of employment or at the termination of employment that any employee, contractor or agent agree to, accept or sign an agreement that limits or denies the rights of such employee, contractor or agent to bring an action or provide information to a government or law enforcement agency pursuant to said sections 5B to 5O, inclusive. Any such agreement shall be void.
(2) An 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 employment because of lawful acts done by the employee, contractor, agent or a person associated with the employee, contractor or agent in furtherance of an action under sections 5B to 5O, inclusive, or other efforts to stop a violation of said sections 5B to 5O, inclusive.
(3) Notwithstanding any general or special law to the contrary, relief under paragraph (2) shall include reinstatement with the same seniority status the employee, contractor or agent would have had but for the discrimination, twice the amount of back pay, interest on the back pay and compensation for any special damages sustained as a result of the discrimination. In addition, the defendant shall be required to pay litigation costs and reasonable attorneys’ fees. An employee, contractor or agent may bring an action in the appropriate superior court, the superior court of the county of Suffolk or any other appropriate court for the relief provided in this section.
(4) A civil action under this section may not be brought more than 3 years after the date when the violation of this section occurred.