California was one of the first states to pass a False Claim Act, enacting its law in 1987. Its law is also one of the most sweeping FCAs in the country, permitting qui tam lawsuits to expose fraud whenever the state or a political subdivision has provided a portion of the purloined funds. So, if a textbook company scammed a school district or a township paid too much to an insider for a sewer main, a private citizen can sue on behalf of the government. Moreover, California has a high bounty level, allowing relators, those whistleblowers who file the initial lawsuit, to take home as much as 30 percent of the recovered funds.
“Now, wait,” you might think. “If the state is trying to recover from losses due to waste, fraud and abuse, how can the rewards be so high? Isn’t that wasteful, too?” Not really, because the CAFCA makes the fraudsters liable for treble damages, meaning they have to repay three times what they pilfered. In other words, the fines pay for the rewards, and the government still (potentially) gets back more than it lost.
So, is California’s law having the desired effect, i.e., incentivizing lawsuits aimed at recovering funds lost from fraud? According to a recent article on jdsupra.com, the answer is yes. Citing data obtained from the State Attorney General’s Office, the article claims that California has raked in more than $2 billion from cases prosecuted under its FCA since 2001, as private citizens filed 345 CAFCA actions. CAFCA also takes the pressure off the government to police its contracts. With private citizen whistleblowers doing the heavy lifting, the CA Attorney General only had to file three FCA cases since 2005.
The exact total of funds recovered is $2,016,366,278.61. How much of that went to relators is unclear, but the law allows for up to 30 percent.
The government certainly knows it’s in a constant battle against fraud. That’s why a portion of CAFCA recoveries goes to fund the state’s Medicaid Fraud Control Unit. Across the country, Medicaid is the state program most vulnerable to fraud. It’s also one of the most heinous rip-offs, since its victims are the poorest in society who rely on the program for life-saving healthcare. Since 2001, CAFCA has funded the MFCU to the tune of $196,328,046.85.
That gives California relators something else to feel good about. Not only have they blown the whistle on the fraud they knew about and received ample compensation for their troubles, but they’ve also directed funds to the state’s Medicaid watchdogs to protect that vital program.
If you live in California and have knowledge of fraud against a government entity, we encourage you to come forward. Speak to a whistleblower attorney who can evaluate your case and tell you how to qualify as a CAFCA relator. If you reside outside California, you can inquire about the FCA in your state. An experienced whistleblower attorney can explain the type of fraud your state’s FCA covers and whether you could file an action under the federal statute. We all are interested in stamping out fraud for the public good, and a relator’s reward can make your time and effort worthwhile. Our business litigation lawyers can help protect your privacy and work to maximize your cash award.