The Federal False Claims Act and NJ False Claim Act
Fraud against the government is an on-going problem that costs taxpayers billions of dollars every year. Whether it is a health care provider submitting false claims to Medicaid, a contractor overbilling for a government project, or a company misrepresenting its products or services for sale to the state, those committing fraud cheat the government and the public out of money that could be used for vital programs and services.
Fortunately, there is a law in New Jersey that allows whistleblowers to expose fraud and hold those committing fraud accountable. It is called the New Jersey False Claims Act, N.J. Stat. § 2A:32C-1, et seq. and it is modeled after the federal law, the False Claims Act, that has been used to recover billions of dollars from those who defraud the federal government.
What is the New Jersey False Claims Act (NJFCA) and how does it work?
The NJFCA is a law that was enacted on January 13, 2008 to combat fraud against the New Jersey government and its agencies. The NJFCA imposes civil liability on any person who knowingly presents or causes to be presented a false or fraudulent claim for payment or approval to the state, or to any contractor, grantee, or other recipient of state funds. The NJFCA also prohibits:
Conspiring to commit a violation of the NJFCA,
Making or using a false record or statement to support a false or fraudulent claim,
Retaliating against whistleblowers who report or oppose fraud.
The NJFCA allows private citizens to file lawsuits on behalf of the state of NJ against those who have defrauded the state. These lawsuits are called qui tam actions, which means "he who sues for the king as well as for himself." Under § 2A:32C-7, distribution of proceeds, the persons who sue can receive a percentage of the recovery obtained by the state, depending on whether the state intervenes in the case or not, and the Court may reduce the amount based on what it determines is the whistleblower’s contribution and involvement throughout the case.
The NJFCA authorizes the Attorney General of New Jersey to investigate and prosecute violations of the NJFCA, either by intervening in qui tam actions or by initiating cases on its own. The Attorney General can seek injunctions or restraining orders to prevent further fraud and can issue subpoenas and compel testimony.
What is the Federal Claims Act (FCA) and how does it work?
The False Claims Act is a federal law that imposes liability and penalties on those who defraud the federal government or its programs. The False Claims Act is one of the oldest laws in the country. The False Claims Act (FCA), 31 U.S.C. §§ 3729 - 3733 was enacted in 1863 by a Congress concerned that suppliers of goods to the Union Army during the Civil War were defrauding the Army. It was the government's response to widespread supplier and contractor fraud during the Civil War, and was drafted to prevent and punish frauds upon the US Government and the Union Army. The original statute was enacted during the Civil War on March 2, 1863 and has been amended several times since then. The FCA also allows qui tam actions by whistleblowers and authorizes the Department of Justice to investigate and prosecute fraud.
The FCA provided that any person who knowingly submitted false claims to the government was liable for double the government’s damages plus a penalty of $2,000 for each false claim. Since its original enactment, the FCA has been amended several times. In 1986, there were significant changes to the FCA, including increasing damages from double damages to treble damages and raising the penalties from $2,000 to a range of $5,000 to $10,000. The FCA has been amended three times since the 1986 changes. It has been interpreted on hundreds of occasions by federal courts which sometimes issue conflicting interpretations of the statute.
President Abraham Lincoln strongly advocated for passage of the False Claims Act, and the False Claims Act is often referred to as the "Lincoln Law". In addition to allowing the United States to pursue perpetrators of fraud on its own, the False Claims Act allows private citizens to file suits on behalf of the government, referred to as “qui tam” suits, against those who have defrauded the government. A reward was offered in what is called the qui tam provision, which permits citizens to sue on behalf of the government and be paid a percentage of the recovery. Private citizens who successfully bring qui tam actions may receive a portion of the government’s recovery. The qui tam provisions of the False Claims Act (FCA) were motived by the recognition that the US government lacks the information and resources to pursue all those who submit false and fraudulent claims to the government.
How is the NJFCA different from the FCA?
There are numerous key differences between the state statute and the federal statute. Some differences important to note are:
Application:
The NJFCA applies to false claims made to the state, or to any contractor, grantee, or other recipient of NJ state funds.
The FCA applies to false claims made to the federal government or its contractors or grantees.
Definitions relative to a claim:
The NJFCA defines a claim as: a request or demand, under a contract or otherwise, for money, property, or services made to an officer, employee, agent, contractor, grantee, or other recipient of state funds. Specifically, it states, in § 2A:32C-2, “Claim” means a request or demand, under a contract or otherwise, for money, property, or services that is made to any employee, officer, or agent of the State, or to any contractor, grantee, or other recipient if the State provides any portion of the money, property, or services requested or demanded, or if the State will reimburse the contractor, grantee, or other recipient for any portion of the money, property, or services requested or demanded.” The current NJFCA states the term does not include claims, records, or statements made in connection with State tax laws.
The FCA defines a claim as "a request or demand, whether under a contract or otherwise, for money or property" that is presented to an officer, employee, agent, contractor, grantee, or other recipient of federal funds.
Liability
The NJFCA provides for joint and several liability for all violators of the NJFCA. Joint and several liability makes all parties in a lawsuit responsible for damages up to the entire amount awarded. That is, if one party is unable to pay, the others named must pay more than their share. What this means is that each individual defendant may be held responsible for paying the full amount of damages and penalties owed to the state.
The FCA does not explicitly provide for joint and several liability, although some courts have applied it in certain cases. The Federal statute begins, in § 3729(a), by explaining the conduct that creates FCA liability. In very general terms, §§ 3729(a)(1)(A) and (B) set forth FCA liability for any person who knowingly submits a false claim to the government or causes another to submit a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government.
Whistleblower statutes are powerful tools for fighting fraud against the state and federal government and their programs. The NJFCA although similar to the FCA in many respects, has some unique features that make it more expansive and effective in some cases.
Additionally, New Jersey’s general employee whistleblower statute, the Conscientious Employee Protection Act, has broad definitions of the essential required elements for a prima facie case of illegal retaliation against employee whistleblowers.
What You Can Do
I am an aggressive and compassionate employment law attorney who is experienced in successfully representing persons who were whistleblower employees and was successful in recovering multiple six figure settlement moneys for them.
Do not sit on your rights, or you may lose the right to file your claim.
I am successful in bringing whistleblower lawsuits against governmental entities and private employers and recovering money for whistleblower workers. If you have questions about whistleblowing and/or are being subjected to unlawful workplace retaliation for whistleblowing, you should contact this office immediately for a free consultation. I accept whistleblower and discrimination cases from all over New Jersey.
Hope A. Lang, Attorney at Law represents workers throughout the entire state, including Hackensack, Jersey City, Newark, Irvington, Orange, East Orange, Trenton, Paterson, Montclair, Elizabeth, North Brunswick, Cherry Hill, Vineland, Union, Plainfield, Hamilton Township, Lakewood, Edison, Parsippany-Troy Hills, Franklin, Lakewood, and in every NJ County, including Bergen, Hudson, Middlesex, Essex, Monmouth, Somerset, Ocean, Union, Camden, Passaic, Morris, Gloucester, Atlantic, Burlington, Camden Counties.