House Judiciary approves state False Claims Act

CHARLESTON -- West Virginia’s House Judiciary Committee on Thursday approved the state’s version of the False Claims Act with a 15-9 vote.

House Bill 4001 would establish a law similar to the federal False Claims Act and establish payment provisions for whistleblowers and their attorneys who bring successful FCA lawsuits. FCA lawsuits allege a company has submitted false claims for reimbursement to state and federal programs, such as Medicaid.

Twenty-nine states and the District of Columbia have state versions of the False Claims Act, which allows them to recover a greater percentage of multi-jurisdiction FCA settlements and judgments because they have False Claims Act laws that are as stringent as the federal version.

“This is a fantastic bill that is going to crack down on taxpayer fraud,” said Del. Stephen Skinner, a Jefferson County personal injury lawyer who was one of the bill’s sponsors.

Two amendments were shot down before the Democrat-led committee voted on the bill. One would’ve capped attorneys fees and whistleblower awards in qui tam, or whistleblower, lawsuits.

Republican John Shott, of Mercer County, made known his concerns with the bill before the vote, but added that he did not expect his words to change anyone’s mind.

“I’d like to express my dismay that at a time with many known problems, including our water quality, including an attack on one of our leading industries… we choose to focus on something that may or may not be a problem,” Shott said.

Shott said there is no way to know a cost-benefit ratio and that the bill will only serve to perpetuate the feeling that West Virginia’s legal climate is a bad one for businesses. The state has been on the American Tort Reform Association’s list of Judicial Hellholes every year since ATRA began its report in 2002.

“How do we fix that?” Shott said. “The first bill we take up in this committee is a bill that can only reinforce that.”

Shott was also bothered by certain language in the bill that holds a company liable for “deliberate ignorance.” He wondered if an employee accidentally moves a decimal point to the wrong place on a claim for reimbursement from the government, if a company has committed deliberate ignorance by not reviewing the claim.

“I don’t think it is but a competent plaintiff lawyer could argue that it is a deliberate act,” Shott said.

“Would they win? I don’t know, but it creates enough of a risk, as a defendant whose business may be in jeopardy because of a bad outcome, I may settle this case.

“What we’ve done is what should be called the ‘Qui Tam Lottery Act.’”

Previous testimony from the pro-False Claims Act group Taxpayers Against Fraud argued the bill will help root our fraud and benefit the taxpayers of West Virginia. TAF is funded by whistleblowers and whistleblower attorneys

Business groups testified in January against the bill. West Virginia Chamber of Commerce general counsel Brenda Nichols Harper said the legislation “unfairly stacks the deck against West Virginia’s own businesses.”

Under West Virginia’s proposed FCA, whistleblowers would file complaints under seal and notify the Attorney General’s Office, which would then decide if it wanted to join in the suit.

Also, the State would receive a higher percentage of the recoveries from national whistleblower suits because it would have a law on the books that is equally as strong as the federal FCA.

Of the nine sponsors of the bill, all are Democrats and four are personal injury lawyers, including Judiciary Chair Tim Manchin.

Manchin says the bill, once fine tuned, has the potential to return to taxpayers up to $90 million a year. He says those funds could be used for road repair, in-home care for seniors and assistance for volunteer firefighters.

Fiscal Year 2013 brought in the most recovery from FCA claims in the act’s history. The federal government accounted for $3.8 billion in settlements and judgments, though some judgments are being appealed.