California

Understanding the California False Claims Act

The California False Claims Act is a civil statute, like its federal counterpart. This means that the law can only assess financial penalties against offenders. However, like the federal False Claims Act, the California state version offers powerful whistleblower protections as well as extensive fines in instances of fraud and theft.

Under the California False Claims Act, the following actions are prohibited:

1. To knowingly present or cause to be presented a false or fraudulent claim for payment or approval
2. To knowingly make, use, or cause to be made or used a false record or statement material to a false or fraudulent claim
3. To conspire to commit a violation of the California State False Claims Act
4. To knowingly withhold full or partial repayment of state or municipal funds
5. To knowingly make false records or statements material in order to avoid payment or repayment of funds
6. To knowingly conceal or decrease an obligation to pay or transmit money to the state of California, or to any Californian political subdivision
7. To profit off of an inadvertent submission of a state false claim, and to fail to report it and make amends once the mistake has been discovered

It is important to understand that under the California False Claims Act, to act “knowingly,” or with disregard or deliberate ignorance with regards to fraud is enough to induce liability under the California False Claims Act. Proof of specific intent to defraud a government entity is not required.

California False Claims Act Penalties

Violation of the California False Claims Act carries a civil penalty of at least $5,500 for each act of fraud, as well as up to three times damages sustained by the state.

Whistleblowers in California may be eligible to recover up to 15 to 25% of the proceeds in the event that the government intervenes in their qui tam case. If the government declines to intervene and the case is still successful, the California whistleblower may be entitled to a larger share of the recovered funds. In this case, a whistleblower may receive between 25 to 30% of the total recoupment. However, in cases where the whistleblower planned or instigated the fraud, their share may be substantially reduced.

What Kinds of Fraud Are Reportable under the California False Claims Act?

Often, other state False Claims Acts only cover cases of healthcare fraud. However, in California, the state False Claims Act extends much further. Covered areas under the California False Claims Act include:

• Healthcare fraud, especially in cases of California Medicare or Medicaid funds
• Banking fraud with the state of California
• Environmental fraud, such as by mining companies or others who conceal natural resources to avoid paying state or local royalties
• State government contractor fraud, such as construction fraud
• State grant programs
• Educational-related fraud of California state funds

Importantly, political subdivisions are also considered to be meaningful government entities under the California False Claims Act. This means that funds misappropriated from local governments, municipalities, counties, and school districts all are covered under the California False Claims Act. Whistleblowers may bring qui tam cases in California on behalf of not only the state government, but also their local school district or other smaller political subdivision. The rate of damages and liability assessed even at these more discrete levels remains the same under the state law.

Other California Anti-Fraud Laws

The California False Claims Act does not apply to cases of workers’ compensation fraud, which would instead fall under the jurisdiction of the California Insurance Fraud Prevention Act, which also has a qui tam provision. The California False Claims Act is also excluded from reporting tax fraud or state tax evasion. The California Department of Tax and Fee Administration (CDTFA) is the state resource for reporting suspected tax fraud as well as illegitimate tax collection schemes.

California has also passed a separate Medicaid Anti-Fraud Statute. This law specifically targets fraud and abuse of Medi-Cal, California’s Medicaid program. California’s Medi-Cal anti-fraud laws are criminal statutes that carry the possibility of up to five years imprisonment in the event of violation, as well as possible civil penalties of up to three times the amount fraudulently claimed for each item or service. Second violations are considered felonies under California Medi-Cal fraud law.

Whistleblower Rewards and Protections Under the California False Claims Act

The California False Claims Act is a qui tam law, meaning that a whistleblower may sue on behalf of the government. The whistleblower does not need to be harmed by the fraud or scheme in order to be involved in the case. They only need to be able to provide meaningful information leading to stolen funds’ recovery.

If the California whistleblower provides useful information and the case is successful, they may be eligible to receive anywhere from 15 to 30% of the recovered funds. Additionally, whistleblowers in California are protected against harassment, discrimination, and retaliation from their employers. Whistleblowers are covered under the California False Claims Act, making it imperative that they file their complaint as soon as possible through a law firm—before their employer has time to act against them.

California whistleblowers who have been retaliated against for their protected disclosure may be able to receive:

• Reinstatement with the same seniority level, whenever possible
• Up to double back pay, with interest for time lost
• Compensation for special damages
• Compensation for punitive damages, litigation costs and reasonable attorneys’ fees

Reporting Fraud under the California False Claims Act

California anti-fraud laws are powerful legal tools to protect taxpayer funds, reduce waste, and reward whistleblowers. By coming forward, you may qualify for a reward and be able to reduce your own risk in the event of employer harassment. You can also help protect California’s irreplaceable natural resources, hold greedy contractors accountable, and protect vulnerable Californians who rely on government-funded services.

The more powerful the law, the more complicated the legal situation surrounding it, however. The California Attorney General’s Office advises that California residents who wish to file a claim under the California False Claims Act consult with a qualified qui tam law firm, as well as contact the Public Inquiry Unit in order to report fraud.

The law firm of Tycko & Zavareei LLP can help you follow through on your California whistleblower claim in order to receive the fullest protections and payout possible. Contact our law firm today to find out how we can help California residents with knowledge of state, local, or federal fraud.