Massachusetts State False Claims Act

Tony Munter summarizes the Massachusetts False Claims Act below and compares it to Federal law. He is not licensed  in the jurisdiction of Massachusetts.

The Commonwealth of Massachusetts has one of the strongest and most expansive state False Claims Acts in the country. It is also the site of many important federal false claims cases. The Massachusetts law was first enacted in 2000, and has been amended and strengthened since then to bring key provisions into conformity with the amended federal law. For a review of other state’s False Claims Act laws, visit a state-by-state guide.

False Claims Act in Massachusetts

Under the Massachusetts False Claims Act the defendant is liable for any kind of false claim if the Commonwealth of Massachusetts, or its “political subdivisions,” provides any portion of the funds. The term “political subdivision” includes any city, town, county or other governmental entity authorized or created by state law, including public corporations and authorities.

Massachusetts Health Care and Financial False Claims

The Commonwealth of Massachusetts has been involved in numerous cases involving health care fraud and financial fraud and the Commonwealth has been able to join with the federal government in many successful cases.  For example, the Attorney General’s Office cited the Commonwealth’s ability to collect $33 million from Morgan Stanley through False Claims litigation regarding subprime mortgage loan securitization.

Other Kinds of False Claims

However, the Commonwealth also pursues less common kinds of false claims cases with some success. Massachusetts recovered $40 million in 2011’s fiscal year through the State False Claims Act in cases which did not involve Medicaid claims.

The $40 million collected by the Commonwealth in Fiscal 2011 actually exceeded the Attorney General’s budget for that year. Large collections shared by federal and state governments should be an expected outcome of state False Claims Acts. These laws give states the opportunity to share in claims filed on a nationwide basis.

False Claims Act and Environmental Law

Whistleblowers in Massachusetts have also attempted to apply False Claims Act laws to violations of environmental law. For example, the State Attorney General’s Office pursued claims involving violations of municipal contracts with an incinerator company. Wheelabrotar was accused of violating the False Claims Act, because its contracts to handle three incinerators with municipalities included the requirement to follow environmental law. Ultimately, the company settled the case for $7.5 Million while denying all the allegations in the complaint. The work the whistleblowers and their attorneys did to provide information created not only a collection for Massachusetts, but also increased enforcement of environmental laws as part of this settlement. The state also pursued Waste Haulers on solid waste and False Claims Charges. It is clear that Massachusetts believes that the False Claims Act can be used to enforce such regulations.

Indeed, using False Claims Act theories to enforce environmental requirements is new and Massachusetts appears to be on the cutting edge of such litigation. The fact that so many cities and towns have contracts for work, which usually require adhering to specific environmental laws, may make this a growth area for False Claims Act cases. However, for a claim such as this to work the state must have a law that allows for suits on behalf of “political subdivisions,” as is the case in Massachusetts.

Implications For Federal False Claims and Environmental Violations

Amendments to the federal law which expand the definition of such terms as “claim” and “obligation” also point to the possibility of suing for environmental violations under the Federal False Claims Act.

Provisions to reward the whistleblower under the Massachusetts Statute are the same as those under federal law, which allow for a reward ranging from 15 percent to 30 percent of the government’s recovery. The Massachusetts law provides for treble (or triple) damages and civil fines, much like the federal law. There are also anti-retaliation provisions in the Massachusetts law, much like those in federal law.

Many commentators believe the original push to create a law in Massachusetts came as a result of local concern regarding overspending on the “big dig” project. It’s similar to the popular support given to the modern version of the Federal False Claims Act enacted as a result of defense contractor scandals in the mid-1980s. Whatever the reason for enacting these laws it is clear that in Massachusetts they can and will be used to fight fraud in many industries on behalf of federal, state and even local governments.

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