Virginia State False Claims Act

Tony Munter provides a brief overview of the False Claims Act Virginia law. He is not a Virginia False Claims Act lawyer. He is not licensed to practice in the jurisdiction of Virginia.

The Virginia Fraud against Taxpayers Act became law in 2002 and is one of the strongest such laws among all of the states. Under the Virginia Fraud Against Taxpayers Act, the defendant is liable for any false claim if the Commonwealth has provided any portion of the money.

Furthermore the “Commonwealth” is defined to include any agency of state government and any political subdivision. So this law allows for any kind of fraud claim to be brought and it allows for individuals to sue on behalf of the Commonwealth as well as the cities and towns within Virginia. Virginia’s law therefore belongs in the strongest class of State False Claims Acts, but it does have a few quirks.

Virginia State False Claims Provisions

For example, Virginia has an unusual provision explicitly setting forth requirements for an employee of Virginia to be a plaintiff under the law. Such restrictions do not exist in the text of the Federal False Claims Act. So at first glance the Virginia law appears to be more restrictive on the rights’ of relators than the federal law. The statutory language of the federal law does not forbid government employees from filing cases or collecting relators. The only federal statutory restriction is to prevent members of the military from filing a case reporting on events related to their military service. So on its face the Virginia statute would appear to be more restrictive than the federal law. However, some federal court decisions have done in several jurisdictions what Congress explicitly declined to do. They have imposed some of these same restrictions on government employee plaintiffs. This is an area of law in which federal courts are not all in agreement and likely will remain an area of confusion for some time. The bottom line is that while on its face the Virginia law is more restrictive on government employees the rules regarding Virginia’s state law are spelled out while federal courts have made the rules of the federal act more difficult to determine.

Of course, nothing at all prevents an employee of the Commonwealth of Virginia from filing a case under the Federal False Claims Act, nor for that matter is a federal government employee prevented from filing a case under Virginia’s law.

The rest of the Virginia law mostly comports with the Federal False Claims Act. It provides substantial rewards to the whistleblower allowing for a collection of between 15 percent-30 percent of the amount recovered by the government. Virginia’s law, like the federal government’s law, imposes treble damages and civil penalties on the defendant found liable under the Act.

VA False Claims Cases

The Commonwealth has enjoyed some success enforcing the False Claims Act and collecting money especially — as is the case in so many states — in the area of health care. Like many states with a False Claims Act, Virginia has been able to collect its share of Medicaid fraud claims when there is a nationwide settlement of such claims under a case filed through the federal law. For example, here is one collection the Attorney General of Virginia was happy to announce:

Attorney General Cuccinelli announces settlement with Texas-based pharmaceutical manufacturer for illegal marketing of Xenaderm
~Virginia’s Medicaid program to receive more than $223,000 in settlement~

It defies understanding why a state would forego a false claims act and forego collecting on cases, which are already being prosecuted by the federal government.

Happily Virginia does share in such collections. In the meantime, Virginia has also been the site of some of the largest health care cases (both federal and state) in the nation. Notably a settlement with Abbot Laboratories filed in federal court in Virginia and pursued by both the Commonwealth and the United States Department of Justice (DOJ) led to a $1.6 billion settlement. The settlement stemmed from charges regarding illegal marketing of a drug called Depakote. As befits a settlement of this size both the federal and Commonwealth governments took a measure of credit.

Somehow getting lost in the dueling press regarding this settlement is the key role of the whistleblowers in the case. Nonetheless, with an expansive law creating liability for virtually any kind of fraud against Virginia, whistleblowers do have an opportunity to make a difference in their state. Hopefully the Commonwealth will pursue many more such cases — both large and small — under their law and in cooperation with the federal government in the future.

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