The following is Tony Munter’s brief overview of the False Claims Act in Minnesota. However, Mr. Munter is not a Minnesota False Claims Act lawyer. He is not licensed to practice in Minnesota.
The relatively new Minnesota False Claims Act is among the most expansive and powerful of the state whistleblower reward laws. The law, as amended, allows for virtually any kind of fraud against the state to be the subject of a qui tam action.
The law also provides liability when a false claim is made to the state or to a contractor “if the money or property is to be spent or used on behalf of the state or the political subdivision.” Finally, the law creates liability for actions of fraud committed against the so-called political subdivisions within the state.
Minnesota’s law generally tracks the liability for actions by a defendant under the federal False Claims Act. There are treble damages and civil fines for defendants who violate these acts. Like the federal False Claims Act, the Minnesota law also provides rewards for whistleblowers, including a relator’s share of 15 to 30 percent.
As a result, Minnesota will be in a position to collect an appropriate share of the “whales,” as one of our colleagues calls them. Those are the massive cases involving nationwide schemes of fraud committed by companies and organizations against Medicare and Medicaid, and any other government healthcare program.
Recent FCA Settlements in Minnesota
Since the passage of the Minnesota False Claims Act, the state has seen a serious federal case settled for $30 million. The case of U.S. ex rel. Health Dimensions Rehabilitation Inc. v. RehabCare Group Inc., et. al., Case No. 4:12-cv-00848 AGF (E.D. Mo.) involved claims that the defendants used a kickback scheme for the referral of nursing home business, according to the U.S. Department of Justice.
This case was originally filed as a qui tam action, meaning a whistleblower was responsible for starting the action. The DOJ’s press release noted the whistleblower responsible for this windfall received $5.7 million for bringing the case to light.
Such large cases can be filed under federal law and, if they involve violations of Minnesota and other state claims, they can also be filed as joint federal and state actions under the Federal False Claims Act’s special jurisdictional provisions. The federal law, of course, can be applied to other areas of Minnesota business to ensure fraudulent activity is properly identified and prosecuted.
For example, the DOJ settled a case for $4.6 million against Minnesota Transit Constructors Inc. for fraud allegations stemming from a local construction project. The government alleged that the defendants “…falsely claimed that they had used Disadvantaged Business Enterprises (DBEs) for part of the work on the project when they had not.”
The project was for a rail link from downtown to the Mall of America in St. Paul. It was a pretty basic infrastructure contract that, nonetheless, became the subject of a major fraud case under the False Claims Act in Minnesota.
Minnesota FCA Law Passage and Amendments
So far, there have not been many cases that we have heard about filed under the Minnesota law specifically. However, the Minnesota False Claims Act is still very new—it was originally enacted in 2009 and has been significantly strengthened by several amendments since that time.
Additionally, cases that fall under this law—as with virtually every False Claims Act law across the country—are filed under seal, so it may take a while before the cases become public knowledge. You can bet that we will be watching to see how many Minnesota FCA cases emerge thanks to the recently enacted law.