What Is The Difference Between State and Federal Whistleblower Cases?

Tony Munter summarizes some state False Claims Act laws below. He does not practice in those state jurisdictions.

There are now 29 states with False Claims Act laws.

Most generally follow the same pattern as the federal law. A few only allow for collections related to health care fraud claims. However, to have a case under a state False Claims Law there has to be some kind of damage, some kind of harm that has cost a state money. The states also have one form of protection for right to sue for retaliation.

Best of all if you have a case involving any kind of nation-wide scheme, the Federal False Claims Act does allow you to sue for damages under applicable state law at the same time. This used to be a lot harder to do. So now if you have some kind of an action which damages both the United States Government and say also the State of New York you can file the entire case in Federal Court and hopefully collect for damages created to both of those governments.

Another tricky area of State False Claims Acts is whether or not funds used by a city or county may also be considered part of the damages. Some state Acts, only allow for you to sue if the State’s money itself was lost in the case. Others, such as New York and California, for example, allow you to sue if money was lost by any so called “political subdivision,” meaning if the city of Sacramento lost money as a result of a fraudulent construction contract that would be actionable under the California False Claims Act. California also has a law that allows individuals to report and sue for insurance fraud. Kind of an unusual action.

The major difference between the Federal False Claims Act and the State False Claims Act would be that since the Federal Government doesn’t buy securities, if you have a case of securities fraud you’re likely to bring a federal case to the Securities and Exchange Commission – the Federal Government is unlikely to have been the victim of securities fraud outside of a few instances – whereas in some states you could bring that type of case. The procedures involved are relatively similar.

Health Care Fraud vs. Other False Claims Act Claims

The major difference between some states’ versus other states’ False Claims Acts is that some states’ False Claims Acts were enacted specifically to deal with health care or Medicaid fraud, and they limit the types of cases you can bring under those statutes to Medicaid or health care-related claims. In those states, unless you’re talking about Medicaid or nursing homes or anything that would be paid for under that statute specifically, you don’t have a right of action.

Health care is a big industry but it’s not the same as a state that allows for a case of any kind of fraud committed against that state to be prosecuted under the State False Claims Act, so that’s a major dividing line. There are some states that also allow you to sue on behalf of their cities, towns, and political subdivisions, for example if the city itself has been defrauded with its money. There is an extra layer of possible action to bring a case under some of those state laws; those are the major dividing lines. There are 29 states and these laws have been enacted over a period of years, 10 or 15 years, most of them.

There have been particular, technical differences in each of them. There have not been many State False Claims Act cases brought in each individual state, which makes determining the state case law is a little tricky. There are 29 states out there with False Claims Acts, and they’re all spending state money all the time so I’m guessing we’re going to start seeing a lot more State False Claims Act cases filed.

States With Laws That Allow a Suit For Any Kind of Fraud That Damages The State

  • California
  • Delaware
  • District of Columbia
  • Florida
  • Georgia
  • Hawaii
  • Illinois
  • Indiana
  • Massachusetts
  • Minnesota
  • Montana
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Oklahoma
  • Rhode Island
  • Tennessee
  • Virginia

States With Laws That Allow For a Suit Only If Their Health Care Funds Have Been Lost

  • Colorado
  • Connecticut
  • Iowa
  • Louisiana
  • Maryland
  • Michigan
  • Texas
  • Washington
  • Wisconsin