Something New Under Georgia’s Sun: the Georgia Taxpayer Protection False Claims Act
| Publication year | 2012 |
| Pages | 0030 |
| Citation | Vol. 18 No. 4 Pg. 0030 |
The Georgia Taxpayer Protection False Claims Act
by Lee Tarte Wallace
In the waning days of this year's legislative session, the Georgia Legislature took an exceedingly rare step: it established a brand new cause of action. The Georgia Taxpayer Protection False Claims Act (the Georgia TPFCA)[1] introduced a new false claims act,[2] and also strengthened the State False Medicaid Claims Act of 2007.[
3
]Before Gov. Nathan Deal signed the bill on April 16, 2012, Georgia had a lackluster false claims act that addressed only Medicaid fraud. Today, Georgia stands poised to join a small group of states that have recovered hundreds of millions of dollars taken from them by fraud. Under the Georgia TPFCA, the state or a local government can recover treble damages, attorneys' fees, expenses and costs, as well as civil penalties for each false or fraudulent claim. To encourage whistleblowers to come forward, the Georgia TPFCA has a qui tam provision that allows private persons (called relators) to get the permission of the attorney general of Georgia to sue on the state's or a local government's behalf, and to collect a percentage of whatever the state or local government recovers, as well as their own attorneys' fees, expenses and costs. If a person faces retaliation in his job because he is trying to prevent fraud against the state or a local
government, then the new Georgia TPFCA also provides for double back pay, damages and attorneys' fees.
Why the Georgia TPFCA was Passed
In 2008, Georgia stuck a toe in the false claims water when it passed the State Medicaid False Claims Act. As the title suggests, that Act addressed only Medicaid fraud; Georgia had no law that rewarded or protected the jobs of whistleblowers who reported other types of fraud against the state or a local government.
Though its first step was small, Georgia took even that step only after a strong push from the federal government. The federal and state governments jointly fund the Medicaid program, and each is entitled to recover its part in a case involving Medicaid fraud. To encourage states to participate in these lawsuits, Congress passed 42 U.S.C. 1396h. Under that statute, if a state passed a Medicaid false claims act that "was at least as effective in rewarding and facilitating qui tam actions for false or fraudulent claims" as the Federal False Claims Act, then the federal government would voluntarily reduce its recovery by 10 percent to give the state an extra share. Georgia joined half-heartedly, doing the bare minimum to recover the additional 10 percent.
By 2012, however, Georgia had two reasons to pass a broader, stronger false claims act. First, Congress had amended the Federal False Claims Act three times in less than two years: in 2009 in the Fraud Enforcement and Recovery Act (FERA),[4] in March 2010 through the Patient Protection and Affordable Care Act,[5] and again in July 2010 via the Dodd-Frank Wall Street Reform and Consumer Protection Act.[6] As a result of these amendments, the Office of Inspector General (OIG) determined that the states' Medicaid false claims act laws were no longer "as effective in rewarding and facilitating qui tam actions" as the amended federal law. The OIG gave states until March 31, 2013, to amend their statutes or face losing the 10 percent bonus.[7]
Second, in an interview for this article, one of the sponsors of the Georgia TPFCA legislation, Rep. Edward Lindsey (R-Atlanta), noted that Georgia was missing out on potential recoveries for other types of fraud against the state and local governments. "Other states, such as Texas, have recovered literally hundreds of millions of dollars as a result of having a false claims act that covered all aspects of state and local government operations," he said. According to Lindsey, the state of Georgia has experienced a good return on investment with the Medicaid False Claims Act that was enacted back in 2008: "Last year, in just dealing with Medicare and Medicaid fraud, the state of Georgia spent approximately $4 million prosecuting Medicaid false claims and recovered $16 million."
The bill introducing the Georgia TPFCA legislation was sponsored by a bipartisan group drawn almost entirely from the dwindling number of lawyers in the Georgia Legislature: House Majority Whip Edward Lindsey; and State Representatives Roger Lane (R-Darien); Alex Atwood (R-Brunswick); and Mary Margaret Oliver (D-Decatur); along with Matt Dollar (R-Marietta). The five accomplished a feat generally reserved for commendations honoring notable Georgia citizens: their bill passed by a stunning, unanimous vote in both the House and the Senate.
Interpretation of the New Law
Like a pristine landscape of newly fallen snow, the Georgia TPFCA is unmarked by a single case. Lindsey said that Georgia's new Act is "tailored after the Federal False Claims Act." Logically, then, Georgia's courts will look for guidance in the cases interpreting the Federal False Claim Act.
The Elements of a Claim Under the Georgia TPFCA
The Georgia TPFCA sets out several criteria for a false claims act case: false or fraudulent claim or conduct; made knowingly; impact on the state government or local government; and the conduct has not been publicly disclosed or the relator is an original source.
False or Fraudulent Claim or Conduct
The statute addresses seven types of false claims or conduct.
The defendant "[k]nowingly presents or causes to be presented a false or fraudulent claim for payment or approval.'[8]
This provision is the most direct one in the Georgia TPFCA, addressing situations in which the defendant directly presents a false claim to be paid for it. If the federal law proves any guide, then the vast majority of Georgia TPFCA cases will be brought under this particular category.
The defendant "[k]nowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim.'[9]
Subsection (2) addresses situations in which the false statement is separated from the claim, but the claim is only paid because of the false statement. For example, a highway contractor might agree to use certain ingredients in mixing asphalt. If the contractor cuts corners and uses cheaper ingredients, and perhaps even falsifies invoices to suggest it had purchased the correct items, then its claim for payment is based on a false statement.
Subsection (2) has special proof requirements. To establish a claim under (2), the relator or the state or local government must show that the false record or statement is "material" to the false claim. The statute defines "material" as "having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property."[10]At the same time, the state or local government and/or the relator do not have to prove that the claim was presented for payment or approval. In Allison Engine Co. v. United States ex rel. Sanders, the Supreme Court noted that: "the concept of presentment is not mentioned in [the federal counterpart,] § 3729(a)(2). The inclusion of an express presentment...
To continue reading
Request your trial