The federal civil False Claims Act (“FCA”) has been the federal government’s favorite weapon to enforce its antifraud initiatives, particularly in the healthcare industry. New Jersey has now joined twenty other states and the District of Columbia in enacting its own version of the federal law to target alleged fraud by companies that do business with the State. On January 13, 2008, Governor Jon S. Corzine signed the New Jersey False Claims Act (“NJFCA”), which takes effect sixty days later, on March 13, 2008.
The federal act was enacted at the initiative of President Lincoln to encourage citizens to come forward with information about defense contract fraud by authorizing suit in the name of the government and providing a portion of the recovery as a reward. It became known as the qui tam statute based on the Latin phrase for “Who sues on behalf of the king as well as himself.” The FCA provides for treble damages plus civil penalties for making false claims on federally funded programs. The qui tam provisions allow the private citizen who brings the suit, called the “relator,” to receive up to 30% of the recovery.
The federal Deficit Reduction Act of 2005 contained financial incentives for states to enact anti-fraud legislation modeled after the federal statute. Any state with a law patterned sufficiently after the federal act and applicable to Medicaid claims would be entitled to an extra 10% share of recoveries on Medicaid claims. The New Jersey statute, however, like many of those passed in other states, is not limited to Medicaid claims, and will apply to virtually all types of companies that engage in business, directly or indirectly, with the State.
The NJFCA applies to:
• Knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to an employee, officer or agent of the State, or to any contractor, grantee, or other recipient of State funds;
• Knowingly making, using, or causing to be made or used, a false record or statement to get a false or
fraudulent claim paid or approved by the State;
• Conspiring to defraud the State by getting a false or fraudulent claim allowed or paid by the State;
• Knowingly making, using, or causing to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the State;
• Having possession, custody, or control of public property or money used or to be used by the State and knowingly delivering or causing to be delivered less property than the amount for which the person receives a certificate or receipt;
•Being authorized to make or deliver a document certifying receipt of property used or to be used by the State and, intending to defraud the entity, making or delivering a receipt without completely knowing that the information on the receipt is true; or
•Knowingly buying, or receiving as a pledge of an obligation or debt, public property from any person who lawfully may not sell or pledge the property.
The "State" is defined to include all agencies and independent authorities of the State government. Though county and municipal government entities are not within the definition, a false claim on a local project could be covered if the claim is submitted to a "contractor, grantee, or other recipient of State funds."
For more information on this topic please read Mark S. Olinsky's recent article "Defending Qui Tam Suits Under New Jersey's New False Claims Act" which was published in the March 2008 edition of The Metropolitan Corporate Counsel.