If you’ve witnessed fraud against a state government (like a children’s healthcare provider overbilling Medicaid or a contractor cutting corners on a state-funded project), you may be wondering whether the same whistleblower laws that apply to federal fraud apply at the state level, too and, for the post part, most states with their own false claims acts patterned them closely on the federal False Claims Act, including the qui tam provision that allows whistleblowers to file suit on the government’s behalf and share in the recovery.
But “modeled on” doesn’t mean “identical to.” The differences between state statutes can change everything about your case, including whether you’re entitled to a reward at all. That’s why it’s so important to talk with an experienced False Claims Act lawyer before you report what you know.
The federal False Claims Act sets the template
The federal False Claims Act (31 U.S.C. §§ 3729–3733) is the government’s most powerful tool for fighting fraud. It holds companies and individuals liable for knowingly submitting false claims for government money, imposes treble damages plus per-claim penalties, and, most importantly for whistleblowers, includes a qui tam provision. That provision allows a private citizen, called a relator, to file a lawsuit under seal on the government’s behalf and receive between 15% and 30% of any recovery.
When states began enacting their own false claims acts, this federal statute served as the blueprint. Today, more than 30 states (plus the District of Columbia and Puerto Rico) have false claims acts of their own, and the vast majority follow the federal model: liability for false claims submitted to the state, damages and penalties, a seal period while the government investigates, and a qui tam provision that authorizes and rewards whistleblowers.
Why so many states copied the federal model
It’s no accident that state false claims acts look so much like the federal version. In 2005, Congress created a powerful financial incentive: states whose false claims acts meet federal standards receive a 10% bonus on their share of Medicaid fraud recoveries.
To qualify, the Office of Inspector General (OIG) of the Department of Health and Human Services, along with the United States Attorney General, has to determine that the state’s law does all of the following:
- Holds companies and individuals liable for submitting false claims (or causing them to be submitted) to the state’s Medicaid program
- Includes a qui tam provision at least as strong as the federal FCA’s
- Requires state FCA actions to be filed under seal for at least 60 days for review by the state attorney general
- Imposes civil penalties equal to or greater than the federal FCA’s
This incentive sparked a flurry of legislative activity, and it’s the main reason so many state statutes mirror the federal law so closely. It’s also an ongoing obligation: when Congress amended the federal FCA in 2009 and 2010, the OIG reviewed state statutes, found many deficient, and pulled the bonus from states that didn’t update their laws. States have to keep pace with federal amendments or lose the incentive, which means state false claims acts evolve over time.
Where state false claims acts differ from the federal FCA
Even among states that followed the federal template, the details vary in ways that matter to whistleblowers:
Scope of covered fraud
The federal FCA covers nearly every kind of fraud involving federal funds (with tax fraud handled separately through the IRS Whistleblower Program). Some state statutes are just as broad, while others, including those in Arkansas, Mississippi, Missouri, and Nebraska, are limited to Medicaid or other state healthcare program fraud. A handful of jurisdictions, such as New York and the District of Columbia, actually go further than the federal law and allow certain tax fraud claims.
Whether whistleblowers can sue at all
A few states copied the federal FCA but left out the qui tam provision. In those states, you can report fraud to the government, but you can’t file a lawsuit yourself, and only the state can. And if the state recovers money, you usually don’t get a share of it. Arkansas and Missouri are the exceptions: they’ll pay whistleblowers up to 10% for providing evidence of fraud, but even there, the state still has to be the one to bring the case.
Reward percentages, deadlines, and procedures
Seal periods, statutes of limitations, penalty amounts, and relator share percentages all vary from state to state. A case that’s viable in one state may face different requirements just across the border.
Beyond the states, several municipalities, including Chicago, New York City, Philadelphia, and a number of counties, have enacted their own false claims ordinances, adding yet another layer for whistleblowers whose information involves local government funds.
One more distinction worth knowing is that a state’s false claims act isn’t the same as its employment retaliation law. Some states offer strong job protections for whistleblowers; others offer very little. But if your case involves the federal False Claims Act, you’re protected from retaliation, like termination, demotion, harassment, or blacklisting, no matter which state you work in.
Why this matters for your whistleblower case
Fraud rarely respects state lines. A hospital chain overbilling Medicaid is often overbilling Medicare at the same time, and a fraudulent scheme can affect the federal government and several state governments at once. When that happens, a single whistleblower case can assert claims under the federal FCA and multiple state false claims acts together, which can increase both the total recovery and the whistleblower’s share.
But coordinating federal and multi-state claims takes experience. Each statute has its own requirements, and a misstep, like filing in the wrong place, missing a state’s procedural rules, or overlooking a state where claims could have been brought, can cost you. And since False Claims Act cases also follow first-to-file rules, waiting too long can cost you everything: if someone else reports the same fraud first, they get the reward.
Talk with an experienced whistleblower attorney today
At Bracker & Marcus LLC, False Claims Act litigation is the heart of our practice, and it’s what we do day in and day out. Our attorneys have decades of experience litigating False Claims Act cases nationwide, including healthcare fraud cases involving Medicaid programs across multiple states. We know the differences between the federal FCA and the state statutes modeled on it, and we can help you determine where and how your case should be filed.
Your evaluation is free and confidential, and we don’t get paid unless we win. If you’ve witnessed fraud against the government at any level — federal, state, or local — call (770) 988-5035 or contact us online today.