In April, Governor Nathan Deal signed into law the Georgia
Taxpayer Protection False Claims Act, H.B. 822, which vastly alters
the landscape for those who conduct business with Georgia's
state and local governments. The Act grants sweeping governmental
authority to recover damages and penalties from private sector
contractors and subcontractors who present erroneous claims to
government entities. While corporate counsel whose clients do
business with the federal government are undoubtedly familiar with
the federal False Claims Act, they may be less familiar with false
claims liability under Georgia law and the significant exposure
they now face as a result of the new statute.
The Taxpayer Protection False Claims Act succeeds, and greatly
expands upon, Georgia's 2007 Medicaid False Claims Act.
Georgia's Medicaid False Claims Act was based loosely on the
federal False Claims Act and restricted liability to those who
submit false claims to the Georgia Medicaid program. In addition to
allowing the state to recover on its own behalf, the law rewarded
"whistleblowers" for pursuing successful actions against
alleged violators. Taking seriously the directive to pursue fraud
and abuse, the Inspector General for Georgia's Department of
Community Health investigated more than 2,600 cases of alleged
Medicaid fraud in 2009 alone.1 The Medicaid False Claims
Act entitled Georgia to an additional 10 percent recovery above its
share of any Medicaid false claims proceeds.
Last year, following changes to the federal False Claims Act
(which were prompted by the enactment of the federal Fraud
Enforcement and Recovery Act of 2009, the Patient Protection and
Affordable Care Act of 2010, and the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010), the federal government
initiated a review of state false claims acts around the country.
As part of that review, the federal government determined that
Georgia's Medicaid False Claims Act was not as aggressive as
the revised federal False Claims Act, and that Georgia would no
longer be eligible for the enhanced recovery unless it strengthened
its own false claims statute.2
The Georgia General Assembly responded this past legislative
session and unanimously passed the Taxpayer Protection False Claims
Act. This Act expands the reach of Georgia's false claims act
beyond Medicaid-reimbursable services and creates new and
significant liability for every industry doing business
with state or local governments in Georgia. The Taxpayer Protection
False Claims Act now applies to any person or entity that
knowingly or recklessly submits a false claim to any government
body in Georgia, including lesser political subdivisions such as
school boards and MARTA—regardless of whether
the person or entity specifically intended to defraud the
government. In addition to the legislation's broad expansion of
what constitutes a violation, the penalties for submitting a false
claim are staggering. Civil penalties range from $5,500 to $11,000
for each false claim (which, in any given case, can run
into the thousands of claims), treble damages, costs, expenses, and
attorneys' fees. The new Act also provides Georgia's
Attorney General with new investigatory powers and permits the
Attorney General to delegate investigative and prosecutorial
responsibilities to district attorneys.
Importantly, the law broadens incentives and protections for
whistleblowers who file lawsuits alleging fraud and is devoid of
any requirement that an employee with knowledge of a false claim
report the claim internally through his or her corporate compliance
program before filing an action. One particularly notable provision
arguably authorizes employees, contractors, and agents of a company
to remove confidential—and perhaps even
privileged—internal documents and turn them over to the
Jones Day will continue to monitor these developments.
1. Craig Schneider, "Data Aids Medicaid
Detectives," Atlanta J. Const. (Apr. 23,
2. Letter from Daniel R. Levinson, Inspector General,
Department of Health and Human Services, to Hon. Robert M.
Finlayson III, Inspector General, Georgia Dep't of Cmty. Health
(Mar. 21, 2011).
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