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 state.
Jones Day will continue to monitor these developments.
1. Craig Schneider, "Data Aids Medicaid Detectives," Atlanta J. Const. (Apr. 23, 2010).
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).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.