FCA* for BEGINNERS

*NEVADA FALSE CLAIMS ACTNRS 357.010 et seq.

L. TIMOTHY TERRYThe Terry Law Firm, Ltd.

775.883.2348

BRIEF HISTORY

♦ Added to NRS in 1999; amended 2007

♦ Patterned after Federal False Claims Act31 U.S.C. §§ 3729 – 3733Civil War Origins – “Lincoln Law”

♦ Approx 23 States with a FCA : CA, DE, D.C.,FL,HI, IL, IN, LA, MD, MA, MI, NE, NV,NH, NJ, NM, NY, OK, RI, TN, TX, VA, WI

“QUI TAM” PROVISION

♦ “Qui tam” – loosely translated means one who sues for the state as well as for himself

♦ Allows a private individual, not injured by a

defendant’s conduct (and therefore not

an eligible plaintiff under traditional

notions of standing), to sue on behalf of

the government

THE “RELATOR”

♦ The “qui tam” plaintiff is commonly referred to as the “Relator”

♦ Why become a Relator?In addition to helping catch the badguys and protecting the governmenttreasury, the Relator also shares in ultimate recovery ($$$) by the gov’t

FCA LIABILITY

♦ Liability imposed on any person(s) who,with or without specific intent to defraud,

commit any of the acts listed in NRS 357.040

♦ Primary violations :(a) knowingly presenting, or causing tobe presented, a false claim for paymentor approval(b) knowingly making or using, or causingto be made or used, a false record or statementto obtain payment or approval of a false claim

FCA LIABILITY Con’t

♦ Primary violations con’t:(c) conspiring to defraud by obtainingallowance or payment of a false claim

♦ Statute specifies 5 more activities givingrise to FCA liability

♦ Liability is joint and several for an actcommitted by two or more persons

♦ State, or any political subdivision, can be victim

DEFINITIONS

♦ “Knowingly”

A person acts “knowingly” with respect

to information if (s)he : (a) has

knowledge of the information; (b) acts

in deliberate ignorance of whether the

information is true or false; or (c) acts

in reckless disregard of the truth or

falsity of the information – 357.040(2)

DEFINITIONS Con’t

♦ “Claim” – 357.020Means a request or demand for money,property or services made to: (a) anofficer, employee or agent of the stateor political subdivision; or (b) a contractor,grantee or other recipient of money from the state or political subdivisionif any part of the money, property orservices requested or demanded wasprovided by the state or political subdivision

DEFINITONS Con’t

♦ “Political subdivision” – 357.030

Means a county, city, assessment district

or any other local government as defined

in 354.474

FCA DAMAGES

♦ 357.040(1) : Defendant liable to gov’t for:

(a) 3 x actual damages(b) costs of litigation(c) civil penalty of not less than $5K or

more than $10K for each act♦ 357.180(1) : Defendant separately liable for Relator’s

attorney’s fees and litigation costs

LIMITATION ON DAMAGES

♦ Defendant can avoid civil penalties and award of litigation costs if :(a) def furnished all info re the fraudulent act to the gov’t w/in 30 days of becoming aware of info, and(b) def fully cooperated with any gov’t investigation, and(c) no crim pros or civ/admin proceeding had been commenced with respect to fraudulent act at time info was furnished to gov’t, and(d) at time info was furnished to gov’t def had noknowledge of the existence of any investigation re the fraudulent act

FCA LITIGATION

♦ Relator :

1) files complaint under seal2) does not serve defendant(s)3) sends copy of complaint to AGO

(ret rec req) on filing date4) sends disclosure statement with complaint to AGO

which must substantially cover all material evidence and info the Relator possesses5) complaint may be filed in any judicial district in which

the def can be found, resides or transacts business

FCA LITIGATION Con’t♦ Government/AGO :

1) must investigate complaint’s allegations2) decide w/in 60 days whether to intervene (for good cause

shown the gov’t may seek extensions of the 60day deadline)

3) if gov’t intervenes, the complaint must be unsealed and served on def

4) if gov’t declines intervention, relator takes over litigation of case (complaint unsealed and served on def)

5) after declining intervention, gov’t may seek to interveneif relator not adequately protecting gov’t interests

LIMITATIONS re DEFENDANTS

♦ Can’t bring an FCA action :

1) against member of legislature, judiciary or elected officer of state executive department, or member of governing body of political subdivision,

if action based upon evidence or info alreadyknown to gov’t

2) if based upon allegations or transactionsthat are subject of a civil action or admin

proceeding for a monetary penalty to whichthe gov’t is already a party - 357.080(3)

LIMITATIONS re RELATORS

♦ Can’t bring an FCA action :

1) for fraud discovered in gov’t employment, unless fraud reported to gov’t officials who

fail to act on info for at least 6 months – 357.090

2) based upon public disclosure of info in:a) crim, civ or admin hrg; b) legislativehrg or audit (or political subdivision audit); c) the news media; UNLESS filedby AGO or an “original source” of the info- 357.100 [357.100(2) defines original source]

RELATOR’S RECOVERY

♦ Intervened cases :- not less than 15%- not more than 33%

♦ Declined cases :- not less than 25%- not more than 50%

♦ Gov’t employee cases (even if relator benefited from fraud)

- no minimum- not more than 33% (intervened cases)- not more than 50% (declined cases)

ADDITIONAL RESOURCES

♦ Civil False Claims and Qui Tam Actions

(3rd Ed) by John T. Boese (Wolters Kluwer – Publishers)

♦ Taxpayers Against Fraud

www.taf.org