Qui Tam Actions under the California False Claims Act
California adopted its own False Claims Act to aid in the recovery of any loss of $500 or more in value in money, property or services ripped off from the state or from any of its political subdivisions such as a county or the Regents of the University of California as a result of a false or fraudulent claim submitted to it by a contractor or as a result of any other type of scam designed to rip off money, property or services from the state or from any of its political subdivisions.
The California False Claims Act makes any person, firm or corporation involved in such a fraud liable for three times the amount of damages sustained by the state or any of its political subdivisions plus a civil penalty of not less than $5,000 and not more than $10,000. If the state Attorney General or the prosecuting authority for the defrauded political subdivision has not already initiated a proceeding to recover the funds, the California False Claims Act authorizes any person to bring a civil action against the perpetrators of the fraud to recover all amounts authorized by the statute. A person bringing such a civil action for the state or its political subdivision affected by the fraud is designated the “qui tam plaintiff” under the statute. A qui tam plaintiff who satisfies all of the technical and procedural requirements imposed by the California False Claims Act is entitled to a reward of a percentage of the proceeds recovered as determined in the discretion of the trial court for his or her efforts in bringing the action and in furnishing the information that results in a favorable judgment.
The qui tam plaintiff must initially file the lawsuit in the Superior Court under seal and without any notice to the defrauding contractor named as the defendant in the case. The qui tam plaintiff must immediately serve a copy of the lawsuit on the state Attorney General’s office who will in turn serve a copy of the lawsuit on the prosecuting authority of any political subdivision of the state that may have been the victim of the fraud. The Attorney General’s office and if appropriate, the prosecuting authority for the affected political subdivision, is allowed a period of time to review and evaluate the lawsuit and make a determination of whether or not to intervene in the case and assume responsibility for pursuing it.
If the AG’s office and if appropriate, the prosecuting authority for the affected political subdivision, declines to pursue the case then the qui tam plaintiff is authorized to pursue it. The percentage of the proceeds awarded to the qui tam plaintiff for his or her efforts will be increased if the AG’s office declines to pursue it and the qui tam plaintiff is required to carry the burden of pursuing the case all the way to judgment. In particular concerning the technical and procedural requirements that can result in the court’s dismissal of a case brought by a qui tam plaintiff, the case cannot be brought if it is based upon facts that have already been publicly disclosed in a civil, criminal or administrative proceeding, or in an official investigation, report, hearing or audit by a legislative or governing body, or by the news media unless the qui tam plaintiff is the “original source” of the information resulting in the public disclosure as that term is defined in the California False Claims Act. In addition to a percentage of the proceeds recovered in the case, a successful qui tam plaintiff is entitled to judgment against the defrauding defendants for reasonable costs incurred plus court costs and a reasonable attorney’s fee.
The California False Claims Act contains within it strong whistleblower protections for the protection of employee whistleblowers. The whistleblower provisions prohibit employers from establishing or enforcing any rule or policy that would keep an employee from doing anything supportive of a false claims action, including reporting information to the appropriate government authorities or initiating, assisting with, giving testimony or otherwise furthering a false claims action including such an action against their own employer. Employers are prohibited from discharging, demoting, discriminating against or in any other manner retaliating against an employee in the terms and conditions of her employment because of the employee’s lawful acts in support of a false claims action. Any employer that takes retaliatory action is liable in a civil action brought by the employee for two times the amount of any back pay, restoration of seniority, recovery of any special damages suffered and for punitive damages in an appropriate case.
