The federal False Claims Act (FCA)1 is widely regarded as a powerful tool to punish fraud against the federal government. Since 1986, the federal government has recovered more than $75 billion from FCA settlements and adjudications.2 Enforcement tools that are often overlooked, however, are state false claims statutes.
Recognizing this, the federal government provides states with a financial incentive to promulgate their own false claims statutes that confer at least as much power to prosecute alleged fraud against state governments as the federal FCA does for federal false claims violations.
The federal FCA imposes treble damages plus significant penalties against any person or entity that knowingly submits, or causes to be submitted, false claims for payment to the government; falsely certifies compliance with applicable laws to obtain payment from the government; or retains government payments premised on false claims or false certifications.3 FCA suits may be brought directly by the government or by whistleblowers on the government's behalf (called qui tam suits) against those who have may have obtained government payments premised on allegedly false claims. The statute provides whistleblowers with financial rewards and protection against job retaliation. These whistleblower actions comprise a significant percentage of the False Claims Act recoveries. In fiscal year 2023, $2.3 billion of the $2.68 billion in FCA settlements and judgments (nearly 86%) stemmed from qui tam lawsuits.4
States began enacting their own false claims statutes starting in the late 1980s. The pace increased after the Deficit Reduction Act of 2005 (DRA) created a financial incentive for states to enact false claims laws targeting Medicaid fraud.5 This financial incentive increases a state's Medicaid fraud recovery by 10% if the state's false claims...
