State and Local False Claims Acts
Whistleblowers who report fraud against state or local governments may be eligible for a portion of the damages and penalties the government recovers. More than half of all states have some form of these laws, usually modeled on the federal False Claims Act. A number of territories and cities—including New York City, Chicago, Miami, and Philadelphia—have similar laws rewarding whistleblowers.
Awards under these programs vary, but are typically between 15 and 30 percent of the total damages and penalties in a successful legal claim.
Jurisdictions with False Claims Act Laws
The following states, territories, and cities have laws that include whistleblower awards that are available through either qui tam claims or standalone reward programs:
Elements of a State and Local False Claims Act Whistleblower Claim
Each state or local False Claims Act has its own specific requirements. In general, to qualify to receive a portion of damages and penalties that the government obtains, a whistleblower must initiate a successful claim based on non-public information (or their own original information) against a person or entity that has knowingly defrauded the government. A whistleblower must also be the first to file the lawsuit concerning the misconduct.
Fraud against the government includes a wide array of activities, including improper claims against the state’s Medicaid program, overcharging for goods or services under government contracts, failing to meet contract terms, underpaying the government, or retaining payments owed to the government.
State and Local False Claims Act Whistleblower Process
Most state and local False Claims Acts require a whistleblower to file a qui tam suit in the appropriate court. This is a special type of litigation, where a private person stands in on behalf of the government to start proceedings. Qui tam suits are typically filed “under seal,” which means the case is confidential while the government reviews the claim and decides whether to intervene in the case by taking over as the plaintiff.
If the government intervenes and the case is successful, the whistleblower is entitled to 15 to 25 percent of any damages and penalties the government collects. When the government does not join a case, whistleblowers may continue the case on their own. Such declined or non-intervened cases typically have lower chances of succeeding, but if the defendant is found liable, the whistleblower may get 25 to 30 percent of the amount the government recovers.
Unlike most whistleblower programs administered by federal agencies, which grant rewards only if an enforcement action involves sanctions of $1 million or more, state and local False Claims Act laws generally have no minimum penalty requirement.
