By Noah Rich of Baron & Budd, P.C.
Many people know that the federal and state False Claims Acts are potent tools in the fight against healthcare fraud, but some may not realize that these statutes can also apply outside the healthcare realm.
The 50 states and DC allocate about 68 percent of their total budgets to non-healthcare programs. As we’ve discussed earlier this month, total expenditures by the 50 states and DC are approximately $1.5 trillion, with 84 percent going to non-healthcare programs. While some states have robust False Claims Acts to account for these kinds of frauds, others do not, leaving them more vulnerable to fraud involving state pension systems, construction projects, taxes, utilities, energy, and myriad other areas—and leading to billions of dollars in losses to state taxpayers.
Four of the largest non-healthcare state False Claims Act settlements demonstrate the diverse schemes employed by fraudsters, and the flexibility of many state False Claims Acts in fighting back.
2018 - $488 million (multiple states): A coalition of state Attorneys General reached settlements with some of the world’s largest banks—including Barclay’s and Deutsche Bank—which were accused of fraudulently manipulating LIBOR, a benchmark interest rate that affects financial instruments worth trillions of dollars and has a far-reaching impact on global markets and consumers.
2018 – $330 million (New York): Earlier this month, we discussed the unique provisions in the New York False Claims Act that allow whistleblowers to pursue tax fraud. In 2018, Sprint agreed to pay $330 million to resolve allegations that it knowingly failed to collect and remit more than $100 million in state and local taxes owed on its wireless calling plans sold to New Yorkers.
2008 – $160 million (California): In this intra-state dispute, the state of California actually sued the city of Los Angeles, alleging that the city’s Department of Water and Power had overcharged various state and municipal entities on their electric utility bills.
2020 – $116 million (California, Nevada): The nation’s four largest cellphone providers—Verizon, AT&T, Sprint, and T-Mobile—agreed to pay a combined $116 million to resolve allegations that they overcharged government customers for wireless services over more than a decade.
State False Claims Acts and whistleblowers are critical in the fight against fraud, no matter what form it takes. States that don’t permit whistleblowers to pursue the many varieties of fraud they face are leaving billions of dollars on the table. To learn more about how robust your state’s False Claims Act is, visit Taxpayers Against Fraud Education Fund.