New York recently amended its False Claims Act (New York State Finance Law § 187, et seq.) (the “NY FCA”) in response to the Inspector General of the U.S. Department of Health and Human Services’ findings that the NY FCA was not as robust as the federal FCA.
The NY FCA was initially enacted in 2007 and then significantly amended in 2010 to include false claims relating to tax fraud – unique among its other state and federal counterparts. In fact, the federal FCA explicitly excludes any action alleging violations of the federal tax code (id., § 3729 [d]). In 2011, the Inspector General found, however, that the New York FCA (among other state FCAs) was not as robust as the federal FCA, and New York would not qualify for an increased allocation of recoveries in cases involving the submission of false claims to Medicaid if it did not amend its FCA to bring it in line with the federal FCA.
Section 1909 of the federal Social Security Act provides for an added ten percent allocation to states from any False Claims Act recovery shared by the federal and state government in FCA cases involving Medicaid claims. Only states whose FCAs “are at least as effective in rewarding and facilitating qui tam actions for false and fraudulent claims as those described in sections 3730 through 3732 of title 31, United States Code [i.e., the federal FCA]” qualify for this additional ten percent recovery.
When the Inspector General reviewed the NY FCA in 2011, the statute ascribed liability to persons who, inter alia, knowingly present or cause to be presented a false claim for payment; or knowingly use a false statement or record in submission of a claim for payment (see, NY FCA § 189  [a]-[g]). To bring its FCA in line with the federal FCA, NY amended its FCA to include subsection (h), which provides that a person may be held liable for violating the NY FCA if that person “[k]nowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the state or a local government, or conspires to do the same . . . .” (NY FCA § 189  [h].) The amendment took effect in April 2013.
New York also amended its FCA to address two other issues raised by the Inspector General. First, the amended NY FCA allows the state, as intervenor in a qui tam case, to relate back to the qui tam plaintiff’s filing date for statute of limitations purposes. Second, it allows for a successful qui tam plaintiff’s reasonable attorneys’ fees.