Establishes the NY fraud, enforcement and recovery act

Summary of provisions

Section 1: Entitles the bill the "Fraud Enforce- ment and Recovery Act"

Section 2: Amends section 188(1) of the New York False Claims Act to, among other things, clarify and establish definitions of terms used in that act in the same way. that the just-passed amendments to the United States False Claims Act changed such definitions in that act.

Section 3: Amends section 189(1) of the New York False Claims Act to, among other things, change certain provisions relating to conduct prohibited by the act in the same way that the just-passed amendments to the United States False Claims Act changes those provisions in that act. The act also clarifies that local governments can obtain civil penalties against fraudsters in certain circumstances.

Section 4: Amends section 190(1) of the New York False Claims Act to clarify that a local government can being an action on behalf of a subdivision of such local government.

Section 5: Amends section 190(2)(b) of the New York False Claims Act to, among other things, change the scope of the seal in qui tam cases brought under the act in the same way that the just-passed amendments to the United States False Claims Act amended the scope of the seal in that act.

Section 6: Amends section 190(2)(a) and (b) of the New York False Claims Act to add a new paragraph (b-1) to the act that clarifies the applica- tion of the attorney-client privilege to qui tam actions.

Section 7: Amends section 190(2)(d) adopt the provision included in the United States False Claims Act that relation-back doctrine in a qui tam of the New York False Claims Act to recently-passed amendments to the clarifies the application of the action.

Section 8: Adds a new subparagraph (i) and (ii) to section 190(2)(f) of the New York False Claims Act that requires a qui tam plaintiff to give the state or a local government copies of motions and other information when litigating a case in which the state and local governments have declined to intervene. Clarifies that the state or a local government must consent to any settlement of a qui tam case.

Section 9: Amends paragraphs (a) and (b) of section 190(6) of the New York False Claims Act to adopt the ranges of relator awards in the Cali- fornia False Claims Act.

Section 10: Adds a new paragraph (d) to section 190(6) of the New York False Claims Act to require counsel to a deceased qui tam plaintiff to notify the government within five days of learning of such death, and ensures that the estate of the deceased inherent the rights of the qui tam plaintiff.

Section 11: Amends section 190(9) of the New York False Claims Act to clarify the undefined terms of the public disclosure bar and give the government and not private parties the right to control motions to dismiss cases based on the public disclosure bar.

Section 12: Amends section 191 of the False Claims Act to clarify the anti-retaliation provisions in the New York False Claims Act in the same way that recently-passed amendments to the United States False Claims Act clarify those provisions in that act. Also addresses blacklisting and transmitting documents to law enforcement.

Section 13: Amends section 192(1) of the New York False Claims Act to clarify the statute of limitations.

Section 14: Provides rules regarding pleadings for qui tam actions.

Section 15: Sets an immediate effective date of the act and states that the amendments apply to any claims, records or statements filed or made prior to, on or after April 1, 2007; provided, however, that changes to the qui tam awards do not apply to any case filed prior to the passage of the act.

Justification

The New York False Claims Act (NYFCA), signed into law by Governor Spitzer in 2007, is the state's most important civil tool to fight fraud against the state or local governments. Most of the critical language in the NYFCA was "cut and pasted" from the hugely successful United States False Claims Act (USFCA), which was signed into law by President Abraham Lincoln in 1863 to address civil war-era contracting fraud, and later amended in 1943 by President Roosevelt and 1986 by President Reagan. Thus, the NYFCA mirrors the 1986 version of the USFCA. In May of 2009, however, President Barack Obama signed a series of crit- ical amendments to the USFCA to, among other things, reverse court deci- sions (including recent decisions by the U.S. Supreme Court) that weak- ened the USFCA in direct contradiction to the text of the law and the intent of the 1863 act and the 1986 amendments.

Additionally, there are other pending amendments in Congress to fix other generally acknowledged problems with the USFCA. Even after the 2009 amendments, the USFCA continues to be riddled with undefined terms that federal courts have struggled to define and interpret consistently. Many courts have issued rulings making it unduly hard for the government to fight fraud and abuse.

Since the NYFCA continues to be a replicated version of the now outdated 1986 version USFCA, there is little doubt that all of the federal court decisions misinterpreting the USFCA would be applied to the NYFCA - even those court decisions that Congress has explicitly overruled. According- ly, this bill amends the NYFCA to:

(1) incorporate into the NYFCA the recently-passed amendments to the USFCA signed by President Obama;

(2) clarify major terms in the NYFCA that, in federal cases interpreting the USFCA, have been inconsistency defined or applied;

(3) further strengthen the NYFCA to enhance the ability of the govern- ment to recover stolen government funds on behalf of taxpayers; and

(4) fix technical aspects of the NYFCA that hinder the ability of the department of law, other state agencies, and local governments to admin- ister the NYFCA and recover stolen government funds and property.

Legislative history

This is new legislation.

Fiscal implications

This bill will increase the amount of funds recov- ered by the state and local governments in civil actions to recover stolen funds. It will also decrease the amount of state and local government funds lost to fraud by deterring would-be fraudsters from using a false claim records or statements to obtain government funds.

Effective date

This bill would be effective immediately and would apply to all false claims, records and statements filed or made prior to, on or after April 1, 2007; provided, however, that the increased incentives for qui tam suits unrelated to the Medicaid program would only apply to those suits filed after the passage of this bill.