FCA* for BEGINNERS

1. FCA* for BEGINNERS *NEVADA FALSE CLAIMS ACT NRS 357.010 et seq. L. TIMOTHY TERRY The Terry Law Firm, Ltd. 775.883.2348

2. BRIEF HISTORY ♦ Added to NRS in 1999; amended 2007 ♦ Patterned after Federal False Claims Act 31 U.S.C. §§ 3729 – 3733 Civil War Origins – “Lincoln Law” ♦ Approx 23 States with a FCA : CA, DE, D.C., FL,HI, IL, IN, LA, MD, MA, MI, NE, NV, NH, NJ, NM, NY, OK, RI, TN, TX, VA, WI

3. “QUI TAM” PROVISION ♦ “Qui tam” – loosely translated means one who sues for the state as well as for himself ♦ Allows a private individual, not injured by a defendant’s conduct (and therefore not an eligible plaintiff under traditional notions of standing), to sue on behalf of the government

4. THE “RELATOR” ♦ The “qui tam” plaintiff is commonly referred to as the “Relator” ♦ Why become a Relator? In addition to helping catch the bad guys and protecting the government treasury, the Relator also shares in ultimate recovery ($$$) by the gov’t

5. FCA LIABILITY ♦ Liability imposed on any person(s) who, with or without specific intent to defraud, commit any of the acts listed in NRS 357.040 ♦ Primary violations : (a) knowingly presenting, or causing to be presented, a false claim for payment or approval (b) knowingly making or using, or causing to be made or used, a false record or statement to obtain payment or approval of a false claim

6. FCA LIABILITY Con’t ♦ Primary violations con’t: (c) conspiring to defraud by obtaining allowance or payment of a false claim ♦ Statute specifies 5 more activities giving rise to FCA liability ♦ Liability is joint and several for an act committed by two or more persons ♦ State, or any political subdivision, can be victim

7. DEFINITIONS ♦ “Knowingly” A person acts “knowingly” with respect to information if (s)he : (a) has knowledge of the information; (b) acts in deliberate ignorance of whether the information is true or false; or (c) acts in reckless disregard of the truth or falsity of the information – 357.040(2)

8. DEFINITIONS Con’t ♦ “Claim” – 357.020 Means a request or demand for money, property or services made to: (a) an officer, employee or agent of the state or political subdivision; or (b) a contractor, grantee or other recipient of money from the state or political subdivision if any part of the money, property or services requested or demanded was provided by the state or political subdivision

9. DEFINITONS Con’t ♦ “Political subdivision” – 357.030 Means a county, city, assessment district or any other local government as defined in 354.474

10. FCA DAMAGES ♦ 357.040(1) : Defendant liable to gov’t for: (a) 3 x actual damages (b) costs of litigation (c) civil penalty of not less than $5K or more than $10K for each act ♦ 357.180(1) : Defendant separately liable for Relator’s attorney’s fees and litigation costs

11. LIMITATION ON DAMAGES ♦ Defendant can avoid civil penalties and award of litigation costs if : (a) def furnished all info re the fraudulent act to the gov’t w/in 30 days of becoming aware of info, and (b) def fully cooperated with any gov’t investigation, and (c) no crim pros or civ/admin proceeding had been commenced with respect to fraudulent act at time info was furnished to gov’t, and (d) at time info was furnished to gov’t def had no knowledge of the existence of any investigation re the fraudulent act

12. FCA LITIGATION ♦ Relator : 1) files complaint under seal 2) does not serve defendant(s) 3) sends copy of complaint to AGO (ret rec req) on filing date 4) sends disclosure statement with complaint to AGO which must substantially cover all material evidence and info the Relator possesses 5) complaint may be filed in any judicial district in which the def can be found, resides or transacts business

13. FCA LITIGATION Con’t ♦ Government/AGO : 1) must investigate complaint’s allegations 2) decide w/in 60 days whether to intervene (for good cause shown the gov’t may seek extensions of the 60 day deadline) 3) if gov’t intervenes, the complaint must be unsealed and served on def 4) if gov’t declines intervention, relator takes over litigation of case (complaint unsealed and served on def) 5) after declining intervention, gov’t may seek to intervene if relator not adequately protecting gov’t interests

14. LIMITATIONS re DEFENDANTS ♦ Can’t bring an FCA action : 1) against member of legislature, judiciary or elected officer of state executive department, or member of governing body of political subdivision, if action based upon evidence or info already known to gov’t 2) if based upon allegations or transactions that are subject of a civil action or admin proceeding for a monetary penalty to which the gov’t is already a party - 357.080(3)

15. LIMITATIONS re RELATORS ♦ Can’t bring an FCA action : 1) for fraud discovered in gov’t employment, unless fraud reported to gov’t officials who fail to act on info for at least 6 months – 357.090 2) based upon public disclosure of info in: a) crim, civ or admin hrg; b) legislative hrg or audit (or political subdivision audit); c) the news media; UNLESS filed by AGO or an “original source” of the info - 357.100 [357.100(2) defines original source]

16. RELATOR’S RECOVERY ♦ Intervened cases : - not less than 15% - not more than 33% ♦ Declined cases : - not less than 25% - not more than 50% ♦ Gov’t employee cases (even if relator benefited from fraud) - no minimum - not more than 33% (intervened cases) - not more than 50% (declined cases)

17. ADDITIONAL RESOURCES ♦ Civil False Claims and Qui Tam Actions (3rd Ed) by John T. Boese (Wolters Kluwer – Publishers) ♦ Taxpayers Against Fraud www.taf.org