The North Carolina False Claims Act

The North Carolina False Claims Act was passed in 2009 and allows an individual to file a lawsuit on behalf of the State of North Carolina in certain situations. Before the passage of the North Carolina False Claims Act, a similar law, the Medicaid False Claims Act, authorized the North Carolina Attorney General to pursue actions against those who committed Medicaid fraud. Although the Medicaid False Claims Act preceded the North Carolina False Claims Act, it is still in effect.

When filing an action under the False Claims Act, the individual filing the lawsuit, known as a plaintiff in most civil cases, is called the “realtor.” The realtor is generally the individual who discovers the fraudulent activity by a person or business entity against the government.

Claims made under the Act are generally known as a qui tam claims, which translates to “in the name of the king.” A qui tam claim is a lawsuit filed for the benefit of the state against a person or business entity for submitting, or causing to be submitted, false or fraudulent claims to the state. Additionally, it can be filed where a person or business entity becomes aware of a claim submitted by mistake but fails to repay the state.

The North Carolina General Statutes Article 51 provides that a person is liable to the state where he or she:

  1. Knowingly presents a false or fraudulent claim for payment.
  2. Knowingly makes or uses a false record or makes a statement material to a false or fraudulent claim.
  3. Conspires to make a false or fraudulent claim.
  4. Has possession or control of money used or to be used by the State and knowingly delivers less than all of that money or property.
  5. Is authorized to make or deliver a document certifying receipt of property used or to be used by the State and makes or delivers the receipt without knowing whether the information is true, with intent to defraud the State.
  6. Knowingly buys public property from any officer or employee of the State who lawfully may not sell the property.
  7. Knowingly makes or uses a false record regarding an obligation to pay the State, or knowingly conceals, avoids, or decreases an obligation to pay to the State.

If a person or entity is found to have committed any of the above acts, they will be liable to the state for costs of the action and will be required to pay a penalty up to $11,000. Additionally, the defendant may be required to pay treble damages. When a statute provides for treble damages, it permits the court to award triple the amount of actual damages sustained by the plaintiff. Here, the court would be permitted to award three times the amount of damages sustained by the State.

What if I Report My Employer for Making False Claims for Payment to the State?

A majority of fraud schemes are found by employees while working at the business in question. When reporting your employer for fraudulent or other illicit activities that would otherwise go unknown, you are known as a whistleblower. Whistleblowers can often find themselves victims of harassment, threats, and other forms of retaliation. For this reason, the North Carolina False Claims Act provides protections for those who report illicit activities within a business. The whistleblower employee is protected from:

  • Loss of pay
  • Termination of employment
  • Demotion
  • Harassment and threats in the workplace

Where an employer is found to have retaliated against you after whistleblowing, he may be required to pay you two times the amount of back pay, interest, attorneys’ fees and costs, and damages for discrimination, as well as reinstate you as an employee.

In addition to damages resulting from retaliation, you may be entitled to a reward from the State for your whistleblowing. Because most fraud against the state goes unreported, the State will reward the whistleblower a percentage of the recovery from the qui tam lawsuit.

How Do I File a Qui Tam Lawsuit?

To bring a cause of action under the False Claims Act, you will be required to file the lawsuit under seal. This means that the public has no knowledge of the lawsuit, and your name as a whistleblower will be protected until the government pursues the action.

Once the case is filed under seal, the State will have 120 days to investigate the fraud or false claim and decide whether to intervene. If the State chooses not to intervene, the realtor may move on with the action in his individual capacity. After 120 days, the case will become unsealed. However, the State can petition the court for an extension of time if necessary for further investigation.

How Does the North Carolina False Claims Act Differ from the Federal False Claims Act?

There are similarities in the Federal and North Carolina False Claims Acts including the protections against retaliation for whistleblowers, the ability to recover treble damages, and provisions under which a person or entity will be found liable. However, there are also differences between the two acts including:

  • A restriction against public employees filing a claim: In North Carolina, a state employee cannot be a realtor where they gain information about fraud or other illicit activity in the course of their employment. Under the Federal Act, there is no such restriction.
  • The time period for which a claim is under seal: While North Carolina provides a 120-day seal period, federal law requires that the claim remains under seal for 60 days while the investigation is conducted and the decision to intervene is made.

If You Believe You Have a Qui Tam Claim, Call Noble Law Today

If you believe your employer is committing fraud against the government of North Carolina or has made false claims in order to receive payment, call the employment law attorneys at Noble Law. Qui Tam claims are serious, and allegations of fraud should be reported immediately. Our attorneys provide consultations in person at our office in North Carolina as well as remotely. Call the Charlotte office at 704.626.6648 or the Triangle office at 919.251.6008. You can also visit our North Carolina website and to schedule your consultation.

This entry was posted in Noble Notes Employment Law Blog. Bookmark the permalink.