The Civil Justice Association of California opposes Assembly Bill 1196 (Blumenfield), a bill that would expand California's False Claims Act in a way that could unfairly expand government's lawsuit power against private citizens and businesses. The bill is set for hearing on April 14 in the Assembly Judiciary Committee.
The False Claims Act allows individuals and prosecutors to sue companies or contractors who overcharge or defraud the government. The California False Claims Act is already quite strict. It imposes strict penalties for making a false statement in filing a claim for money or services from the government. California law imposes a penalty of three times the amount of actual damages when a person has made a false claim. The false claimant is also liable for the costs of the lawsuit to recover the money and a civil penalty of up to $10,000. (Government Code Section 12651 (a).) The law allows an individual, called the qui tam plaintiff, to bring a lawsuit as a whistleblower on behalf of the government.
There are two primary provisions of concern in this bill. The first is that the bill expands the definition of "claim" for a False Claims Act to include "any record or statement used to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state or any political subdivision."
This expansion is broad enough to include any overpayment to a contractor or company, even an inadvertent overpayment. In other words, under this bill, if the government mistakenly overpays a contractor, the contracting company can then be sued by an individual whistleblower. It is dangerous public policy to have the failure to return an overpayment the basis of a lawsuit, because the real decision-makers in the company might never have even found out about the overpayment.
The other main problem with the bill is that it un-does the statute of limitations for any government claim. The bill authorizes any additional claim on the part of the government to "relate back" to the filing by the qui tam plaintiff. This means that if the government takes over a lawsuit originally brought by an individual, the government's case is said to have been filed when the individual brought her case, for all possible claims the government might bring, not only the claims that the individual brought. This provision effectively nullifies any statute of limitations for government prosecutions of companies which contract with the government.
Statutes of limitations are important because they encourage fairness, they encourage claims to be resolved quickly, and they provide certainty to potential defendants after a set period of time.