Summer 2011

Companies Face Expanding Dangers And Pitfalls Under State False Claims Statutes

Kristina Starr Azlin

False Claims Act Defense Partner Vince Farhat and Associate Kristina Azlin authored a SideBAR article titled "Companies Face Expanding Dangers And Pitfalls Under State False Claims Statutes."

Since 1986, more than 4,000 qui tam suits have been filed under the federal False Claims Act (FCA), recovering over $6 billion in funds for the government – of which over $960 million has been paid directly to corporate whistleblowers. Mr. Farhat and Ms. Azlin write that although most FCA cases involve companies that do business directly with the government, companies that have never dealt with the government also face the prospect of expanded liability under a unique and seldom-invoked provision contained in the FCAs of 12 states. Indeed, for companies with any connection whatsoever to persons or entities that provide products or services to the government, either directly or indirectly, the risk of being named as a defendant in an expensive and burdensome FCA case, and exposed to potential liability for treble damages, civil penalties and attorneys’ fees and costs, may be even higher than companies think. According to Mr. Farhat and Ms. Azlin, all companies should be aware of the potential for increased FCA liability, institute compliance programs and seek the advice of counsel if potential liability is suspected.

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