Mayor Bloomberg Signs Permanent Extension of NYC False Claims Act

At a public hearing on June 20, 2012, Mayor Michael Bloomberg of New York City gave remarks before a legislative session of the New York City Council in which he announced his support for legislation which would give New York City’s False Claims Act effect into perpetuity, as well as make some alterations to the current ordinance in order to bring it into closer conformity with the New York State False Claims Act and the federal False Claims Act (“FCA”).

New York City, Chicago, and Allegheny County, Pennsylvania are the only three units of local government in the U.S. that have adopted false claims acts of their own, although thirty states have passed false claims act laws of which whistleblowers seeking to report knowledge of fraud against state or federal government may avail themselves. Like the federal FCA, the New York City ordinance provides a means for whistleblowers to bring evidence of false claims for City funds to the attention of City authorities, with victorious whistleblowers receiving a percentage of any final settlement or damage award recovered by the City.

In his speech before the City Council, Mayor Bloomberg said, “Since the [New York City False Claims Act] was enacted by the Council and our Administration in 2005, the Corporation Counsel’s Office and the Department of Investigation have found it to be a useful tool in their efforts to curb fraud.”

Most state and local whistleblower protection statutes are modeled on the federal False Claims Act, a law enacted in 1863 to combat war profiteering during the Civil War. Under the qui tam provisions of the False Claims Act, whistleblowers (known as relators) have standing to bring legal claims on behalf of the government against parties that have allegedly submitted false claims for payment or in order to evade payment of monies owed. The statute has undergone significant changes since passage of the Fraud Enforcement and Recovery Act (FERA), the Patient Protection and Affordable Care Act (PPACA), and Dodd-Frank Act (Wall Street Reform Bill). The amendments to the act have generally expanded the scope of protections afforded to whistleblowers as well as individuals’ exposure to liability; for example, false claims made to third party beneficiaries or grantees of government programs may also give rise to a sufficient complaint under the FCA. The statute also contains protections for employees against retaliation. Relators who prevail under the FCA may receive between 15% and 30% of any settlement or final judgment.