The Minnesota False Claims Act (“MFCA”) takes effect today: Thursday, July 1, 2010. The MFCA allows the state, and certain private parties suing on behalf of the state, to recover money damages for false or fraudulent claims submitted to the state, or a political subdivision of the state, by a government contractor or grantee. While Minnesota joined 25 other states in passing this state counterpart to the Federal False Claims Act on May 16, 2009, the MFCA becomes effective today and only applies to claims submitted on or after July 1, 2010. The MFCA can be found at https://www.revisor.mn.gov/statutes/?id=15C&view=chapter.
A person is liable under this act if he or she knowingly: (1) presents a false or fraudulent claim for payment; (2) makes or uses a false record or statement to get a claim paid or approved; (3) conspires to defraud the state by presenting a false claim or using a false record to obtain payment or approval; (4) delivers to the state less money or property than the amount for which the person receives a receipt; (5) prepares or delivers a receipt that falsely represents the money or property used by the state; (6) buys, or receives as a pledge, public property from an officer or employee of the state who lawfully may not sell or pledge the property; or (7) makes or uses a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state.
The MFCA does not apply to, among other things, false claims that are due to mere negligence, inadvertence or mistake, or claims made by a non-managerial employee without an employer’s knowledge. In addition, a contractor can avoid liability by repaying any damages within 45 days of the date it learns of a false claim from an “original source” – a person with independent knowledge of the false claim who reports the false claim to the state.
A person who violates the act is liable for $5,500-$11,000 per false or fraudulent claim, plus three times the amount of damages sustained by the state or political subdivision. A prosecuting attorney has authority to investigate and bring a civil action under the MCFA. In addition, a whistleblower – or “relator” – may commence a qui tam lawsuit in his or her own name. The relator’s share of recovery can range from 15 to 30%, depending upon if and when a prosecuting attorney chooses to join the lawsuit. A prevailing party also may be awarded attorney fees in a MFCA case.
It is important that state contractors become familiar with Minnesota’s new law because violations of the MFCA can: (i) create an incentive for whistleblowers to report violations; and (ii) result in treble damage awards. Thus, every contractor should take appropriate measures to ensure that adequate controls are in place to avoid potentially false claims.