Similar to the federal False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733, which protects federal whistleblowers, the Virginia Fraud Against Taxpayers Act (VFATA), Va. Code § 8.01–216.1 et seq., rewards and protects employees and other individuals who report activities that defraud the state government.
In a nutshell, the VFATA provides that any person who knowingly submits a false or fraudulent claim to the Commonwealth of Virginia is liable for triple damages, plus penalties, attorney’s fees, and costs for each false claim. In addition to allowing the Commonwealth to pursue those who submit false claims, the VFATA allows private citizens with personal knowledge about false or fraudulent claims to hire their own attorney and file “qui tam” suits on behalf of the Commonwealth against those who have defrauded it. Private citizens who successfully bring qui tam actions under the VFATA may receive a portion of the government’s recovery. The VFATA also contains a strong anti-retaliation provision that protects whistleblowers who assist with a VFATA investigation or action.
The VFATA was originally enacted in 2003 to provide state-level rewards and protections similar to those provided in the federal FCA. Both laws have the same objective: to recover government funds lost due to fraudulent claims and to reward and protect those who blow the whistle on fraud against the government.
Liability for False Claims
The VFATA imposes liability and penalties for defrauding or submitting false claims to the Commonwealth. The law creates liability to the Commonwealth for any person who
“[k]nowingly presents … a false or fraudulent claim for payment or approval [or] [k]nowingly makes … a false record or statement material to a false or fraudulent claim[.]” Va. Code § 8.01–216.3(A)(1)&(2).
A defendant who is found to have knowingly defrauded or submitted false claims to the Commonwealth is liable for triple damages (3 times the amount of damages the Commonwealth incurred because of the fraudulent act), as well as civil penalties, attorney’s fees, and costs. Va. Code §§ 8.01–216.3(A)(1)&(2) & 8.01-216.7(B).
“Knowingly” Defined
The VFATA defines “knowing” and “knowingly” to mean that a person, with respect to information:
(i) has actual knowledge of the information;
(ii) acts in deliberate ignorance of the truth or falsity of the information; or
(iii) acts in reckless disregard of the truth or falsity of the information.
Significantly, like the FCA, under the VFATA, to show that a person acted “knowingly” does not require proof of specific intent to defraud. Va. Code § 8.01–216.3(C).
“Claim” Defined
Also like the FCA, the VFATA defines the term “claim” to mean any request or demand, whether under a contract or otherwise, for money or property and regardless of whether the Commonwealth has title to the money or property, that:
(i) is presented to an officer, employee, or agent of the Commonwealth; or
(ii) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Commonwealth’s behalf or to advance a governmental program or interest, and if the Commonwealth—
(I) provides or has provided any portion of the money or property requested or demanded; or
(II) will reimburse such contractor, grantee, or other recipient for any portion of the money or property that is requested or demanded.
Va. Code § 8.01–216.2. However, for purposes of the VFATA the term “claim” does not include requests or demands for money or property that the Commonwealth has paid to an individual as compensation for employment with the Commonwealth or as an income subsidy with no restrictions on that individual’s use of the money or property. Va. Code § 8.01–216.2.
Qui Tam Actions and Recovery
As with the federal False Claims Act, lawsuits under the VFATA start with a whistleblower bringing a “qui tam” action on behalf of the Commonwealth and herself to recover the damages to the state government due to the fraudulent act. “Qui tam” is short for a Latin phrase (“qui tam pro domino rege quam pro se ipso in hac parte sequitur”) which means roughly “he who sues in this matter for the king as well as for himself.” This reflects the fact that a whistleblower who brings a qui tam action does so on behalf of the government as well as him or herself. Va. Code § 8.01-216.5.
The whistleblower in qui tam actions is called a “relator.” A relator can be anyone with knowledge of the fraud against the Commonwealth. The relator can be an employee, but the relator does not have to be an employee.
Also like the FCA, the VFATA provides that the relator may recover up to 15-30% of the amount recovered by the government through the qui tam action. Va. Code § 8.01-216.7.
Retaliation Prohibited / Relief Provision
The VFATA protects from retaliation those who report fraud against the Commonwealth. The law’s anti-retaliation provision prohibits a defendant from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against an individual because he or she assisted with an investigation or action under the Virginia Fraud Against Taxpayers Act. Va. Code § 8.01-216.8.
A whistleblower who prevails on a retaliation claim under the VFAT is entitled to “all relief necessary to make [him or her] whole[.]” Va. Code § 8.01-216.8. That relief can include:
(i) reinstatement with the same seniority status that the whistleblower would have had but for the discrimination;
(ii) two times the amount of back pay;
(iii) interest on the back pay, and
(iv) compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
Va. Code § 8.01-216.8. Any relief awarded to an employee in a VFATA retaliation case is reduced by any amount previously awarded to the employee through a state or local grievance. Id.
Waiver of Sovereign Immunity
Significantly, the VFATA’s anti-retaliation provision contains a waiver of the Commonwealth’s sovereign immunity from legal actions against it. This allows employees to sue the Commonwealth in court if the Commonwealth is the employer responsible for an adverse employment action that violations the anti-retaliation provisions of the VFATA. Va. Code § 8.01-216.8.
In short, the VFATA allows private citizens to serve as whistleblowers by filing qui tam suits on behalf of the Commonwealth against those who have defrauded the state government. The defendant can be liable for civil penalties plus three times the Commonwealth’s damages, and whistleblowers who successfully bring qui tam actions may receive a portion of the Commonwealth’s recovery. The VFATA also contains a strong anti-retaliation provision protecting those who assist with a VFATA investigation or action.
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