Effective June 30, 2023, the New Jersey Legislature amended the New Jersey False Claims Act (“NJFCA” or “Act”) to align it more closely with the federal False Claims Act (‘FFCA”) and, thus, make New Jersey eligible for a 10% enhancement in its recoveries in Medicaid fraud cases.[1]
Overview of the NJFCA
The NJFCA, enacted in 2008, authorizes the New Jersey Attorney General and private individuals (whistleblowers, or “relators,”) to initiate suits on behalf of the State (“qui tams” suits when brought by a relator), to recover treble damages and collect stiff penalties from those who submit false claims for payment to the State or its agents, make false records material to a false claim, or create false records to reduce an obligation to transmit money or property to the State.[2] Under the NJFCA whistleblowers can receive a bounty of between 15% and 30% of the State’s recovery, as well as their attorney’s fees.[3]
Actionable conduct includes submitting false claims for payment to the Medicaid program, the State’s health benefits plans, to any department or other agent of the State or any grantee of the State or making or using a false record or statement material to a false or fraudulent claim. False records that reduce an obligation to transmit money to the State can include, for example, a dental practice’s failure to remit uncollected patient credit funds to the State’s Unclaimed Property Administration, or a surgical center’s and diagnostic testing provider’s underreporting of annual gross receipts that result in underpayments to the State’s Charity Care Fund.[4]
Key Amendments
The amendments, among other things,
- Aling the definition of “claim” to the broad federal definition, and for the first time define the terms “material” and “obligation”, (N.J.S.A. 2A:32C-2);
- Grant the Attorney General the power to veto the effect of a public disclosure bar that requires a Courts to dismiss a whistleblower’s claim if it is based on public information, the whistleblower is not “an original source,” and the Attorney General declined to take over the action (“intervene”). Now, if the Attorney General objects to dismissal, the case may proceed even when the Attorney General has declined to take over the action, (N.J.S.A. 2A:32C-9 (c));
- Grant additional investigatory powers including the authority to issue subpoenas to out of State entities, and to serve interrogatories, (N.J.S.A. 2A:32C-14);
- Clarify that the Attorney General in its sole discretion, may settle a qui tam matter over the objections of a relator, even in cases where the Attorney General has declined to intervene and the relator is litigating the matter, (N.J.S.A. 2A:32C-6 (c));
- Abrogate a provision that barred State employees from serving as relators if the information underlying a claim was discovered in the course of their employment responsibilities, (abrogating N.J.S.A. 2A:32C-9(d));
- Strengthen anti-retaliation provisions for relators, adding contractors and agents as individuals entitled to protection, (N.J.S.A. 2A:32C-10); and
- Add a new section providing that a final judgment in favor of the State or the United States in any criminal proceeding estops a defendant from denying any essential element of the offense in a false claims act suit involving the same transaction, N.J.S.A. 2A:32C-12.1).
Impact and Conclusion
These amendments are likely to significantly impact the False Claims Act practice in New Jersey.
[1] See https://pub.njleg.state.nj.us/Bills/2022/AL23/73_.PDF (P.L. 2023, CHAPTER 73, approved June 30, 2023 Assembly, No. 5584, Amending P.L. 2007, c. 265).
[2] N.J.S.A. 2A:32-C-3 (a),(b), and (g) among other bases for liability.
[3] N.J.S.A. 2A:32-C-7(a) and (d).
[4] See https://www.newjerseywhistleblowerlawyerblog.com/category/false-claim-act-new-jersey/ (discussing settlement in U.S. ex rel. D’Agostino v. Allied Dental Practices of New Jersey, No 3:17-cv-07719, and https://nj.gov/oag/newsreleases18/pr20180607a.html (discussing settlement in N.J. ex rel. Allstate Insurance et al. v. Patel, et al., Docket No. MER-L-0954-16).
