North Carolina False Claims Act vs. Federal FCA: A Quick Guide
At Barrett & Farahany, we have built a national reputation for excellence as the oldest and largest firm in the Southeast dedicated exclusively to employee rights. From our offices across the country — including our dedicated team in North Carolina — we champion the courageous individuals who step forward to report wrongdoing.
Whistleblowers play a critical role in maintaining integrity within government spending. However, understanding the legal landscape can be difficult, especially when determining which laws apply to a specific situation.
While the Federal False Claims Act (Federal FCA) is the most well-known statute for combating fraud, state-specific laws like the North Carolina False Claims Act (North Carolina FCA) are equally vital. Understanding the distinctions between these two acts is the first step in protecting your rights and holding fraudsters accountable.
Overview of the Federal False Claims Act (FCA)
The Federal False Claims Act, often referred to as “Lincoln’s Law,” is the federal government’s primary litigation tool for combating fraud against the government. Enacted during the Civil War, its original purpose was to stop defense contractors from selling sick horses and faulty rifles to the Union Army. Today, the Federal FCA covers a broad range of federal programs, including healthcare (Medicare and Medicaid) and defense contracts.
The law imposes liability on persons and companies who defraud governmental programs. Crucially, it includes qui tam provisions that allow private citizens, known as “relators” or whistleblowers, to file lawsuits on behalf of the government. If the suit is successful, the whistleblower is entitled to a portion of the recovery.
Introduction to the North Carolina False Claims Act
Just as the federal government needs protection from fraud, so does the State of North Carolina. The North Carolina False Claims Act was enacted to mirror the federal version but with a specific focus on protecting state funds.
The North Carolina FCA serves as a powerful deterrent against individuals or entities attempting to defraud the state government. While it shares the same spirit as its federal counterpart, its jurisdiction is strictly tied to North Carolina’s financial resources.
Key Similarities Between the Acts
Because the North Carolina FCA is modeled after the Federal False Claims Act, they share several core characteristics designed to incentivize honesty and punish deceit.
1. Combating Fraud and Protecting Funds
The primary purpose of both laws is identical: to combat fraud against government funds. The Federal FCA protects the U.S. Treasury, while the North Carolina FCA protects the state’s treasury.
2. Definitions and Liability
The structure of the NC law mirrors the federal law. Both statutes use similar definitions of what constitutes a “false claim” and impose comparable liabilities on those found guilty of fraud.
3. Financial Penalties and Damages
Both acts take financial fraud seriously. They allow for the recovery of treble damages — meaning the fraudster may have to pay back three times the amount of money they stole — plus significant civil penalties for each false claim filed.
4. Whistleblower Protections and Qui Tam Provisions
Both the Federal and North Carolina False Claims Acts empower private citizens to file lawsuits on behalf of the government. Furthermore, both laws offer robust protections for these whistleblowers, safeguarding them against retaliation such as firing, demotion, or harassment for reporting fraud.
Key Differences Between the FCA and NCFCA
While the statutes are similar in structure, there are distinct differences regarding jurisdiction and procedure.
1. The Source of Funds
The most obvious difference lies in the victim. The Federal FCA applies when the fraud involves federal funds. The North Carolina FCA applies when the fraud targets state funds. However, it is important to note that some programs, such as Medicaid, often involve a mix of both state and federal money, potentially triggering claims under both acts.
2. Initiating Lawsuits
Procedurally, there are differences in how suits are handled. Under the North Carolina FCA, the North Carolina Attorney General plays a central role in initiating lawsuits. This differs slightly from the federal system, where the government investigates allegations and decides whether to intervene in a private suit filed by a whistleblower.
3. Whistleblower Rewards
Under the North Carolina FCA, whistleblowers are eligible to receive between 15% and 30% of the recovery. This percentage can vary depending on whether the state decides to intervene in the case, but the potential for significant financial reward mirrors federal guidelines.
4. Scope of the Laws
The North Carolina FCA is broader than its predecessor, the Medical Assistance Provider Act, but it remains focused on fraud occurring within North Carolina. The Federal FCA has a nationwide scope covering all federal programs.
Protecting Your Rights in North Carolina
Identifying whether a fraud involves state funds, federal funds, or both can be complex. If you have information regarding fraud against the State of North Carolina, you would typically file under the North Carolina FCA, often working in conjunction with the NC Attorney General’s office. If the fraud involves federal dollars, the Federal False Claims Act applies. In many cases, specifically in healthcare, a case may need to be structured to preserve rights under both acts.
If you suspect fraud and are considering blowing the whistle, you need experienced legal counsel to navigate these complexities. Contact Barrett & Farahany today to discuss your case and ensure your rights are protected.
