Updated January 25, 2021.  Originally posted August 28, 2019.  

Bills that sought to extend the reach of the California False Claims Act to tax-related matters stalled in the California State Senate in 2020. 

The California False Claims Act, as well as its Federal equivalent, are specialized statutes with specific pleading requirements and a robust body of case law.  The IRS, the SEC, and many other Federal and state agencies also have their own “whistleblower” programs.  These statutes and programs can lead to significant economic recoveries for government agencies.  They also provide that a portion of the money collected be shared with whistleblowers. 

Currently, the California False Claims Act says that anyone who presents a false claim for payment or approval, presents a false record, or makes a materially false statement or fraudulent claim, must pay three times the amount of the loss and the cost of any civil action brought against it.  It also allows a person with knowledge that other people or companies have submitted false claims to bring a civil action in the name of the state.  That “whistleblower” is referred to as a “qui tam plaintiff.”  The qui tam plaintiff files the complaint under seal and forwards a copy to the California Attorney General.  After given a period to investigate, the California Attorney General may take the case on itself, a process called “intervention,” or decline prosecution and have the qui tam plaintiff litigate the case on his or her own. 

The California False Claims Act does not currently apply to false claims under the state's Revenue and Taxation Code.  In February 2019, California Assembly Member Mark Stone introduced Assembly Bill 1270 that, among other things, would permit a qui tam plaintiff to file a civil suit based on a false claim, statement, or record made under the California Revenue and Taxation Code if the alleged damages exceed $200,000 and the claim, statement, or record was made on or after January 1, 2020.  After AB 1270 stalled in the State Senate in 2019, a substantially similar bill, Assembly Bill 2570, was introduced.  However, like its predecessor, AB 2570 also stalled in the Senate in 2020.  

Bienert Katzman Littrell Williams LLP partners Thomas H. Bienert, Jr., Michael R. Williams, Dan Z. Goldman, and others on the BKLW team have significant expertise and experience in handling False Claims Act cases, having secured a record $280 million settlement and $78 million relator share for its client Beverly Brown.

Read more:

• Mike Williams' interview by Best Lawyers on partnering up in False Claims Act whistleblower litigation, bestlawyers.com.
• Dan Goldman's interview by Best Lawyers on the Anti-Money Laundering Act broadening potential sources for whistleblower claims, bestlawyers.com.
• Unnecessary hospitalizations may lead to liability under the False Claims Act, bklwlaw.com.
• Tissue graft company to pay $6.5 million in Dept. of Veterans False Claims Act case, bklwlaw.com.