Indiana False Claims and Whistleblower Protection Act
Indiana passed the Indiana False Claims and Whistleblower Protection Act (IFCWPA) in 20052. The IFCWPA generally models the federal FCA,3 but contains some differences.
1. LIABILITY AND DAMAGES PROVISIONS
Generally, an individual will be liable under the IFCWPA for the same violations as the federal FCA. For example, an individual will be liable for knowingly or intentionally presenting a false claim to the state for payment or approval, or making or using a false record or statement to obtain payment or approval of a false claim from the state.4 The IFCWPA imposes an additional liability on a person who knowingly or willingly causes or induces another person to perform an act in violation of the IFCWPA.5
Similar to the federal FCA, the IFCWPA explicitly excludes false tax claims.6 The damages provision in the IFCWPA differs from the penalties imposed in the federal FCA. While the federal FCA allows for treble damages and civil penalties ranging from $5,500 to $11,000 per claim,7 the IFCWPA only provides for a civil penalty of at least $5,000 per violation and up to three times the damages the state sustained.8 There is no maximum penalty, unlike the federal FCA.9 However, the IFCWPA follows the federal act and provides for the reduction of liability to not less than twice the damages that the state sustained if the defendant 1) voluntarily disclosed information of the violations to the state within thirty days of obtaining the information, 2) cooperated with the investigation, and 3) did not have knowledge of an investigation at the time the person provided the information to officials.10
2. PROCEDURAL ISSUES
a. General Procedural Provisions
The IFCWPA allows a private person to bring a suit on behalf of the person and the state.11 The IFCWPA provides that a civil action brought pursuant to the statute may be filed in a circuit or superior court in the county in which a defendant or plaintiff resides, or in a circuit or superior court in Marion county.12 Unlike the federal FCA, which requires that the complaint be sealed for 60 days, the IFCWPA states that the complaint shall remain under seal for 120 days.13
Several of the other procedural provisions in the Indiana statute are the same as in the federal statute, including the government’s right to request an extension of the seal of the complaint upon a showing of good cause;14 the required disclosure to the attorney general of all material information known to the relator;15 the government’s primary responsibility for litigating the action if it chooses to intervene and the right to limit the relator’s participation;16 the relator’s right to proceed with the litigation if the state chooses not to intervene;17 the state’s right to dismiss the case as long as the relator is provided with a hearing on the motion;18 and the right of the attorney general or inspector general to intervene at a later date upon a showing of good cause.19 However, unlike the federal FCA, if the attorney general or inspector general is permitted to intervene, the state will obtain the primary responsibility of litigating the action.20
In addition, the state’s right to settle the case differs in the state and federal FCA.21 In both statutes, the state has the right to settle the case if the settlement is “fair, adequate, and reasonable under all the circumstances.”22 However, the Indiana statute states that the court may consider the objection of the relator upon a showing of a good cause, but is not bound by it.23
The IFCWPA, like the federal FCA, provides that the state or person bringing the suit must prove all the elements of the cause of action, including damages, by a preponderance of the evidence.24 Also, like the federal FCA, the state may explicitly request a stay of proceedings if discovery would interfere with the investigation of a criminal matter arising from the same facts.25 The state may request an extension of the stay if it can show that it has pursued the matter with reasonable diligence.26 In addition, both the federal FCA and the IFCWPA provide that, if a final judgment was rendered in favor of the government in a criminal proceeding, the defendant is estopped from denying the essential elements of the offense in any action brought pursuant to the statute that involves the same transactions.27
b. Statute of Limitations
The IFCWPA provides the same limitations period as the federal FCA. Like the federal FCA, the IFCWPA states that an action may not be brought more than six years after a violation of the IFCWPA occurred, or more than three years from the date when the state knew or should have known of material facts of the violation, but not later than ten years after the date on which the violation is committed.28
3. JURISDICTIONAL BARS TO ACTIONS
a. First to File Bar and Bar Against Members of Legislative, Executive or Judicial Branches
Like its federal counterpart, the IFCWPA provides jurisdictional bars to certain qui tam actions. The IFCWPA contains a first to file bar,29 as well as a bar prohibiting actions against members of the judiciary, legislature, and certain state employees and officials, unless the action is brought by the attorney general, the inspector general, a prosecuting attorney, or a state employee acting in his or her official capacity.30
b. Public Disclosure Bar
The IFCWPA also contains a public disclosure bar that is similar to the federal FCA. The IFCWPA prohibits a relator from bringing an action based upon (1) a transcript of a criminal, a civil, or an administrative hearing, (2) a legislative, an administrative, or another public report, hearing, audit, or investigation, or (3) a news media report.31
In order to be an “original source,” the IFCWPA requires the relator to have direct and independent knowledge of the information that is the basis of the action and to voluntarily provide this information to the state.32 This used to be very similar to the federal FCA language, but the Patient Protection and Affordable Care Act (“the Affordable Care Act”)33 amended that section of the federal FCA in 2010.34 The Indiana statute has yet to enact these changes.
c. Additional Jurisdictional Bars
Unlike the federal FCA, the IFCWPA bars actions that are based on information discovered by a present or former state employee in the course of the employee’s employment, unless (1) the employee, in good faith, exhausted existing internal procedures for reporting and recovering the amount owed the state; and (2) the state failed to act on the information within a reasonable amount of time.35 The IFCWPA also prohibits actions based upon an act that is the subject of a civil suit, a criminal prosecution, or an administrative proceeding in which the state is a party.36 These bars do not apply to actions brought by the attorney general, the inspector general, a prosecuting attorney, or a state employee acting in his or her official capacity.37
The IFCWPA, like its federal counterpart, protects whistleblowers from retaliation by their employers. The damages recoverable under the state statute are almost identical to those recoverable under the federal FCA.38 Damages include reinstatement with the same seniority status and all damages necessary to make the employee whole, such as double the amount of back pay, interest on the back pay, and special damages, including litigation costs and reasonable attorney’s fees.39
5. RELATOR’S SHARE
The relator’s recovery under the IFCWPA is identical to the relator’s recovery under the federal FCA. If the state decides to intervene on an action, the relator is entitled to fifteen to twenty-five percent of the proceeds.40 If the state declines to intervene, the relator is entitled to twenty-five to thirty percent of the proceeds.41 Like the federal FCA, the statute allows for a reduction of the award to not more than ten percent of the proceeds if the suit is based upon public disclosure and the relator is an original source.42 The statute also allows for a recovery of reasonable attorney’s fees and costs, which would be an additional cost assessed against the defendant and may not be paid from the proceeds of the civil action.43
While the federal FCA provides a reduction of the award amount if the relator “planned and initiated” the violation, the Indiana statute prohibits a relator who “planned and initiated” the violation from sharing in any of the proceeds.44 If the relator is convicted of criminal conduct due to his role in the fraud, the relator will not share in the proceeds.45 In an action brought by a private individual in which the state declined to intervene, the IFCWPA allows a successful defendant to recover reasonable attorney’s fees and expenses if the court finds that the action was frivolous.46 However, the state is not liable for expenses incurred by a party in an action.47
- Author of treatise, Federal False Claims Act and Qui Tam Litigation, Law Journal Press (2010), research source of the issues discussed in this article.
- Ind. Code §§ 5-11-5.5-1 to 5-11-5.5-18.
- 31 U.S.C. §§ 3729 to 3733.
- Ind. Code § 5-11-5.5-2(b).
- Ind. Code § 5-11-5.5-2(b)(8).
- Ind. Code § 5-11-5.5-2(a). See also 31 U.S.C. § 3729(d).
- 31 U.S.C. § 3729(a). The civil penalties under the federal FCA have been raised from $5,000 and $10,000 to account for inflation.
- Ind. Code § 5-11-5.5-2(b).
- Id. Compare 31 U.S.C. § 3729(a).
- Ind. Code § 5-11-5.5-2(c).
- Ind. Code § 5-11-5.5-4(a).
- Ind. Code §§ 5-11-5.5-3(h) & 5-11-5.5-4(a).
- Ind. Code § 5-11-5.5-4(c). Compare 31 U.S.C. § 3730(b)(2).
- Ind. Code § 5-11-5.5-4(d).
- Ind. Code §§ 5-11-5.5-4(c)(1)-(2).
- Ind. Code §§ 5-11-5.5-5(a) & 5-11-5.5-5(d).
- Ind. Code § 5-11-5.5-5(e).
- Ind. Code § 5-11-5.5-5(b).
- Ind. Code § 5-11-5.5-5(f).
- Ind. Code § 5-11-5.5-5(f). Compare 31 U.S.C. § 3730(c)(3).
- Ind. Code § 5-11-5.5-5(c). Compare 31 U.S.C. § 3730(c)(2)(B).
- Ind. Code § 5-11-5.5-5(c).
- Ind. Code § 5-11-5.5-9(c). Compare 31 U.S.C. § 3731(d). The federal FCA states only that the “United States” must prove all elements by a preponderance of the evidence.
- Ind. Code § 5-11-5.5-5(g). See also 31 U.S.C. 3730(c)(4).
- Ind. Code § 5-11-5.5-9(d).
- Ind. Code § 5-11-5.5-9(b).
- Ind. Code § 5-11-5.5-4(g).
- Ind. Code §§ 5-11-5.5-7(a) & (d).
- Ind. Code § 5-11-5.5-7(f).
- Patient Protection and Affordable Care Act (“the Affordable Care Act”), Pub. L. No. 111-148, 124 Stat. 119 (March 23, 2010).
- Pub. L. No. 111-148, § 1303(j)(2), 124 Stat. 119 (March 23, 2010), amending 31 U.S.C. § 3730(e)(4). The previous version f the federal FCA required an original source to have “direct and independent knowledge.” In the amended version of the federal FCA, the definition of “original source” was changed and the amended law now allows a person to qualify as an “original source” if that person discloses the information to the government before the public disclosure is made or if they have “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions.” In addition, in the amended version of the federal FCA, the court can only dismiss an action based upon a public disclosure if the government does not oppose the dismissal. Also, actions based on public disclosures are only barred if they are made in a criminal, civil, or administrative hearing in which the government is a party.
- Ind. Code § 5-11-5.5-7(b).
- Ind. Code § 5-11-5.5-7(e).
- Ind. Code § 5-11-5.5-7(a).
- Ind. Code § 5-11-5.5-8.
- Ind. Code § 5-11-5.5-8(b).
- Ind. Code § 5-11-5.5-6(a)(1).
- Ind. Code § 5-11-5.5-6(a)(3).
- Ind. Code § 5-11-5.5-6(a)(2).
- Ind. Code § 5-11-5.5-6(a).
- Ind. Code § 5-11-5.5-6(a)(4). Compare 31 U.S.C. § 3730(d)(3).
- Ind. Code § 5-11-5.5-6(a)(4).
- Ind. Code § 5-11-5.5-6(b).
- Ind. Code § 5-11-5.5-6(c).
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