According to the American Bar Association, the False Claims Act is the fastest growing area of federal litigation. In 2013, the U.S. Department of Justice reported that it had recovered $3.8 billion in federal False Claims Act suits. 2014 has already produced similarly impressive settlement numbers. While False Claims Act litigation has been quickly expanding on the federal level for the past decade, state-level False Claims Act enforcement in particular has exploded in the past year.

With many states facing budget pressure, state governments are taking extra steps to encourage reporting of False Claims Act violations. Many states have enacted their own False Claims Act statutes similar to the federal FCA, as well as amending existing state-level FCA law to further incentivize whistleblowers to come forward. Along with New York and California, Virginia is one of the front-runners in enacting legislation that both protects and rewards whistleblowers for reporting fraud in state, local, and municipal contracting.

While many states now have their own False Claims Act legislation, Virginia’s False Claims statute, known as the Virginia Fraud Against Taxpayers Act, is broader in scope than most. While some of these states limit their statutes to Medicaid based fraud allegations, Virginia’s statute applies to fraud involving a broad range of state-funded programs. Virginia’s False Claims statute includes a number of provisions designed to encourage and incentivize whistleblowers’ honesty. One such provision is the “no retaliation” feature, which grants whistleblowers protection from negative repercussions associated with reporting fraud. Virginia is also one of the states that allows the qui tam whistleblower to receive a portion of the money recovered by the state, as in federal FCA suits.

Under Virginia’s FCA, the defendant is liable for any false claim if the Commonwealth has provided any portion of the money. “Commonwealth” is defined to means the Commonwealth of Virginia, any agency of state government, and any political subdivision. A defendant may be ordered to pay up to three times the actual harm to the state, plus a fine equal to between $5,500 and $11,000 for each violation of the law. A plaintiff who files a successful claim may receive between 15 and 25 percent of any recovery to the state if the Virginia Attorney General intervenes in the matter. If the private plaintiff successfully prosecutes the case on his own, he may receive between 25 and 30 percent of the award.

States with high concentrations of government contractors, healthcare entities, and research programs, such as Virginia, Texas, California, and New York, are hotbeds for potential state-level False Claims Act suits. The explosion of state-level FCA enforcement in 2014 is expected to continue to grow as plaintiffs increasingly assert multiple state FCA claims alongside federal claims and attempt to work alongside state governments and Attorney Generals in pursuing these cases.

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