North Carolina False Claims Act – Qui Tam Whistleblower

North Carolina passed the state False Claims Act in 2009. The North Carolina False Claims Act was modeled on the federal False Claims Act, as is true for many of the 29 states that maintain their own state False Claim Act laws.  It provides for establishing recourse for governments subject to fraud or loss and provides protections and rewards for whistleblowers.  Filing a claim on behalf of the North Carolina government is known as a “qui tam” lawsuit.

North Carolina False Claims Act

The North Carolina False Claims Act allows individuals to bring a case on behalf of the state or local government to recover from an act of fraud.  The “relator” is the individual bringing the claim. You can proceed with a qui tam lawsuit on behalf of the state and receive part of any recovery.  North Carolina does not allow state employees to be relators if they gained the knowledge during government employment.  The claims must be new and a claim cannot be made for publicly known fraud.

After filing a claim, the government will investigate the claim and evidence. A relator or whistleblower need not have all the evidence as an investigation can uncover new evidence or witnesses. The lawsuit is filed under seal.

North Carolina False Claim Act Penalties

The North Carolina False Claims Act allows for penalties of $5,500 to $11,000 per violation.  Additionally, attorneys’ fees and costs as well as treble damages can be recovered. For example, if someone defrauded a North Carolina state or local government agency of $200,000 through 2 violations, he/she could face a total penalty of up to $622,000.

I Have a North Carolina False Claims Act Claim

If you believe you have knowledge of a wrongdoing affecting the state or local governments of North Carolina, contact the experienced whistleblower qui tam lawyers of Schneider Wallace at 1-800-689-0024 or info@schneiderwallace.com.. An experienced attorney can review your claim to determine if you have original private information of a wrongdoing and are able to proceed with a qui tam lawsuit.

North Carolina provides protections against retaliation for whistleblowers under their statute.

North Carolina False Claim Act Rewards

North Carolina whistleblower rewards can be up to 30 percent of the recovery, plus attorney fees and costs. This reward is to recognize the extra work by the relator and their qui tam attorney to take the case to conclusion, with or without government legal assistance.

Schneider Wallace works on a contingency fee basis, so whistleblowers do not need to spend their own money to hire a qui tam lawyer or to file a claim. Schneider Wallace only recovers fees and costs if they secure a whistleblower reward for a client.

North Carolina False Claim Act Rules

The North Carolina False Claim Act law establishes these liabilities:

  • § 1-607. False claims; acts subjecting persons to liability for treble damages; costs and civil penalties; exceptions.
§ 1-607.

False claims; acts subjecting persons to liability for treble damages; costs and civil penalties; exceptions.

(a)       Liability. – Any person who commits any of the following acts shall be liable to the State for three times the amount of damages that the State sustains because of the act of that person. A person who commits any of the following acts also shall be liable to the State for the costs of a civil action brought to recover any of those penalties or damages and shall be liable to the State for a civil penalty of not less than five thousand five hundred dollars ($5,500) and not more than eleven thousand dollars ($11,000), as may be adjusted by Section 5 of the Federal Civil Penalties Inflation Adjustment Act of 1990, P.L. 101-410, as amended, for each violation:

(1)        Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval.

(2)        Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.

(3)        Conspires to commit a violation of subdivision (1), (2), (4), (5), (6), or (7) of this section.

(4)        Has possession, custody, or control of property or money used or to be used by the State and knowingly delivers or causes to be delivered less than all of that money or property.

(5)        Is authorized to make or deliver a document certifying receipt of property used or to be used by the State and, intending to defraud the State, makes or delivers the receipt without completely knowing that the information on the receipt is true.

(6)        Knowingly buys, or receives as a pledge of an obligation or debt, public property from any officer or employee of the State who lawfully may not sell or pledge the property.

(7)        Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the State, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the State.

(b)       Damages Limitation. – Notwithstanding the provisions of subsection (a) of this section, the court may limit the damages assessed under subsection (a) of this section to not less than two times the amount of damages that the State sustains because of the act of the person described in that subsection and may assess no civil penalty if the court finds all of the following:

(1)        The person committing the violation furnished officials of the State who are responsible for investigating false claims violations with all information known to that person about the violation within 30 days after the date on which the person first obtained the information.

(2)        The person fully cooperated with any investigation of the violation by the State.

(3)        At the time the person furnished the State with information about the violation, no criminal prosecution, civil action, or administrative action has commenced with respect to the violation, and the person did not have actual knowledge of the existence of an investigation into the violation.

(c)       Exclusion. – This section does not apply to claims, records, or statements made under Chapter 105 of the General Statutes.  (2009-554, s. 1; 2018-41, s. 2.)

North Carolina’s False Claim Act establishes these rights to qui tam lawsuits:

  • §1-609.  Rights of the parties to qui tam actions.
§1-609.

(a)        If the State proceeds with an action under G.S. 1-608(b), it shall have the primary responsibility for prosecuting the action and shall not be bound by an act of the qui tam plaintiff. The qui tam plaintiff shall have the right to continue as a party to the action, subject to the limitations set forth in subsections (b) through (e) of this section.

(b)        The State may dismiss the action for good cause notwithstanding the objections of the qui tam plaintiff if the qui tam plaintiff has been notified by the State of the filing of the motion and the court has provided the qui tam plaintiff with an opportunity for a hearing on the motion.

(c)        The State may settle the action with the defendant, notwithstanding the objections of the qui tam plaintiff, if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. Upon a showing of good cause, the hearing may be heard in camera.

(d)       Upon a showing by the State that the qui tam plaintiff’s unrestricted participation during the course of the litigation would interfere with or unduly delay the State’s prosecution of the case or would be repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, impose limitations on the person’s participation, such as any of the following:

(1)        Limiting the number of witnesses the qui tam plaintiff may call.

(2)        Limiting the length of the testimony of those witnesses.

(3)        Limiting the qui tam plaintiff’s cross-examination of witnesses.

(4)        Otherwise limiting the participation by the qui tam plaintiff in the litigation.

(e)        Upon a showing by the defendant that the qui tam plaintiff’s unrestricted participation during the course of the litigation would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the qui tam plaintiff in the litigation.

(f)        If the State elects not to proceed with the action, the qui tam plaintiff shall have the right to conduct the action. If the State so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts at the State’s expense. When a qui tam plaintiff proceeds with the action, the court, without limiting the status and rights of the qui tam plaintiff, may permit the State to intervene at a later date upon a showing of good cause.

(g)        Whether or not the State proceeds with the action, upon a showing by the State that certain actions of discovery by the qui tam plaintiff would interfere with the State’s investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay such discovery for a period of not more than 120 days. Such a showing shall be conducted in camera. The court may extend the 120-day period upon a further showing in camera that the State has pursued the criminal or civil investigation or proceedings with reasonable diligence and any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigations or proceedings.

(h)        Notwithstanding the provisions of G.S. 1-608(b), the State may elect to pursue its claim through any alternate remedy available to the State, including any administrative proceeding to determine a civil money penalty. If any such alternate remedy is pursued in another proceeding, the qui tam plaintiff shall have the same rights in that proceeding as the qui tam plaintiff would have had if the action had continued under this section. Any finding of fact or conclusion of law made in the other proceeding that has become final shall be conclusive on all parties to an action under this section. For purposes of this subsection, a finding or conclusion is final if it has been finally determined on appeal to the appropriate court of the State, if all time for filing such an appeal with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.  (2009-554, s. 1.)

North Carolina False Claims Act Statute of Limitations

The North Carolina False Claims Act allows for claims up to six years from the time of the act. Any claim made for actions taken more than six years in the past would be beyond the statute of limitations.

A company or person may commit multiple violations. If a company is incorrectly billing the government for over a decade, the violations that have occurred within the last six years can still be subject to a claim.

North Carolina False Claim Lawyer

Schneider Wallace represents North Carolina whistleblowers. Schedule a consult with our false claim lawyers for a free and confidential consultation. Contact us at 1-800-689-0024 or info@schneiderwallace.com.

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