NEW YORK FALSE CLAIMS ACT TAKES THE LEAD IN THE FIGHT AGAINST FRAUD

New York is once again pushing the envelope with proposed amendments to the New York False Claims Act, N.Y. Fin. Law §§ 187 – 194 (“NYFCA”).  Twenty-nine states, the District of Columbia, and a number of large U.S. cities have enacted their own False Claims Acts that substantially mirror the federal False Claims Act, 31 U.S.C. § 3729, et seq. (“FCA”).  However, no state or local law, nor the FCA, is as comprehensive as the NYFCA.

In 2010, New York amended the NYFCA, bringing claims of tax fraud within the purview of the law.  Upon doing so, New York became the first, and to date the only, jurisdiction to include such a provision within its False Claims Act.  By contrast, the FCA specifically discounts tax fraud, leaving such claims to the, arguably less effective, IRS Whistleblower program.  New York Attorney General Eric Schneiderman, championed the amendment during his time as a New York State Senator.

Likely due in large part to its success prosecuting cases under the expanded NYFCA, a number of New York State Senators are looking to again widen the scope of the law to further hone its efficacy as a fraud fighting tool.  Senate Bill S4362, the proposed expansion to the NYFCA, would cover whistleblowers who provide information about violations of New York’s banking, insurance, and financial services laws to the New York State Department of Financial Services (“DFS”).  In the event of a successful DFS action, the whistleblower will be entitled to receive up to thirty-percent of the total recovery as a reward for their assistance.  Additionally, the proposed amendments offer the same protections from retaliatory employment actions, currently enjoyed by NYFCA whistleblowers.  Looking to again champion the strengthening of the NYFCA, on October 23, 2013, Mr. Schneiderman’s office submitted proposed regulations related to the expansion.

Young Law Group, P.C.

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