Better Know an FCA: Virginia’s Qui Tam Statute

by Kurt Schulzke

Vendors beware! In this first part of a fifty-part series on state false claims acts, we take a closer look at Virginia’s Fraud Against Taxpayer’s Act or FATA.*

What’s so special about Virginia’s FATA? While the FATA is nearly identical in many respects to the federal False Claims Act (“FCA”), the FATA drills down a bit deeper than the FCA on a subset of “knowledge” or “intent” sometimes called “deliberate ignorance.” Under both statutes, a defendant’s liability to the State for a false claim is predicated on that defendant’s “knowing” state of mind.  Both the FCA and FATA (Code of Virginia § 8.01-216.3(C)) define “knowing” and “knowingly” as follows:

… “knowing” and “knowingly” mean that a person, with respect to information (i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information…

So far, so identical. Yet, in one relatively narrow context, there is more to FATA “knowing” than first meets the eye. Here’s the operative language from just a few paragraphs above, at Code of Virginia § 8.01-216.3(A):

A. Any person who:

… 5. Authorizes [sic] to make or deliver a document certifying receipt of property used, or to be used, by the Commonwealth and, intending to defraud the Commonwealth, makes or delivers the receipt without completely knowing that the information on the receipt is true; …

shall be liable to the Commonwealth for a civil penalty of not less than $5,500 and not more than $11,000, plus three times the amount of damages sustained by the Commonwealth.

In other words, anyone in the position of either “making” or “delivering” a “receipt” for property to or for the Commonwealth of Virginia has a legal obligation to go beyond the usual formulation of due care or not knowing that the receipt is not accurate.  The legal duty for this aspect of FATA is higher:  To escape FATA liability, one must completely know that the receipt is accurate.  Without digging out case law on point — a tall order given the fact the FATA has been on the books only since 2002 — this formulation of “knowing” captures more false-claims behavior than mere “deliberate ignorance.”

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*Like all state qui tam or false claims acts, Virginia’s full text can be accessed through the Taxpayers Against Fraud website.  Individual sections can also be accessed through the Commonwealth of Virginia’s Legislative Information System starting at § 8.01-216.1.

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