New Jersey

New Jersey False Claims Act

New Jersey joined many other states and the District of Columbia by passing its version of the Civil False Claims Act in January 2008. The New Jersey False Claims Act (“NJFCA”), NJSA §§ 2A:32C-1 to 17, is closely patterned after the federal FCA, although the state statute contains several notable differences related to statutory application, the terms governing the filing of claims under the state Act, the investigation and prosecution of claims, and the distribution of financial proceeds as a result of settlements or judgments.

New Jersey’s False Claims Act casts a wide net by applying to those who “present” false claims to an “agent of the State, or to any contractor, grantee or other recipient of state funds.” This statutory language covers a wide variety of entities that contract directly or indirectly with the state, including contractors, subcontractors, and consultants. The NJFCA notes that a request for “services” can trigger the Act; therefore private sector contractors who provide services such as bridge or road inspections are potentially liable under the NJFCA. In addition to treble damages, violators face civil penalties of $5,500 to $11,000 per violation and the obligation to pay attorneys’ fees and related costs to state prosecutors and qui tam counsel. Notably, the federal FCA does not require the defendant to pay for the government’s attorneys’ fees and costs.

Like the federal FCA, New Jersey’s Act allows qui tam relators to receive 15 to 25% of a settlement where the government intervenes and 25 to 30% where the government does not intervene. Additionally, New Jersey lawmakers ensured that the State Attorney General would receive 10% of the proceeds in any action brought by the Attorney General, regardless of the subject matter, in order to self-fund state prosecutions under the NJFCA.

State Cases

New Jersey’s Medicaid Fraud Control Unit’s False Claims Act group recovered nearly $45 million in 2012 as a result of twelve settlements in FCA cases.

In August 2012, New Jersey received a $22.3 million share of a settlement with GlaxoSmithKline (“GSK”) after the company engaged in off-label promotion of certain of its drugs. Additionally, GSK failed to pay rebates to New Jersey’s Medicaid program.

In October 2012, the Garden State received $7.15 million from a settlement involving Abbott Laboratories after the company illegally promoted and sold the prescription drug Depakote for off-label uses and paid kickbacks to healthcare providers from 1998 to 2008 in an effort to increase company profits.

In May 2012, New Jersey obtained $6.21 million, part of a national Medicaid settlement of $200 million involving Merck Sharpe & Dohme Corp. (“Merck”). The settlement resolved claims that Merck illegally marketed and sold Vioxx for off-label uses and misrepresented the safety of the drug.

In August 2012, the state received $7 million from McKesson Corporation to resolve claims that the company falsified the average wholesale price of its drugs between August 2001 and March 2005, which led New Jersey’s Medicaid program to reimburse McKesson.