Virginia

Virginia Fraud Against Taxpayers Act

Lawmakers in the Commonwealth of Virginia enacted the Virginia Fraud against Taxpayers Act (“VFTA”) in 2002. See Va. Code Ann. §§ 8.01-216.1 et seq. Under § 8.01-216.3 of the Act, an individual or business may face civil liability for knowingly presenting or causing to be presented a false or fraudulent claim, conspiring to do so, or engaging in other fraudulent activity specified by law. Heavily borrowing from the federal FCA, Virginia’s FCA imposes statutory penalties from $5,500 up to $11,000 for each specific violation, treble damages paid to the Commonwealth, and attorneys’ fees on defendants who violate its terms. With its qui tam provision, Virginia’s False Claims Act provides strong incentives for whistleblowers to come forward to expose instances of fraud against the state, since they can obtain a reward of up to 25% of the civil penalties recovered by the Commonwealth, or if the Attorney General decides not to intervene, up to 30%.

Like the federal FCA, Virginia’s False Claims Act protects whistleblowers against employer retaliation. If a relator can prove such retaliation occurred, the Commonwealth offers a number of compensatory damages such as double back pay including interest, reinstatement (if appropriate), and compensation for any special damages such as attorneys’ fees and expenses if the employee acted lawfully under the VFTA, including by attempting to stop the violation.

According to § 8.01-216.8 of Virginia’s Code, a relator can file a disclosure with the Commonwealth to ensure that he or she is the original source of the information about the fraud, which will significantly help the relator’s case in any resulted litigation.

State Cases

In April 2010, AstraZeneca announced that it would pay $6 million to the Commonwealth of Virginia to settle claims that it engaged in off-label marketing of its drug Seroquel. The settlement came as part of a larger national settlement in which the Department of Justice (“DOJ”) secured $520 million from the drug manufacturer.

On March 8, 2013, a jury in Alexandria, Virginia delivered a win to a former city architect in the first case brought under the retaliation provisions of Virginia’s VFTA. Henry Lewis, the now former city architect, was awarded $104,050 in back pay. Under the VFTA, he received double that amount; $208,100. Lewis is currently seeking $246,528 for front pay, paid leave, and loss of his pension benefits. Lewis claimed city supervisors harassed, threatened, and eventually fired him after he spoke out against an inappropriate relationship between city officials and a contractor hired by the city to complete an $81 million project to build a new police headquarters. According to Lewis, the contractor overcharged the city, cut corners, and performed shoddy work. One Virginia attorney claimed, “I don’t know of any wrongful termination provision in the Virginia Code that’s as powerful.”

Notably, in December 2013, Virginia’s Supreme Court quashed attempts by the Attorney General, Ken Cuccinelli, to issue Civil Investigate Demands (“CIDs”) to the University of Virginia as part of an investigation into possible grant fraud. According to Justice Leroy F. Millette Jr., “[N]either by express language nor by necessary implication does FATA provide the Attorney General with authority to issue CIDs to commonwealth agencies.”