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California False Claims Act

Fight fraud against the state and share in the recovery

The federal False Claims Act (FCA) prohibits any person or entity from defrauding the federal government, permits whistleblowers to sue in the government’s name to recover defrauded funds, and rewards whistleblowers with up to 30 percent of the winnings in the lawsuit.

Similarly, the California False Claims Act (CFCA) prohibits fraud against the California state government, permits whistleblowers to sue in the government’s name, and rewards whistleblowers with up to 50 percent of the recovery. In total, 29 states and the District of Columbia have a state False Claims Act.

If the alleged fraud affects both the California and federal governments, the whistleblower can file one lawsuit with claims under both the California False Claims Act and the federal False Claims Act.

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The decision to blow the whistle on government fraud is a difficult one. Our qui tam attorneys understand the utmost importance of confidentiality and act with discretion at every step of the process.

Speak privately with us at no obligation by calling toll-free (800) 254-9493 or filling out the form.

California False Claims Act Settlements, By Industry

The State of California has recovered over $1 billion under the California False Claims Act. The following are a list of settlements under the CFCA, by industry type:

Water

  • Los Angeles Department of Water & Power. $160 million settlement.
    • The allegations were that the power company had inflated the electric bills of its government customers since as early as 1998. The whistleblowers received up to 19 percent of the $160 million recovery.
  • Tyco International et al. $60 million settlement.
    • The allegations were that Tyco and other manufacturers provided substandard parts for the state’s water supply system and some of those parts contained amounts of lead that exceeded industry standards.

Tech Companies

  • Toshiba. $30 million.
    • The allegations were that the computers Toshiba sold to California public agencies had defective micro-code, resulting in data being lost or corrupted as it was written to an external floppy disk.

Medical

  • Eli Lilly. $112 million settlement.
    • The allegations were that Eli Lilly had aggressively marketed its drug Zyprexa for unapproved uses, costing Medi-Cal millions of dollars to pay for these unapproved, off-label uses. The whistleblowers received 18 percent of the recovery in the Eli Lilly settlement.
  • Sandoz, Inc. $75 million settlement.
    • The allegations were that Sandoz fraudulently inflated the price of its drugs when reporting them to a pricing-database used by the government. The whistleblower was Ven-A-Care, a competitor of Sandoz. Ven-A-Care stated that it came forward because it accurately priced its own drugs but was disturbed by what some of its competitors were doing.
  • Schering-Plough. $21.3 million settlement.
    • The allegations were that Schering-Plough reported falsely inflated prices for Albuterol and other inhalers, causing Medi-Cal to overpay for the inhalers.
  • Quest Diagnostics. $241 million settlement.
    • The complaint alleged that Quest Diagnostics charged the government up to 6 times more for a blood test of someone on Medi-Cal than it charged non-Medi-Cal customers. The whistleblower was a competitor of Quest Diagnostics—Hunter Laboratories—that said that unlike its competitors, it elected not to overbill Medi-Cal, but knew that its competitors were doing so. The whistleblower received 29 percent of the $21.3 million recovery.

Securities

California has two state pension funds, CalPERS and CalSTRS. Both pension funds invest large amounts of money in the financial markets. A company that withholds material information or presents materially misleading information to investors may be liable to the State of California under the CFCA for losses that CalPERS and CalSTRS sustain as a result of the fraudulent omission or statement.

  • Bank of America. $300 million settlement.
    • The alleged violation of the CFCA was that Bank of America (BoA) had defrauded the state’s pension funds, CalPERS and CalSTRS, by misrepresenting the strength of its mortgage-backed securities by omitting information about the underlying mortgages and BoA’s lack of due diligence in weeding out poor quality loans.

Government Contractors

  • Hanson Building Materials. $42.2 million settlement.
    • The allegations in the complaint were that Hanson had cheated the California government out of tens of millions of dollars over a ten-year period by: (a) taking and selling two million cubic yards of sand from state lands that Hanson was not supposed to be dredging on, and (b) understating the price and quantity of sand they dredged from lands they were allowed to be on in order to pay the government less money for the sand.

Education companies

  • rong>K12 Inc. $2.5 million settlement.
    • The allegations in the complaint were that K12 and its affiliated charter schools submitted inflated student attendance numbers in order to collect more state funding from the California Department of Education than they were entitled to.

Girard Gibbs’ Whistleblower Experience

Girard Gibbs’ whistleblower lawyers have more than two decades of experience prosecuting fraud. Our attorneys have successfully litigated against some of the largest companies in the United States, and we have recovered more than a billion dollars on our clients’ behalf. We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California and The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).

We proudly hold memberships in Taxpayers Against Fraud, a public interest organization dedicated to combating fraud against the government and protecting public resources. Our firm supports the nonprofit’s educational initiatives and efforts to advance public and government support for qui tam whistleblower cases.