Georgia's New False Claims Act Part II: How This New Act May Apply To You

In May, Jones Day distributed a Commentary titled "Georgia's New False Claims Act: It's Not Just For Health Care Anymore," describing a sweeping new Georgia statute: the Georgia Taxpayer Protection False Claims Act (the "Georgia FCA"). That statute went into effect on July 1, and it exposes almost every sector of commerce in Georgia to potential liability.

The Georgia FCA empowers the state and qui tam relators (whistleblowers) to pursue causes of action against businesses that present false claims to not only the state but also its political subdivisions, such as community health centers, schools, transportation and housing authorities, and MARTA. Moreover, the Georgia FCA applies to false claims made to recipients of government funds if those funds are used in part to pay such claims.

The Georgia FCA affects activity beyond the obvious submission of overstated bills by government contractors. Indeed, Georgia FCA liability may extend to:

Withholding of overpayments, rebates, royalties, or commissions; Repeat billing for payments already made; Presenting claims for payment when the contractor is otherwise in breach of contract; "Reverse false claims," i.e., submitting a false document or statement to avoid paying an obligation to the government; Delivering nonconforming goods or services; Overstating qualifications in order to obtain a contract; and Submitting a false invoice for payment to a government contractor or other entity that has received government funds. Most significantly, the Georgia FCA generally does not require that the business submitting the erroneous claim have any specific intent to defraud the government.

Given case law in other jurisdictions with false claims acts, we expect to see litigation in Georgia involving activities not commonly thought of in the context of false claims. The following are examples of how wide-ranging liability for false claims can be:

An appeals court allowed a complaint against a school bus company to proceed where the alleged false claim was that the school bus company requested payment under its contract with the school district when the bus company was otherwise in breach of certain safety and pollution control requirements of the contract. San Francisco Unified School District ex rel. Contreras v. Laidlaw Transit, Inc., 182 Cal. App. 4th 438, 442, 106 Cal. Rptr. 3d 84, 87 (Ct. App. 2010) (noting that "a vendor impliedly certifies compliance with its express contractual requirements when it...