Builders and Contractors Exchange
Weekly Bulletin: 19 Apr 2004
The Virginia Fraud Against Taxpayers Act
By: Michael Sterling
You couldn't understand how that out-of-state contractor undercut your bid on a public project by fifty percent. You caulk it up to bad luck, and move on to the next job. Later, you are the successful bidder on some follow-on work at the same facility, and you discover that the out-of-state contractor installed cheap substitutes for the expensive building materials specified in the contract. You ask the owner if he authorized the substitutions and he says he did not know about the changes. What can you do?
With little fanfare the new Virginia Fraud Against Taxpayers Act ("VFATA" or the "Act"), Virginia Code §§ 8.01 - 216.1, et. seq., went into effect on January 1, 2003. Since that time several successful suits have been brought under the Act that allows private citizens to assist the state government by recovering money fraudulently obtained by government contractors. It was patterned after the federal False Claims Act ("FCA"), 31 USC §§ 3729, et. seq. The VFATA prohibits any person or entity from presenting a false claim to the state government, or any of its political subdivisions, for payment. It also prohibits assistance or ancillary acts involved in presenting a false claim. Like the federal FCA, the VFATA allows private citizens to participate in so-called "qui tam" suits. In such suits, the private plaintiff, brings the suit in the name of the commonwealth, and may receive 15% - 25% of the recovery if the government intervenes and takes over the case. In cases where the government does not intervene the citizen plaintiff may recover 25% - 30%.
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.