Tennessee False Claims Act

Tony Munter summarizes the Tennessee False Claims Act below and compares it to federal law. He is not licensed in the jurisdiction of Tennessee.

Tennessee has two False Claims Act Laws: the Tennessee False Claims Act (465 Tenn. Code Ann. §§4-18-101 et seq.) and the Tennessee Medicaid False Claims Act (466 Tenn. Code Ann. §§71-5-181 et seq). Together, these laws create some of the strongest False Claims Act legislation of any state in the country.

The Tennessee False Claims Act is specifically for all kinds of cases besides those involving Medicaid funds. This is clearly a law designed to provide incentives both to the individuals who may report a case of fraud and even to the government agencies who take up the case.

False Claims Against the State

The Tennessee FCA includes liability for false claims made against the State, as well as all political subdivisions of Tennessee. “Subdivisions” in this context are defined to include any city, town, municipality, county, or other legally authorized local jurisdiction.

This law provides a higher share of a successful case for the individual relator than both the Federal False Claims Act and the Tennessee Medicaid False Claims Act. Under the Tennessee False Claims Act, an individual who files a case may receive from 25 to 33 percent for an intervened case. If the individual proceeds on their own, then the share is from 35 to 50 percent of the recovery.

Obviously, a 50 percent relator’s share is a powerful incentive to pursue a case. However, this law creates incentives for the government agencies to pursue the case as well.

The Tennessee False Claims Act has a specific incentive for the Attorney General and for the equivalent prosecuting authority from a political subdivision to pursue such claims. Such agencies are to receive 33 percent of the recovery to put towards fighting fraud within their offices, as opposed to the entire amount being returned to the state treasury.

This law provides the same kind of liability for false claims as the federal law does, with the addition of a provision which creates liability for “inadvertent false claims” when someone is the beneficiary of such a claim and fails to report it within a “reasonable” period of time.

The Two False Claims Acts in Tennessee

The Tennessee False Claims Act includes the sensible provision, which limits cases to controversies involving at least $500. The law also includes a provision which allows for a state employee to file a case, but only if that employee first in good faith exhausted internal procedures for reporting and seeking claimed funds through official channels, and the state or political subdivision failed to act. While it allows state employees to recover rewards, the Act makes such awards optional.

The Tennessee Medicaid False Claims Act provides similar liability for claims as under the Federal False Claims Act, including treble damages for violations. However, the Tennessee Medicaid False Claims Act includes a higher civil fine of from $5,000 to $25,000.

The share of the proceeds a successful relator can claim under this law is in line with federal standards of 15 to 25 percent for an intervened case, and from 25 to 30 percent for a non-intervened case.  It is a relatively standard False Claims Law applicable only to Medicaid funds.

The two laws working together meet or exceed virtually every analogous provision of the Federal False Claims Act.