New York False Claims Act

The New York State False Claims act, passed in 2007 and revised in 2010, is modeled on the Federal False Claims Act and is even more robust than the federal law. The New York State law has stronger anti-retaliation provisions that protect whistleblowers from backlash including industry blacklisting and reputational damage.

In addition to New York’s well-established Medicaid Fraud Division, New York Attorney General Eric Schneiderman created the Taxpayer Protection Bureau to investigate and prosecute a wide variety of corporate fraud. Unlike the federal False Claims Act, the New York False Claims Act includes provisions to reward whistleblowers for information relating to tax fraud.

Examples

In March 2013, the New York Attorney General announced that the owner of Mohan’s Custom Tailors pled guilty to tax evasion spanning ten years and agreed to pay $5.5 million to settle False Claims Act charges originally brought by a whistleblower. The whistleblower received $1.1 million for his information.

In September 2012, the New York Attorney General announced an $18 million settlement with a food management services provider to resolve False Claims Act charges that Compass Group USA overcharged New York schools by failing to pass on discounts received from food vendors.

In April 2012, the New York Attorney General filed a lawsuit against Sprint/Nextel for under-collecting and under-paying millions of dollars in sales tax for wireless calling plans. New York State’s investigation of Sprint began with a whistleblower tip. The case is ongoing, and in June 2013, a state trial court agreed that Sprint knowingly submitted false tax statements.