New York False Claims Act

Neil Getnick and Lesley Ann Skillen authored a Report issued by the New York State Bar Association (NYSBA) Commercial and Federal Litigation Section, recommending New York State False Claims Act legislation modeled on the federal False Claims Act and rejecting an unacceptable weakened version of the law.

After a presentation by Neil Getnick, NYSBA Civil Prosecution Committee Chair, and Bernice Lieber, NYSBA Commercial & Federal Litigation Section Chair, the NYSBA Executive Committee endorsed enacting a robust New York State False Claims Act, as advanced in Getnick and Skillen’s 1996 Report.

Following an effort initiated by Neil Getnick, U.S. Senator Charles E. Grassley urged New York Governor, George Pataki, to enact a New York State False Claims Act patterned on the federal law. Senator Grassley assured the governor that a New York State False Claims Act would save the state’s taxpayers “significant amounts” that would otherwise be lost to fraud and abuse, and he added that the Federal False Claims Act had been an effective tool against fraud and a remedy for taxpayer-funded programs.

On June 23 and November 9, 2004, Neil Getnick testified before the New York City Council Governmental Operations Committee for passing a New York City False Claims Act.

New York City passed its own False Claims Act based on the federal law. On May 19, 2005, Mayor Michael Bloomberg signed the bill into law in the presence of City Council sponsor David Yassky and principal supporter Neil Getnick. Private citizens with unique knowledge of fraud were empowered to bring suit on behalf of the City.

After U.S. Senator Charles E. Grassley sponsored a key provision to the Federal Deficit Reduction Act, allowing states to keep a greater percentage of their Medicaid fraud recoveries, the New York State Senate passed a sham False Claims Act, excluding the whistleblower provisions and many other key components. At the urging of Neil Getnick, the New York State Bar Association and Taxpayers Against Fraud denounced the sham False Claims Act as ineffective. In June 2006, Getnick, in a Newsday Op Ed, called it “a toothless bill that lacks all of the essential elements of the Federal False Claims Act.” The bill was not enacted into law.

With Neil Getnick’s continued advocacy, New York State passed an effective False Claims Act modeled on the federal statute. In April 2007, the New York Governor signed the False Claims Act into law. The Corporate Crime Reporter interviewed Getnick on the new law’s impact.

With Neil Getnick and Lesley Skillen’s continued involvement, the New York State legislature passed the Fraud Enforcement Recovery Act amendments, creating the most powerful state False Claims Act in the country. Among other things, tax whistleblower cases were permitted under the New York State False Claims Act for the first time.

Getnick Law won a $600 million federal and state False Claims Act recovery, including a $21 million + share for New York State under the New York State False Claims Act. In a letter to Neil Getnick, NY State Governor David Paterson praised Getnick’s “very skillful advocacy . . . courage and determination,” saying, “You were up to the task and achieved a stunning victory.”

The New York State Attorney General announced a new initiative to bolster recovery of taxpayer dollars and fight government fraud by establishing a new Taxpayer Protection Bureau and augmenting the Medicaid Fraud Control Unit to increase recoveries. The Attorney General’s news release quoted Neil Getnick, in his capacity as Taxpayers Against Fraud Chairman, supporting the program as “an effective strategy that more than pays for itself.”

The New York State Attorney General invited False Claims Act lawyers from around the country to a Continuing Legal Education program about using the New York State False Claims Act for “Fighting Fraud Against the Government in the Empire State.” Neil Getnick moderated the panel on the “New Paradigm of Public-Private Partnerships with NYS AG.” Lesley Skillen moderated the panel on “Ethics of Qui Tam [Whistleblower] Practice.”

On January 20, 2012, Neil Getnick testified in favor of extending the New York City False Claims Act’s reach at the invitation of the New York City Council Governmental Operations Committee. Getnick cited the value of the New York City False Claims Act law since its enactment and encouraged its extension beyond the 2012 seven-year sunset date (after which the New York City False Claims Act would no longer be in effect).

On April 16, 2012, following up on the Committee’s January hearing, Neil Getnick testified again at the invitation of the City Council Governmental Operations Committee. He spoke in favor of enacting newly proposed legislation to preserve, extend, and improve the New York City False Claims Act; extending outreach to, and strengthening anti-retaliation protections for, whistleblowers; and recommended additional improvements.

On June 20, 2012, Mayor Michael Bloomberg signed amendments to the New York City False Claims Act that brought the City’s False Claims Act more closely in line with the New York State False Claims Act. The Amendments clarified that the City may waive the “public disclosure bar,” which prevents people from filing False Claims Act suits based on a fraud that had already been disclosed through public channels (unless a person was the “original source” of the information), and increased the minimum awards for whistleblowers.

Margaret Finerty, Neil Getnick, and Richard Dircks co-chaired a Continuing Legal Education program for the New York State Bar Association on “The New York False Claims Act: Model Statute for the Public/Private Partnership to Fight Fraud against the Government.” The program educated participants on how to bring claims under the New York State False Claims Act, including best practices and ethical considerations. The program also addressed how the New York State Attorney General Office Taxpayer Protection Bureau, and the New York State Medicaid Fraud Control Unit, use the New York State False Claims Act to combat fraud in all areas involving government dollars. Finerty moderated a panel on “Litigating NYS False Claims Act Cases: Ethical Considerations,” which addressed gathering evidence and navigating a client with potential criminal liability.

On April 1, 2013, Governor Andrew Cuomo signed amendments to the New York State False Claims Act that: (1) created a new cause of action against individuals or corporations that lie to avoid paying money they owe to the government; and (2) ensured that whistleblowers’ attorneys’ fees, costs, and expenses are paid for by a party found liable under the Act.

On December 31, 2013, the New York State Attorney General issued sweeping and unique regulations that: (1) closed a loophole that could allow liable parties to escape having to pay treble damages as the statute requires; (2) protected whistleblowers from having their cases unjustly dismissed under the “public disclosure bar”; (3) allowed whistleblowers to file a New York State False Claims Act action based on information derived from undisclosed federal reports; and (4) clarified that a person or corporation that files a false statement illegally reducing someone else’s obligation to pay money to the government can be held liable under the New York State False Claims Act.

Margaret Finerty, Neil Getnick, and Richard Dircks organized and participated in a Continuing Legal Education program for the New York State Bar Association Commercial and Federal Litigation Section on “Blowing the Whistle on Commercial Fraud.” The program featured a panel on the New York State False Claims Act, which provided participants with an opportunity to hear directly from the prosecutorial force behind the New York State False Claims Act’s enforcement: the Office of the New York State Attorney General.

Margaret Finerty, Neil Getnick, and Richard Dircks co-chaired a Continuing Legal Education program at the New York State Bar Association on “Blowing the Whistle on Fraud: Litigating Federal and New York False Claims Act and SEC Whistleblower Cases.” The program provided practical guidance to practitioners and explored the interplay between whistleblower laws, the agencies that administer or utilize them, and the resulting synergies of public and private sector resources. Finerty moderated a panel on “Multi-Jurisdictional Cases.”

Margaret Finerty moderated a Continuing Legal Education panel at The American Law Institute’s Continuing Legal Education False Claims Act Institute on “Multijurisdictional Practice.” The panel discussion included an overview of the New York State False Claims Act and how to navigate cases involving both federal and state False Claims Act violations.

Margaret Finerty organized and moderated a Continuing Legal Education panel at the Fourteenth Annual Taxpayers Against Fraud Education Fund Conference and IRS, SEC, CFTC Whistleblower Boot Camp on “Hybrid Cases Coordinated Fraud Fighting.” The panel focused on navigating hybrid cases involving IRS, SEC and qui tam (federal and state) actions. The state qui tam component of the panel addressed the New York State False Claims Act.

Margaret Finerty organized and moderated a Continuing Legal Education panel at the Sixteenth Annual Taxpayers Against Fraud Education Fund Conference on “Navigating Multiple Whistleblower Claims.” The panel addressed best practices for whistleblower attorneys; how to coordinate a False Claims Act investigation involving multiple offices and agencies; and considerations that go into deciding where a whistleblower should file a False Claims Act claim if he or she has multiple options. The panel also discusses the protections provided to whistleblowers under the New York State False Claims Act.

On April 18, 2017, Getnick Law, together with co-counsel, secured a $40 million tax evasion settlement against Harbert Management Corporation under the New York State False Claims Act, the largest tax whistleblower recovery in New York state history at the time. The whistleblower, whose identity remains protected, received 22 percent of the settlement ($8.8 million), the then-largest amount and percentage share for a whistleblower in a non-Medicaid New York State False Claims Act case.

Margaret Finerty organized and moderated a Continuing Legal Education panel at the Seventeenth Annual Taxpayers Against Fraud Education Fund Conference on “The Future of Tax Whistleblower Cases.” The panel addressed emerging trends in tax court litigation and how the court is interpreting new False Claims Act regulations, as well as state tax cases in New York involving the New York State False Claims Act.

On September 27, 2018, Getnick Law, together with co-counsel, secured a $30 million settlement against Harbinger Capital Partners Offshore Manager LLC, the investment manager for New York-based hedge funds run by Philip Falcone from 2002 to 2009. The settlement was the second stage of the largest tax whistleblower recovery in New York state history at the time. The win followed the related $40 million settlement against Harbert Management Corporation in April 2017, bringing the total recovery to $70 million. The Relator, whose identity remains protected, received 22 percent of the $30 million settlement ($6.6 million).

On November 27, 2018, Getnick Law secured a settlement in New York’s first ever whistleblower case leading to a criminal restitution recovery for individual consumer fraud victims. New York recovered $3.2 million from Morgan Fuel & Heating Co. Inc., also known as Bottini Fuel Co., which provides heating oil throughout Hudson Valley. The whistleblower received 23.5% of the government’s recovery in the settlement, the largest percentage ever awarded for any New York State False Claims Act case not involving Medicaid in which the State has superseded.

Margaret Finerty organized and moderated a Continuing Legal Education Panel at the New York State Bar Association Presidential Summit on “Enlisting the Public in the Fight Against Fraud: How Whistleblower Laws Work, How They Have Evolved and the Courage It Takes to be a Whistleblower.” The panel included an overview of the New York State False Claims Act and how it compares to the federal False Claims Act. Neil Getnick participated on the panel and spoke to the development and passage of the New York State False Claims Act, as well as the public-private partnership that occurs in both federal and state False Claims Act cases.

On September 27, 2021, Getnick Law and the New York Attorney General’s Office secured a $6 million settlement against National Grid in a groundbreaking whistleblower case. This resolution, addressing National Grid’s failure to properly manage New York State’s electrical distribution system on Long Island and the Rockaway Peninsula, marked the first time that the New York State False Claims Act was applied to an electrical utility company. The whistleblower, whose identity remains protected, received 23.5% of the government’s recovery. This is the largest award percentage paid in any non-Medicaid New York State False Claims Act case in which the State has superseded.

In 2021 and 2022, Getnick Law attorneys advocated for proposed amendments to the New York State False Claims Act that would impose liability on those who knowingly and illegally fail to file tax returns. Getnick Law spearheaded efforts in the New York State Bar Association to issue Memoranda in support of the legislation; advocated for the legislation; and exposed weaknesses in arguments against the legislation in a Law360 op-ed. On May 3, 2023, the Governor signed into law legislation imposing liability on non-filers.

On May 23, 2022, Courtney Finerty-Stelzner moderated a continuing legal education program on amendments to New York’s Labor Law that expanded anti-retaliation protection for employee whistleblowers. The program educated participants on the new law as well as anti-retaliation provisions in the New York State False Claims Act.