New York State & New York City False Claims Acts: G&G’s Lead Role

New York State boasts the most powerful False Claims Act (FCA) in the country. Passed in 2007, and strengthened in 2010, it is a critical tool for fighting fraud against the state and creating structural reform. The law allows private citizens with evidence of such fraud to file suit in order to help the state recover the billions of dollars of fraudulent charges billed each year to government entities. When successful, the recovery is equal to three times the amount of money determined to be defrauded, and the citizen (the whistleblower) receives a monetary award that is typically 15 – 30 percent of the total recovery. New York City has its own FCA that was passed in 2005 and strengthened in 2012 to more closely align with the NY State FCA.

At every stage from conception, to enactment, to implementation, G&G has played a major leadership role in overcoming obstacles and gaining support to make both the NY State FCA and the NY City FCA a reality.

Continuing that work after the passage of the NY City FCA in May 2005 and the NY State FCA in April 2007, G&G Managing Partner Neil Getnick and colleagues concentrated on strengthening the laws. In August 2010, the legislature passed the Fraud Enforcement Recovery Act, making the amended NY State FCA law the most powerful FCA in the country, including a provision that allows state tax whistleblower cases. Since 2010, G&G attorneys have educated others about the NY State FCA and utilized the law as intended: to fight fraud against the state and secure some of the largest recoveries and relator’s shares (the amount awarded to the whistleblower) under the Act. As a result of the cases brought by G&G, in collaboration with co-counsel and the New York State Attorney General’s Office, New York State has recovered close to $100 million in defrauded funds.

Conception

May 1996 – G&G Partners Author Report Encouraging Robust NY State FCA
Neil Getnick and Lesley Ann Skillen author a Report issued by the New York State Bar Association (NYSBA) Commercial and Federal Litigation Section, which recommends NY State FCA legislation modeled on the Federal FCA and rejects an unacceptable weakened version of the law.

+ NYSBA Report of the Commercial & Federal Litigation Section of the NYSBA (May 1996)

Jan. 1998 – NY State Bar Association Endorses Robust NY State FCA Bill
After a presentation by Neil Getnick, NYSBA Civil Prosecution Committee Chair, and Bernice Lieber, NYSBA Commercial & Federal Litigation Section Chair, the NYSBA Executive Committee endorses enacting a robust NY State FCA, as advanced in Getnick and Skillen’s 1996 Report.

+ NYSBA Minutes – Executive Committee Meeting (Redacted) (Jan. 29, 1998) + NYSBA Newsletter Article (Dec. 1998)

July 1999 – Following G&G-Initiated Effort, Senator Grassley Encourages Passing NY State FCA
Following an effort initiated by Neil Getnick, U.S. Senator Charles E. Grassley urges New York Governor, George Pataki, to enact a NY State FCA that is patterned on the federal law. He assures the governor that a NY State FCA will save the state’s taxpayers “significant amounts” that would otherwise be lost to fraud and abuse, adding that the federal FCA has been an effective tool against fraud and a remedy for programs funded by taxpayers.

+ Letter from Senator Grassley to Governor Pataki (July 22, 1999)

June/Nov. 2004 – Neil Getnick Testifies for Passing NY City FCA
On June 23 and November 9, 2004, Neil Getnick testifies before the New York City Council Governmental Operations Committee for passing a NY City FCA.

+ Neil Getnick’s Remarks to NYC Council (June 23, 2004) + Neil Getnick’s Remarks to NYC Council (Nov. 9, 2004)

Enactment

May 2005 – New York City Enacts NY City FCA
New York City passes its own FCA based on the federal law. On May 19, 2005, Mayor Michael Bloomberg signs 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 are empowered to bring suit on behalf of the City.

+ Press Release from Council Member David Yassky: “Mayor Bloomberg signs Yassky Bill” (5/19/05) + Photo of Bill Signing by Mayor Michael Bloomberg with Neil Getnick and David Yassky at his side. Published in The Chief. (May 27, 2005)

June 2006 – G&G Plays a Leading Role in Defeating Efforts to Derail NY State FCA
After U.S. Senator Charles E. Grassley sponsors a key provision to the Federal Deficit Reduction Act, allowing states to keep a greater percentage of their Medicaid fraud recoveries, the NY State Senate passes a sham FCA, excluding the qui tam (whistleblower) provisions and many other key components. At the urging of Neil Getnick, the New York State Bar Association and Taxpayers Against Fraud protest the sham FCA as ineffective. In June 2006, Getnick, in a Newsday Op Ed, calls it “a toothless bill that lacks all of the essential elements of the Federal False Claims Act.” The bill is not enacted into law.

+ NYS Bar Association Resolution (Mar. 15, 2006) + Newsday Opinion piece by Neil Getnick (June 16, 2006) + TAF News Release: “Taxpayers Against Fraud Blasts Senate Medicaid Bill” (June 14, 2006)

Apr. 2007 – New York State Passes NY State FCA
With Neil Getnick’s continued advocacy, NY State passes an effective FCA modeled on the federal statute. In April 2007, the New York Governor signs the FCA into law. The Corporate Crime Reporter interviews Getnick on the impact of the new law.

+ Corporate Crime Reporter Article & Interview of Neil Getnick (Apr. 30, 2007) + Taxpayers Against Fraud Lobbying Campaign (March 2007)

Implementation

Aug. 2010 – New York State Enacts Stronger NY State FCA
With Neil Getnick and Lesley Skillen’s continued involvement, the NY State legislature passes the Fraud Enforcement Recovery Act amendments creating the most powerful state FCA in the country. Among other things, tax whistleblower cases are permitted under the NY State FCA for the first time.

+ News Release: Historic Anti-Fraud Taxpayer Protection Measure (July 1, 2010)

Oct. 2010 – G&G Wins $600mm Federal and State FCA Recovery, with $22mm+ Share Under NY State FCA
Getnick & Getnick wins a $600 million federal and state FCA recovery, including a $22 million + share for NY State under the NY State FCA. In a letter to Neil Getnick, NY State Governor David Patterson praises Getnick’s “very skillful advocacy . . . courage and determination,” saying, “You were up to the task and achieved a stunning victory.”

+ Medicaid Compliance News (Oct. 2010) + Governor Paterson letter to Getnick & Getnick (Dec. 30, 2010)

Jan. 2011 – NY State Attorney General Announces New NY State FCA Initiative, Quoting Neil Getnick
The NY State Attorney General announces a new initiative to bolster recovery of taxpayer dollars and fight government fraud by establishing a new Taxpayer Protection Bureau and augment the Medicaid Fraud Control Unit to Increase Recoveries. His news release quotes Neil Getnick, in his capacity as Taxpayers Against Fraud Chairman, supporting the Attorney General’s program as “an effective strategy that more than pays for itself.”

+ Office of Attorney General: Taxpayer Protection Bureau Unit Announcement (Jan. 27, 2011)

June 2011 – G&G Partners Lead Legal Education Programs on Fighting Fraud in NY State in Partnership with the New York Attorney General
The NY State Attorney General invites FCA lawyers from around the country to a Continuing Legal Education program about using the NY State FCA for “Fighting Fraud Against the Government in the Empire State.” Neil Getnick moderates the panel on the “New Paradigm of Public-Private Partnerships with NYS AG.” Lesley Skillen moderates the panel on “Ethics of Qui Tam [Whistleblower] Practice.”

+ Office of Attorney General: Continuing Legal Education Program (June 8, 2011) + Continuing Legal Education Program presented by Getnick & Getnick at the NYC Bar Association (Nov. 2011)

Jan./Apr. 2012 – Neil Getnick Testifies for Extending NY City FCA’s Reach
On January 20, 2012, Neil Getnick testifies in favor of extending the NY City FCA’s reach at the invitation of the NYC Council Governmental Operations Committee. He cites the value of the NY City FCA law since its enactment and encourages its extension beyond the 2012 seven-year sunset date (after which the NY City FCA would no longer be in effect).

On April 16, 2012, following up on the Committee’s January hearing, Neil Getnick testifies again at the invitation of the City Council Governmental Operations Committee. He speaks in favor of newly proposed legislation to preserve, extend, and improve the NY City FCA, as well as to extend outreach to, and strengthen anti-retaliation protections for, whistleblowers. His testimony recommends further improvements as well.

+ Neil Getnick’s Testimony – NYC Council FCA Hearing (Jan. 20, 2012) + Neil Getnick’s Testimony & Supplemental Statement – NYC Council FCA Hearing (Apr. 16, 2012) + Neil Getnick Testifying at the NYC Council Hearing (Apr. 16, 2012 Photo One) + Neil Getnick Testifying at the NYC Council Hearing (Apr. 16, 2012 Photo Two)

June 2012 – New York City Extends NY City FCA
On June 20, 2012, Mayor Michael Bloomberg signs amendments to the NY City FCA that brought the City’s FCA more closely in line with the NY State FCA. The Amendments clarified that the City may waive the “public disclosure bar,” which prevents people from filing FCA 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 that whistleblowers can receive.

+ NYC Law Department, NY City FCA

Nov. 2012 – G&G Partners Lead NY Legal Education Program on Litigating NY State FCA Cases
Margaret Finerty, Neil Getnick, and Richard Dircks co-chair 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 educates participants on how to bring claims under the NY State FCA, including best practices and ethical considerations. The program also addresses how the NY State Attorney General Office’s Taxpayer Protection Bureau, along with NY State’s Medicaid Fraud Control Unit, uses the NY State FCA to combat fraud in all areas involving government dollars. Finerty moderates a panel at the CLE on “Litigating NYS False Claims Act Cases: Ethical Considerations,” which addresses gathering evidence and how to navigate a client with potential criminal liability.

Apr./Dec. 2013 – NY State Further Extends NY State FCA’s Reach
On April 1, 2013, Governor Andrew Cuomo signs amendments to the NY State FCA that: (1) create a new cause of action against individuals or corporations that lie to avoid paying money they owe to the government; and (2) ensure that whistleblowers’ attorneys’ fees, costs, and expenses are paid for by a party found liable under the NY State FCA.

On December 31, 2013, the NY State Attorney General issues sweeping and unique regulations that: (1) close a loophole that could allow liable parties to escape having to pay treble damages as the statute requires; (2) protects whistleblowers from having their cases unjustly dismissed under the “public disclosure bar”; (3) allows whistleblowers to file a NY State FCA action based on information derived from undisclosed federal reports; and (4) clarifies 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 NY State FCA.

+ Office of Attorney General: Regulatory Impact Statement + Office of Attorney General: Text of Proposed Regulations

May 2013 – G&G Partners Lead NY Legal Education Program on Blowing the Whistle on Commercial Fraud
Margaret Finerty, Neil Getnick, and Richard Dircks organize and participate 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 features a panel on the NY State FCA, which provides participants with an opportunity to hear directly from the prosecutorial force behind the NY State FCA’s enforcement: the Office of the NY State Attorney General.

Dec. 2013 – G&G Partners Lead NY Legal Education Program on Litigating False Claims Act Cases
Margaret Finerty, Neil Getnick, and Richard Dircks co-chair 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 provides practical guidance to practitioners and explores the interplay between whistleblower laws, the agencies that administer or utilize them, and the resulting synergies of public and private sector resources. Finerty moderates a panel on “Multi-Jurisdictional Cases.”

May 2014 – G&G Partner Leads Legal Education Program at False Claims Act Institute on Multijurisdictional Practice
Margaret Finerty moderates a Continuing Legal Education panel at The American Law Institute’s Continuing Legal Education False Claims Act Institute on “Multijurisdictional Practice.” The panel discussion includes an overview of the NY State FCA and how to navigate cases involving both federal and state FCA violations.

Sept. 2014 – G&G Partner Leads Legal Education Program on Hybrid Whistleblower Cases Coordinated Fraud Fighting
Margaret Finerty organizes and moderates 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 focuses on navigating hybrid cases involving IRS, SEC and qui tam (federal and state) qui tam actions. The state qui tam component of the panel addresses the NY State FCA.

+ Press Release: G&G Partners Play Leadership Roles at National Whistleblower Law Conference Article (Sept. 12, 2014)

Sept. 2016 – G&G Partner Leads Legal Education Program on Navigating Multiple Whistleblower Claims
Margaret Finerty organizes and moderates a Continuing Legal Education panel at the Sixteenth Annual Taxpayers Against Fraud Education Fund Conference on “Navigating Multiple Whistleblower Claims.” The panel addresses best practices for whistleblower attorneys; how to coordinate a FCA investigation involving multiple offices and agencies; and considerations that go into deciding where a whistleblower should file a FCA claim if he or she has multiple options. The panel also discusses the protections provided to whistleblowers under the NY State FCA.

Apr. 2017 – G&G Wins Record-Breaking $40mm NY State FCA Recovery
On April 18, 2017, Getnick & Getnick LLP and co-counsel Labaton Sucharow LLP secure a $40 million settlement under the NY State FCA, the largest ever tax whistleblower recovery in New York state history. The whistleblower, whose identity remains protected, receives 22 percent of the settlement ($8.8 million), the largest amount and percentage share ever for a whistleblower in a NY State FCA case not involving Medicaid at the time.

+ Press Release: G&G Secures Record-Breaking Settlement for Whistleblower Client in Hedge Fund Tax Case (Apr. 18, 2017)

Nov. 2017 – G&G Partner Leads Legal Education Program on Tax Whistleblower Cases
Margaret Finerty organizes and moderates a Continuing Legal Education panel at the Seventeenth Annual Taxpayers Against Fraud Education Fund Conference on “The Future of Tax Whistleblower Cases.” The panel addresses emerging trends in tax court litigation and how the court is interpreting new FCA regulations, as well as state tax cases in New York involving the NY State FCA.

Sept. 2018 – G&G wins $30mm Federal and NY State FCA recovery
On September 27, 2018, Getnick & Getnick LLP and co-counsel Labaton Sucharow LLP secure 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 is the second stage of the largest ever tax whistleblower recovery in New York state history at the time. It follows the related $40 million settlement in April 2017, bringing the total recovery to $70 million. The Relator, whose identity remains protected, receives 22 percent of the $30 million settlement ($6.6 million).

Neil Getnick gives an interview for the October 2018 issue of The Corporate Crime Reporter discussing the case and using False Claims laws to combat tax and consumer fraud.

+ Press Release: Getnick & Getnick Secures Major Whistleblower Settlement in Philip Falcone Hedge Fund Tax Case (Sept. 27, 2018) + The Corporate Crime Reporter Article and Interview with Neil Getnick (Oct. 8, 2018)

Nov. 2018 – G&G Wins Highest Relator Share Recovery for Non-Medicaid NY State FCA Claim
On November 27, 2018, Getnick & Getnick secures a settlement in New York’s first ever whistleblower case leading to a criminal restitution recovery for individual consumer fraud victims. New York recovers $3.2 million from Morgan Fuel & Heating Co. Inc., also known as Bottini Fuel Co., which provides heating oil throughout Hudson Valley. The whistleblower receives 23.5 percent of the government’s recovery in the settlement, the largest percentage ever for any New York False Claims Act case not involving Medicaid.

Neil Getnick, Margaret Finerty, and Richard Dircks worked closely with the NY State Attorney General’s Office in the successful prosecution and resolution of the case. The settlement marks the first time that a NY State FCA suit led to a criminal conviction and restitution for victimized New York consumers. Getnick & Getnick represents the whistleblower in the case, whose identity remains protected.

+ Press Release: Getnick & Getnick Whistleblower Case Exposes NY Heating Oil Scam Leading to $3.2M Recovery for Consumers, State, Towns, and Schools (Nov. 27, 2018)

Jan. 2019 – G&G Partner Leads NY Legal Education Presidential Summit Program on Whistleblower Laws’ Function and Evolution
Margaret Finerty organizes and moderates 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 includes an overview of the NY State FCA and how it compares to the federal FCA.

Neil Getnick participates on the panel and speaks to the development and passage of the NY State FCA, as well as the public-private partnership that occurs in both federal and state FCA cases.

Feb. 2020 – G&G Counsel Quoted on Success of Tax Whistleblowers Under the NY State FCA
G&G Counsel is quoted in a Bloomberg Daily Tax Report on states’ plans to expand their FCA laws to cover tax fraud, inspired by the success of New York’s law.  G&G’s counsel lauded the NY State FCA’s tax provisions, saying “New York’s ten years of experience demonstrates that any state establishing a false claims act with jurisdictional thresholds for tax whistleblowers will recover significant amounts of tax dollars, level the playing field for small businesses by stopping sales tax cheats, and not lead to any abuse.”

+The Bloomberg Daily Tax Report