Lawmakers consider rewards for whistleblowers

Friday, April 9, 1999 | 10:35 a.m.

Whistleblowers could reap financial benefits by helping state and local government agencies recover money from contractors who overcharged them under a bill before the state Senate Government Affairs Committee.

Senate Bill 418, which was scheduled to be heard today by the committee in Carson City, has the support of the state attorney general's office.

Under SB418 a contractor accused of overbilling state and local governments could be sued in civil proceedings and forced to pay up to triple the amount that was overcharged if found liable. The liable contractor also could face civil penalties of $2,000 to $10,000 per false claim.

A whistleblower could get as much as one-third of the court-awarded damages if the case is prosecuted by the state or local authorities and half of the damages if there is no state or local intervention.

Some of the money awarded by the court would be returned to the state or local government's general fund. In cases prosecuted by the state or local government, a portion of the money also would go into a special fund to help investigate and litigate false claims cases.

The bill, co-sponsored by Senate Minority Leader Dina Titus and fellow Las Vegas Democratic Sens. Valerie Wiener and Terry Care, is the brainchild of Las Vegas attorney Sharon Green.

Green represents a whistleblower who is part of a false claims lawsuit against a contractor who has been accused of overbilling the Metropolitan Transportation Authority in Los Angeles $20 million for a subway construction project. The case is being prosecuted under California's own false claims law.

The federal government has had a false claims law since 1863, and has recovered more than $4 billion from contractors since the law went through its last major revision in 1986. Only five states have their own false claims laws, however. Aside from California, they include Florida, Illinois, Texas and Tennessee.

Green said a similar law is needed in Nevada, arguing that contractors often have a big advantage over the government entities that employ them. She said this is particularly true in cases where contractors are managing large public works projects.

Government agencies often don't know when they're being overcharged by the hired managers of their projects, Green said.

"What evens the score is the false claims act," Green said. "You need something that levels the playing field so that if you get caught overcharging, you get punished. With these big contractors that deal with the government, the government is at their mercy.

"The people negotiating on behalf of the government often don't understand how the contract will be administered. If the contract has an overhead rate in it, the government agency better be darn sure they won't be billed for direct costs on things that should be part of the overhead rate."

In addition to covering contractors involved in public works projects, SB418 would also apply to Medicaid and other health care providers and to those who underpay the government for land swaps and mining royalties.

"It's a real good way to protect taxpayer dollars," Titus said.

Anne Cathcart, a special assistant attorney general, said the states that have false claims laws have had positive results.

"We have our own Medicaid fraud investigators, but there are things in the course of their investigation they wouldn't be aware of unless someone came forward," Cathcart said. "This bill provides the mechanism for these people to come forward.

"The only concern we might have is we don't know the extent to which our office's resources might be impacted. But we think it's worth a try based on the other states' experiences."