When Will South Carolina Get a State False Claims Act?

Mr. Louthian and the Louthian Law Firm provided me with excellent legal services regarding a legal issue with a major corporation.

Errick Bethel Sr.

Mr. Louthian and the Louthian Law Firm provided me with excellent legal services regarding a legal issue with a major corporation.

Errick Bethel Sr.
March 1, 2017

While the people of South Carolina, like the rest of the United States, have a lot of statutory federal protection when it comes to whistleblowing, we don’t have an adequate state whistleblower statute to deal with state-level needs. State Senator Gerald Malloy has tried twice to get a False Claims Act (FCA) bill that has actual teeth in it passed, and both times it has died in committee; the most recent attempt was during 2015. Senator Gerald Malloy has proposed the same bill twice, but to no avail.

What’s Wrong with the Current State Statute?

In SC, two whistleblower statutes exist: one for those who bring workplace safety or health concerns to light, and one for public employees who want to report misuse of public money or violations of the law.

We in SC really have nothing similar to the federal False Claims Act, nor are the awards commensurate with the risks taken. Private sector employees have little in the way of provisions that protect them should they blow the whistle on actions that rob the taxpayer. While public sector employees do have some provisions, they are limited and provide poor rewards for becoming a whistleblower:

  • Any savings in public money is capped at a maximum of $2,000 for the whistleblower.
  • Damages for retaliation or reinstatement into a job are limited to a maximum of $15,000. Attorney’s fees are limited to similarly small amounts.

Compare these provisions to the federal ones.

It’s almost as if the SC legislature wants to make sure that no one steps forward. If we are looking for people to take fraud seriously, we need to provide them with an incentive to take the risks involved.

What Did Sen. Malloy Propose?

Sen. Malloy’s bill appears to be modeled after the federal FCA when it comes to time-period limitations, the kinds of violations and frauds that can be a reason to bring a whistleblower suit, regulations concerning qui tam actions, and awards for successfully bringing a case. The language regarding civil penalties, or awards, is as follows:

“A person who commits any of the following acts shall be liable to the State for three times the amount of damages which the State sustains because of the act of that person. A person who commits any of the following acts shall also be liable to the State for the costs of a civil action brought to recover any of those penalties or damages, and shall be liable to the State for a civil penalty of not less than five thousand five hundred dollars and not more than eleven thousand dollars for each violation, or as adjusted in accordance with the inflation procedures prescribed in the Federal Civil Penalties Inflation Adjustment Act of 1990.”

In brief? It outlines pretty much the same provisions that are specified in the federal False Claims Act.

South Carolina needs a genuine False Claims Act to curtail state-level fraud and false claims, because the federal FCA will not apply to state situations. It is our tax money that is being stolen by the unscrupulous, so we need statutes that have some force behind them in order to deter those who would do wrong. Perhaps one day our legislators will pass a state FCA containing the provisions necessary to take down fraud involving taxpayer money in our state. We hope that Sen. Malloy will try again, with greater success next time.

Making a difference.

If you think you have the facts needed to bring a federal whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the U.S.government will intervene, or join in your lawsuit.

For a free, confidential evaluation of your case, call the Louthian Law Firm today at 1-803-454-1200 or, if you prefer, you can fill out our online contact form.

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