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Qui Tam

: Virginia Qui Tam Law

The Virginia Supreme Court ends a series of misguided attempts to abuse the Virginia Fraud Against Taxpayers Act

By Zachary A. Kitts

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Last Thursday, the Virginia Supreme Court announced its opinion in Ligon v. County of Goochland, et al., in the process putting a stop to a troubling trend. In the last couple of years, a small number of plaintiff's lawyers have been attempting to convert the Virginia Fraud Against Taxpayers Act into a generalized whistleblower cause of action for wrongful termination on behalf of government employees.

The usual fact pattern for these ill-advised attempts is a government employee alleging that he or she was terminated for blowing the whistle on untoward activity at the state or county government level. In every case I am aware of--including Ligon's case--the allegations have been lodged against the employee's supervisor, who by definition has always been a state or county employee. I am aware of several such cases in various Circuit Courts of the Commonwealth.

The Virginia Supreme Court upheld the trial court, which had granted the defendant's demurrer on the grounds of sovereign immunity. Stated another way, the Commonwealth can only be sued when it has specifically waived its immunity. The VFATA most assuredly does not waive immunity to suit by an employee of the Commonwealth or one of its political subdivisions.

Of course, as readers of this blog are aware, when private-practice lawyers use the VFATA for the purposes for which it was intended, the successes are hard to refute. In very broad terms, the VFATA contains two categories of causes of action.

First, it provides a private right of action for any person with personal, first-hand knowledge of another person submitting false claims for money to the Commonwealth in any one of a number of ways. Because there is no requirement of personal damages, this part of the statute makes the private party and his or her lawyer a partial assignee of the Commonwealth's claim against the defendants (in other words, a qui tam provision).

As with the federal statute, government employees are only allowed to bring claims under this portion of the VFATA in very specific, very limited circumstances. Ligon did not try to assert a claim under these provisions in any event--that is, he did not try to assert a qui tam claim for a part of the Commonwealth's damages.

Rather, Ligon tried to make a claim under the second major part of the statute, which protects individuals who take steps toward bringing a claim under the qui tam provisions outlined above. These provisions are commonly called the anti-retaliation provisions, and they are present to one degree or another in most remedial statutes. Under federal False Claims Act case law, it is not necessary for such a person to actually file a qui tam action, nor is it necessary for such a person to use the words "qui tam" or "fraud" in order to fall under the statute's protective reach.

The VFATA was not, however, meant to protect Mr. Ligon, and I am very glad that the Supreme Court saw it that way.  I have several reasons for saying this. First, this was the first Virginia Supreme Court decision interpreting the VFATA, so there was always a risk that the Court would do some damage to the statute from the point of view of a qui tam lawyer.

Second, I hope that from this point forward lawyers in private practice will take the time to actually learn how to bring a real qui tam case, and not become distracted by misuses of the statute. As always, comments and/or questions are invited and appreciated.

Full post as published by Virginia Qui Tam Law on March 01, 2010 (boomark / email).