Companies receiving state or federal funds face growing false claims exposure as states ramp up enforcement alongside the DOJ.
Tanisha Palvia and Tiffany Payne explore this topic in a recently published article in Dow Jones Risk Journal: “State False Claims Laws: An Overview of the Evolving Landscape and Recent Enforcement Trends.”
Here’s what you need to know:
State FCA enforcement is accelerating
More than 30 states plus the District of Columbia have civil false claims statutes, many closely modeled on the False Claims Act (FCA). Some states limit liability to Medicaid-related claims, while others expand potential liability even further—covering tax-related claims, which are excluded under the FCA.
Private equity is under the microscope
States are increasingly targeting investors and owners, not just operating companies. Massachusetts now imposes liability on private equity firms and other stakeholders who know of false claims and fail to act—a trend echoed by recent DOJ enforcement.
DEI compliance is becoming a false claims issue
Federal and state governments are signaling that misrepresentations related to DEI practices in government contracts may trigger FCA liability. New certification requirements are already in place, with enforcement expected to follow. (Two days after this article was published, the DOJ announced its first FCA settlement based on allegations that DEI practices violated federal anti‑discrimination requirements embedded in government contracts.)
Whistleblower activity remains a key risk driver
Thirty states allow qui tam actions brought by private individuals with knowledge of alleged fraud. States are actively incentivizing these cases—and potential whistleblowers are paying attention.
What companies should do now
• Monitor state and federal false claims developments.
• Reassess controls around government billing, contracting, and DEI certifications.
• Ensure internal reporting channels are strong and responsive.
• Prepare for increased state and federal scrutiny.
The article can be viewed here (paid subscription required).