AGC Opposes False Claims Legislation

Once again AGC is opposing false claims legislation introduced by Sen. Adam Kline (D-37). AGC member Douglas Roach of Ahlers & Cressman testified against the measure at a Jan. 15 hearing.

Among other things the bill states that a person who knowingly presents a false or fraudulent claim for payment to the government is liable to the government for a civil penalty between $5000 and $10000 plus three times the amount of damages the government sustains. Either the Attorney General or a private party may bring a civil action for such a violation on behalf of any government entity.

AGC Legislative Counsel Van Collins calls the bill PSSB 5144 a solution looking for a problem that does not exist. “This bill will increase costs rather than save public bodies monies and it will be a disservice to the performance of public works contracting in general” said Collins. “Contractors must bid for public projects and will as any reasonable business person would include the price associated with any potential liability arising from this bill. Public contracts are already subject to audits. While proponents often speak of ‘criminals’ ‘fraud’ and the like the truth is that this statute creates a cause of action for purely honest mistakes. In Section 2 the definition of ‘knowing’ specifically states an action arises regardless of intent to defraud. Thus mistakes in judgment are subject to actual damages treble damages penalties and attorney fees. Similarly one often hears about ‘big corporations’ being subject to this act. However most construction companies in this state performing public work are not large. They are often family businesses without the resources to fight such claims when brought against them. AGC believes that the potential for abuse against such companies is severe and real. We have seen many examples of this activity in other states which already employ state false claims acts as weapons.”

The bill is currently under consideration by the Senate Judiciary Committee. For additional information contact Van Collins at 360-352-5000.