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False Claims Legislation Could Put Contractors in Catch-22

Senate Bill 5144 known as the False Claims Act is vigourlusly opposed by AGC. The legislation says that a person who knowingly presents or assists in the presentation of a false or fraudulent claim that results in losses to a state or local government entity of at least $1000 is liable for a civil penalty of between $5000 and $10000 plus treble damages attorney fees and costs. Plus a third party may initiate action on the governments behalf.

Douglas Roach of counsel with Ahlers & Cressman and a member of AGCs Legal Affairs Committee testified before the Senate Judiciary Committee with Van Collins AGCs Legislative Counsel.

Among the arguments made by Roach and Collins is the fact that Washington State due to the Mike M. Johnson case has the most restrictive notice requirements in the nation. There are jurisdictions where a contractor needs to submit a fully developed claim with pricing within five days an insufficient amount of time to obtain precise information from subcontractors and suppliers. Sometimes the claims therefore include good-faith estimates – but this could trip a false claim accusation by a third party under SB 5144. Conversely if a contractor took the time needed to secure precise information it could end up waiving claim rights.

Clearly this bill would cast a long and gloomy shadow over public works contracting which does not need to be there in these difficult economic times said Collins. Public owners and contractors should be encouraged to work in partnership for the betterment of projects rather than forced into a ‘gotcha mindset.

SB 5144 is sponsored by Senators Kline Rockefeller and Pridemore.

For questions or comments about the measure contact Van Collins at 360-352-5000.

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