Minnesota False Claims Act is signed into law

After years of unsuccessful tries and despite opposition from unexpected quarters, Minnesota became the 23rd U.S. state (along with the federal government and the District of Columbia) to enact a false claims law when the measure passed as part of the omnibus state government finance bill and Gov. Tim Pawlenty spared it his veto pen earlier this week. The law seeks to empower whistleblowers by letting them claim a share of the money recovered when they expose false claims made by contractors to units of government.

The opposition from unexpected quarters came courtesy of the Minnesota Attorney General’s office and former AG Mike Hatch, who spoke out publicly against the bill and its chief author, Rep. Steve Simon (DFL-St. Louis Park) (pictured). The AG’s office saddled the bill with a fiscal note claiming that it would cost $2 million to implement a false claims act. There had never been any big price tag attached to the measure in previous sessions, when it had the backing of the AG’s office. It was Hatch, in fact, who first brought the idea to the Legislature and urged its passage, back in 2004.

The about-face this year was almost universally viewed as a vendetta against Simon, a former staffer in the attorney general’s office who incurred the wrath of Hatch and his successor, Lori Swanson, by getting the Office of Legislative Auditor to look into whistleblower claims by AG staffers.

Its path through the Legislature was anything but easy. In the final week of session, the bill nearly got turned on its head on the Senate floor when Sen. Don Betzold (DFL-Fridley) amended it so as to gut its whistleblower provisions. Betzold’s amendment stipulated that wrongdoers could only be found liable if the employee who spotted the wrongdoing first reported it to the employer. A further amendment in conference committee put back the measure’s teeth.

There were other compromises along the way. The law won’t take effect until July 1, 2010, and won’t apply to misconduct committed before that date. It can’t be used against units of government that commit fraud against other units of government.

"The basic premise" of his push for the bill this session, says Simon, "was look, defrauding the taxpayer is always wrong, but it’s even worse in tough economic times.

"When we went on these listening tours at the beginning of the session, you could group the comments into two major categories: Don’t raise my taxes, and don’t cut my spending. And that’s very natural. There’s nothing wrong with that. And so here was a way to potentially raise tens of millions of dollars without raising any taxes or cutting any spending.

"I have to give credit where it’s due: The governor’s office really worked with us on this. They had concerns and we were able to talk them through. I’m told that there are dozen states this year that tried to get [a false claims act] enacted, and we’re the only one that has. It’s gone down to defeat in a couple of states that I know of, and I assume the rest have been defeated or are pending.

"It’s a great victory because of its long and winding path. In the House, it passed nine committee hearings in eight committees. It’s really had an unusually long path, going through that many committees. And there were obstacles along the way, including a very committed opposition and the fact that this really is something new for Minnesota. This is a win for reform and it’s something creative we can do for Minnesota taxpayers."

One Response to “Minnesota False Claims Act is signed into law”

1. Anonymous Says:
   May 22nd, 2009 at 4:38 pm

   Whether or not the Legislative Auditor has the guts to do what’s right in the Swanson investigation, this bill strikes me as rather solid proof that Swanson/Hatch won’t be a significant force in this state’s politics for much longer. In all seriousness: how pathetic is it that the AG couldn’t kill this thing? My understanding is that her office’s opposition - and the bi-partisan disdain in the House and Senate for anything she touches - basically assured passage. On a legislative basis, at least, she’s become irrelevant. Nobody’s listening to her at the capitol.