CHARLESTON, W.Va. -- A bill that would allow people to sue companies that commit fraud against West Virginia state government drew support Tuesday from a nonprofit group funded by whistleblowers and trial lawyers -- and sparked opposition from corporate lobbyists.
The legislation (HB4001) would make West Virginia the 30th state with a "false claims act," allowing whistleblowers to file lawsuits on behalf of the government. The federal government also has a false claims law.
"Federal and state false claims acts have proven to be critical tools in helping recover taxpayer money," said Patrick Burns, co-director of Taxpayers Against Fraud, at a legislative hearing Tuesday. "The core idea behind the False Claims Act is very simple: If we incentivize integrity, we'll get more of it."
But business-group lobbyists said the bill would kill jobs, and prompt companies to raise prices for goods and services sold to consumers and state government.
Brenda Nichols Harper, a lawyer with the West Virginia Chamber of Commerce, called the bill "duplicitous, horrible policy" that promotes "litigation for profit."
"You're going to reduce jobs," Nichols Harper said. "You're going to send small businesses out of business. It unfairly stacks the deck."
Chris Hamilton, a lobbyist for the West Virginia Business & Industry Council, said the bill would provide a "windfall" for trial lawyers.
"We believe it will serve to set our legal system and our legal fairness back decades," Hamilton told legislators.
Supporters of the legislation argued that the bill would help whistleblowers who report corporations that defraud state government programs.
"I don't see this as an anti-business bill," said Gary Zuckett, who heads the West Virginia Citizens Action Group. "I see this as an anti-fraud bill."
Burns disputed criticism that the bill would spark a flurry of frivolous lawsuits.
Whistleblowers and their lawyers file about 200 lawsuits a year under federal and state false claims acts, Burns said. State attorneys general typically sign onto the suits.
About 95 percent of the cases get settled before going to trial, he said. Whistleblowers and their lawyers typically collect about 15 percent of any settlement or award, while state governments get the rest.
"Those cases are returning $4 billion to $9 billion a year back to federal and state governments," Burns said. "These are big cases, big frauds."