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Whistleblower legislation advances in W.Va. House

CHARLESTON, WV -- A bill outlining new incentives for anyone to report government fraud or abuse advanced on the first full day of the 2014 legislative session.

The Democrat-backed bill made it through the House Judiciary Committee by a 15-9 party-line vote. The committee approved the bill with little changes despite nearly four hours of discussion, apprehension from GOP delegates and concerns from outside parties.

Known as the "Fair Claims Act," the bill gives whistleblowers a chance to recoup money from a successful lawsuit if they notify the state of fraudulent activity by public employees or someone working under a government contract, said House Judiciary Committee Chairman Tim Manchin, D-Marion.

"We've already missed out on millions and millions and millions of dollars in suits that have been brought across the country where we could have been included at little or no expense whatsoever and received significant amounts of money in terms of Medicaid fraud and some of those things," Manchin said.

"But we didn't have this act and we have missed out on those monies, and the taxpayers have paid those fraudulent claims in West Virginia but have never recovered the money that somebody else has done the work to get."

Republicans and some other interest groups argue that's an oversimplification.

GOP delegates proposed six amendments to the bill, all with a common theme: They believe there's a chance the act would lead to a rise in frivolous lawsuits and put undue burden on the attorney general.

"It does seem to me that this provides the potential for a bonanza for out-of-state lawyers to put stress on our in-state job creators," Delegate Woody Ireland, R-Ritchie, said.

Under the bill, someone who believes they know of government fraud or abuse can file a lawsuit. The state attorney general reviews all claims and can determine if they have merit. If the attorney general believes the case is legitimate, the state becomes a party to the lawsuit.

If the whistleblower and the state win the lawsuit, the whistleblower would be eligible for up to 25 percent of the proceeds from a settlement, according to the bill.

There are certain restrictions on who can bring the lawsuits; the committee amended the bill so inmates can't file one, and someone who learned of the problem through a newspaper article also doesn't have a claim.

There are other limitations on the amount of money the person bringing the lawsuit can receive, depending on how much information was provided, their own involvement in the alleged wrongdoing and the cooperation of the accused, according to the bill.

A lawsuit must be brought within six years of the alleged action, unless information about the supposed fraud isn't known within the time frame. There's leeway if someone learns about the action after that window, but now lawsuits can be filed even if 10 years have passed since the transgression.

Additionally, there's a retroactivity clause that allows the law to apply to any relevant activity that's occurred during the allowed timeframe.

"This bill could have had significant impact in a scandal like 'Routergate,' " said Delegate Stephen Skinner, D-Jefferson, in reference to an investigation of how the state handled a federal broadband grant.

"This bill could have had an impact on the current allegations against the Department of Agriculture," he added, referencing recent allegations of questionable loan practices by the department.

Several GOP lawmakers questioned how much time and money the attorney general would need to devote to reviewing these cases if the measure passes. There was no fiscal note — an estimate of a bill's financial impact — accompanying the bill.

Dan Greear, general counsel for the Attorney General's Office, said he thought the bill would have a "significant" effect on the office's workload and resources. He didn't know the exact dollar amount, having just received the bill earlier in the day.

"I will say that our attorneys are very busy, and to suggest that we have an overwhelming amount of available time, I don't think is correct," Greear said.

Earlier in the week, Attorney General Patrick Morrisey pledged the use of attorneys from his office to help with his call for audits of every major state agency.

In addition to criticizing the committee for "ramming" through a bill that he believes will "dramatically" increase lawsuits, he agreed the bill would put burdens on his office.

He did not explain how attorneys were available for help with potential audits but not available for reviewing cases brought under the potential whistleblower law.

"If passed and signed into law, the bill has the potential to create significant new staffing burdens for our Office on a permanent basis. Our Office is currently analyzing the impacts of the legislation," said a statement sent by Morrisey spokeswoman Beth Ryan.

The state Chamber of Commerce also opposes the measure.

Democrats downplayed those concerns. Delegate Mark Hunt, D-Kanawha, said 36 states have similar laws. Manchin and Skinner questioned the validity of Greear's arguments.

"I just don't buy it, to be honest with you. They've got a consumer protection division, they are evaluating cases to bring as civil suits every day," Manchin said.

"Even at that, it doesn't make any difference. The whole idea is to recover taxpayer dollars for the taxpayer. If the attorney general needs some additional money out of the general fund to do that, they're going to give him what he needs to run the office."

The bill now moves to the full House for consideration. Should the House approve, the bill would then advance to the state Senate.

Contact writer Dave Boucher at 304-348-4843 or david.boucher

@dailymailwv.com. Follow him at www.Twitter.com/Dave_Boucher1.


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