House defeats 'false claims' bill
CHARLESTON, W.Va. -- West Virginia won't join a growing number of states that allow people to sue companies that commit fraud against state government.
On Tuesday, the House of Delegates voted 55-41 to reject a bill that has brought billions of dollars to other states and the federal government over the past decade.
Opponents of the legislation (HB4001) called it a "sue and settle" bill that would be bad for business in West Virginia. Republican House members said the legislation was designed to create a windfall for trial lawyers.
"This is a way to create plaintiffs," said Delegate J.B. McCuskey, R-Kanawha. "It's not an answer to our state's budget problems."
State business groups, including the West Virginia Chamber of Commerce, opposed the legislation, which would have allowed whistleblowers to file lawsuits on behalf of state government against companies that defraud the state.
House members predicted the legislation would prompt frivolous lawsuits.
"Our strategy now appears to be to sue ourselves into prosperity," said Delegate John Shott, R-Mercer. "This is a terrible message that we're saying with this bill."
The legislation was modeled after a similar law in Virginia, a state that has recovered tens of millions of dollars under its false-claims act.
Whistleblowers typically collect 15 to 20 percent of any lawsuit settlement or jury award, while state government programs get the rest.
Delegate Tim Manchin, D-Marion, predicted the law would have generated up to $50 million a year for West Virginia -- and helped reduce corporate fraud on state government.
"It works," Manchin said. "It catches people who cheat the government."
Thirty states and the federal government have false-claims acts.
"Who's going to benefit? The taxpayer," Delegate Barbara Fleischauer, D-Monongalia, said. "Who's going to have a problem with this? People committing fraud."
Business leaders said the bill would kill jobs and prompt companies to raise prices for goods and services sold to consumers and state government.
Ten House Democrats joined GOP delegates in voting against the bill Tuesday.
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