By enacting House Bill 1135 during its 2009 legislative session, the North Carolina General Assembly adopted a  new State False Claims Act, which substantially expands  the state’s arsenal for criminal and civil prosecution and  recovery in health care and other cases. The act was  passed in the wake of the federal Deficit Reduction Act of 2005, which allows states with a false claims act certified  by the Office of Inspector General for the U.S. Department  of Health and Human Services to be as effective  as the federal law in allowing the state to retain an additional 10 percent of the federal share of Medicaid funds recovered.

The principal elements of the new act provide that: 

• Effective August 28, 2009, the act authorizes the attorney general to use a document subpoena known as a “health care fraud subpoena” to obtain documents and materials from corporations and government entities relevant to a criminal investigation of a violation of N.C. Gen. Stat. § 108A-63.
• Effective December 1, 2009, the act creates an additional legal basis for criminal liability under the existing Medical Assistance Provider Fraud statute and adds a new obstruction of justice offense.
• Effective January 1, 2010, the act authorizes a private person, known as a “qui tam plaintiff,” to bring an action as a whistle-blower on behalf of the state, where the person has information that the defendant or defendants have knowingly submitted or caused the submission of false or fraudulent claims to the state. The qui tam plaintiff may be awarded an amount between 15 and 25 percent of the amount of any recovery, which is paid from the proceeds of the action or settlement.