Opinion ID: 2510469
Heading Depth: 1
Heading Rank: 10

Heading: The FCA's scope

Text: Nevada's FCA was expressly modeled after the federal FCA. [54] As a result, understanding the federal act's background is helpful in appreciating the circumstances under which Nevada's FCA was passed. Originally enacted in 1863 after investigations brought to light various activities used during the Civil War to fraudulently obtain government funds, the federal FCA was intended to apply to reach all types of fraud, without qualification, that might result in financial loss to the Government. [55] Accordingly, it was broadly phrased to reach any person who [fraudulently] makes or causes to be made `any claim' of government funds. [56] At that time, however, the federal FCA did not include any language permitting a person to maintain an FCA action based on allegations involving the fraudulent withholding of amounts due to the government. [57] Moreover, at that time, the federal Internal Revenue Code expressly stated that `[n]o suit for the recovery of taxes ... shall be commenced unless the Commissioner authorizes or sanctions the proceedings and the Attorney General directs that the suit be commenced.' [58] Consequently, private FCA claimants were generally not permitted to bring any tax matters as federal false claims actions. [59] The federal FCA was amended in 1986 to include what is commonly referred to as reverse false claims, or obligations, within its scope. [60] As a result, FCA liability was created for attempts to avoid paying sums owed to the government. [61] At the same time, however, an express tax bar was added to the federal FCA, [62] apparently because Congress recognized that, without it, tax deficiency allegations would fall within the purview of the reverse false claims provision. [63] Courts subsequently concluded that the tax bar was intended to codify existing case law. [64] Although the Nevada FCA was adopted in 1999, after the 1986 amendments to the federal act, no Nevada FCA provision expressly excludes tax liabilities from the scope of possible false claims. Instead, NRS 357.040 generally imposes liability on any person who, with or without specific intent to defraud, does one or more of several enumerated acts, such as knowingly submitting to the government a falsified claim for payment. [65] At issue here, NRS 357.040(1)(g), like the 1986 federal amendments, provides for reverse false claims. According to that provision, a reverse false claim occurs any time a person [k]nowingly makes or uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the State or a political subdivision. Nevertheless, the petitioners argue that this provision prohibits tax-based claims even without an express exclusion because tax liabilities do not fall within the act's definition of claim or obligation. When interpreting a statute, a court should consider multiple legislative provisions as a whole. [66] The language of a statute should be given its plain meaning unless, in so doing, the spirit of the act is violated. [67] Thus, generally, a court may not look past the language of a facially clear statute to determine the legislature's intent. [68] An ambiguous statute, however, which contains language that might be reasonably interpreted in more than one sense or that otherwise does not speak to the issue before the court, may be examined through reason and considerations of public policy to determine the legislature's intent. [69] The Attorney General first points out that the reverse false claim provision's plain language is ambiguous because legal use of the term obligation does not encompass merely contingent liabilities, while common usage of the term might encompass contingent, or even moral, liabilities. [70] Federal courts, in narrowly interpreting the federal FCA's similarly ambiguous reverse false claims provision, [71] have recognized that [a] defendant does not execute a reverse false claim by engaging in behavior that might or might not result in the creation of an obligation to pay or transmit money or property to the government. Contingent obligationsthose that will arise only after the exercise of discretion by government actorsare not contemplated by the [federal FCA]. [72] In other words, the reverse false claims provision includes only those obligations that arise out of an economic relationship, such as an affirmative duty to pay imposed by contract, statute or regulation, between the government and the defendant. [73] When the Legislature adopts a statute substantially similar to a federal statute, `a presumption arises that the legislature knew and intended to adopt the construction placed on the federal statute by federal courts.' [74] Consequently, we agree with the Attorney General that, in Nevada, reverse false claims must be based upon an affirmative duty to pay, such as that imposed under a statutory or regulatory scheme. [75] But we fail to see how, as petitioners suggest, tax liabilities are mere contingent liabilities until they are self-reported and remitted to the Department of Taxation, or until they are assessed or levied by the Department of Taxation pursuant to an audit, so that they cannot fall within the scope of obligations subject to reverse false claims actions. One need only refer to Nevada's revenue statutes to conclude that the duty to pay taxes is a present, affirmative duty and is not contingent. For example, NRS 372.105 provides that [f]or the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of 2 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this State. NRS 372.185(1) provides that [a]n excise tax is hereby imposed on the storage, use or other consumption in this state of tangible personal property purchased from any retailer... for storage, use or other consumption in this state at the rate of 2 percent of the sales price of the property. Accordingly, the term obligation does not automatically exclude tax liabilities from the FCA's scope. Any ambiguity caused by the Legislature's failure to mention taxes in the FCA is easily resolved by applying basic principles of statutory construction to ascertain the Legislature's intent. This court presumes that the Legislature enacts a statute `with full knowledge of existing statutes relating to the same subject.' [76] Thus, the presumption that the Legislature, in enacting a state statute similar to a federal statute, intended to adopt the federal courts' construction of that statute, is rebutted when the state statute clearly reflects a contrary legislative intent. [77] Nevada's FCA, in stark contrast to the federal legislation after which it was modeled, includes language allowing reverse false claims but omits any provision barring persons from bringing false claims actions based on tax liabilities. [78] Thus, facially and otherwise, the inclusion of obligations within the FCA's scope, coupled with the omission of an express tax bar, conclusively demonstrates the Legislature's intent to include tax liability matters within the realm of possible false claims.