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Similar to a federal law, Massachusetts now has a law that would punish those who defraud the state and provide “whistleblowers” with a cut of any money they help the state recover. Signed by Gov. Paul Cellucci last month, the new law is an amendment to the G.L. Chapter 12, Section 18. Massachusetts is now one of at least seven states that have such a law. The law would allow a whistleblower with direct and independent knowledge of fraud on the state to file an action on behalf of the state and collect anywhere from 15 to 30 percent of the money the commonwealth recovers. The impact of the law is significant since there are numerous industries in Massachusetts that receive state funding, said Boston tort litigator Jeffrey L. Newman, who has handled whistleblower cases on the federal level. The construction and healthcare industries would likely be areas where workers could come forward with allegations of fraud, he said. “The economic incentive to risk your job and reputation is substantial under this law,” said Newman of the firm Newman & Ponsetto. Unlike the federal statute, the state law calls for a much quicker time frame under which the Attorney General’s office must act on a complaint brought by a whistleblower. That provision would provide an incentive for the person alleging the fraud because the Attorney General’s office could not ask for more than two 90-day extensions to present its case. “This is a good thing. This will push cases along precipitously,” Newman said. The state law has much stronger protections against retaliation for the whistleblower than the federal “False Claims Act,” its federal counterpart. Under the state law, no employer can “demote, suspend, threaten, harass, deny promotion or discriminate” in any other way against a person who discloses information about fraud to the government. If there is discrimination, an employee is entitled to be reinstated at the same seniority status and receive two times the amount of back pay, plus interest on the back pay. In addition, the employer would be required to pay the whistleblower’s litigation costs and reasonable attorneys’ fees. The whistleblower would also be entitled to emotional distress damages, something that is not allowed under current employment law if an employee is wrongfully terminated, Newman said. In response to the new law, the Attorney General’s office is setting up a special division to handle false claims acts. A spokesman for the Attorney General’s office was unavailable for comment before deadline.

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