New Jersey False Claims Act Does Not Apply Retroactively, Just As the Statute Says

State v. Correctional Medical Services, Inc., 422 N.J. Super. 363 (App. Div. 2011). The New Jersey False Claims Act, N.J.S.A. 2A:32C-1 to -15 and -17 to -18, was enacted on January 13, 2008. That statute provided that it “shall take effect on the 60th day after enactment.” Despite that language, Leslie A. Hayling, Jr., sought to bring a False Claims Act case based on conduct that pre-dated the statute. In an opinion by Judge Payne, the Appellate Division affirmed the dismissal of that case, holding that the statute clearly stated its effective date. But the court did allow one small portion of the case to go forward, as discussed below.

Judge Payne began with “the general rule of statutory construction that favors prospective application of statutes,” as stated at length in Gibbons v. Gibbons, 86 N.J. 515, 521-22 (1981). There are exceptions to that general rule, as the panel noted, but those exceptions apply only where “there is no clear expression of intent by the Legislature that the statute is to be applied prospectively only.” That was not so here, where “the fact that the Legislature postponed the Act’s effective date provides clear evidence that it envisioned only prospective application.” Judge Payne also contrasted this New Jersey statute with false claims statutes in other states that do expressly provide for retroactivity.

Though it was not necessary to go further, the panel went on to discuss and reject other arguments for retroactivity. An isolated statement by a single legislator that Hayling viewed as endorsing retroactivity did not actually do that. Moreover, the remark was not a sponsor’s statement and, in any event, was overcome by the actual language of the statute. Judge Payne also found unpersuasive the notions that (a) the statute was ameliorative or curative, (b) retroactivity was necessary to make the statute workable, or (c) the expectations of the parties called for retroactivity.

The Appellate Division did note, however, that some of Hayling’s allegations related to post-enactment conduct. The panel remanded to allow Hayling to amend his complaint to allege that post-enactment conduct only.

The discussion of the various grounds on which a statute may be found to apply retroactively is a useful one. But those legal principles are not new. It is unclear why this decision was approved for publication, unless it was to remove any doubt at all that the New Jersey False Claims Act, a potentially powerful weapon, will not apply retroactively.