The False Claims Act imposes liability on any "person" who, among other things, "knowingly presents, or causes to be presented, to an officer or employee of the United States Government ...a false or fraudulent claim for payment or approval." 31 U.S.C. §3729(a). While the Act itself defines many of its terms, it does not define the word person. Three years ago, in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000), the Supreme Court determined that a state was not a person subject to a qui tam action under the False Claims Act. The Court's analysis started from the presumption that, generally speaking, the term person does not include the states unless there is an affirmative showing of statutory intent to the contrary. The Court found no contrary intent. Rather, because punitive damages generally cannot be imposed against states, and because the Court characterized the treble damages and statutory penalties imposed under the FCA as punitive, the Court reasoned that Congress did not intend to make states persons subject to liability under the FCA.

On March 10, 2003, in Cook County v. Chandler, 123 S. Ct. 1239 (2003), the Court determined that Cook County, Illinois was a person under the FCA. The Court reasoned that the meaning of the term person has remained unchanged since the FCA was enacted in 1863, that in 1863 the term person extended to corporations, and that this included municipal corporations. In response to the County's argument that municipalities are not generally subject to punitive damages, the Court appears to have contradicted its reasoning in the Stephens case by stating that "treble damages have a compensatory side, serving remedial purposes in addition to punitive objectives." 123 S. Ct. at 1246. According to the Court, the fact that, in 1986, Congress increased the damages available under the FCA from double damages to treble damages is not enough to demonstrate that Congress intended to immunize municipalities from liability under the FCA.

Finally, in an unusual decision, the U.S. Court of Appeals for the Ninth Circuit recently ruled, in essence, that a state is not a person for purposes of liability to a whistleblower but is a person for purposes of liability to the United States in the same case. In Donald v. University of California Bd. of Regents, 329 F.3d 1040 (9th Cir. Cal. 2003), several whistleblowers initiated a qui tam action against the University of California, alleging Medicare and Medicaid fraud at the University's teaching hospitals. The United States reviewed the complaint and negotiated a settlement with the University. Although the qui tam provisions of the FCA provide that the whistleblower initiating the action is entitled to a percentage of the government's recovery, in this case, the government, relying on Stephens, refused to share its recovery with the whistleblower because the recovery was from a state entity. The Ninth Circuit agreed that the whistleblower was not entitled to claim a share, stating that in Stephens the Supreme Court "held that a state or state agency is not a 'person' for purposes of the FCA, and, therefore, not subject to liability for qui tam suits brought by private parties." What this means is that the University is not a person for purposes of liability to a private party, but is a person under the same statute in the same case for purposes of liability to the United States.