Situation: Small business customer has around 20 checks all just under $10,000 come out of their account totaling nearly $200,000. Happened in less than 2 weeks and the customer notified the bank immediately - less than two weeks after the first check was taken out of the account. These are clearly counterfeit/fraudulent checks (different check format/look, business had very limited history of writing checks, signature wasn't even close to the signer's check, etc.).

Is the bank liable for these counterfeit checks from the customer's small business account? And where in the UCC is this stated and are there court cases or other guidance that outlines this?

You are on the hook if you paid the items when they contained a forged maker's signature. For that kind of money your legal counsel should have been involved immediately.

The basis of your bank's liability for paying a counterfeit or forged drawer's signature check was established before the American Revolution in a case, Price v. Neal, King's Bench 1762. The bank is responsible for knowing the signatures of its account signers. That's why you only have until your midnight deadline to return a forged drawer signature check.

What if the dollar amount and check number is the same as a written check of the customer? The check itself is different but has the same business name and what appears to be the signature of the customer.

what appears to be the signature of the customer.

That is your issue. As John said: The bank is responsible for knowing the signatures of its account signers.

your system should be kicking this out as a duplicate item if you've already paid a check with the same number and $ amount from this account, even before you look at a signature

The bank should be talking to its attorney. There are very few situations in which a bank can avoid liability to its customer when the bank pays a counterfeit check on the customer's account.

The bank should be talking to its attorney. There are very few situations in which a bank can avoid liability to its customer when the bank pays a counterfeit check on the customer's account, unless the bank and customer have a well-written positive pay agreement and the customer dropped the ball.

Even if not reported until past the 60 days as included in the account's Terms and Conditions (and a single counterfeit item)?