Thumbnail image for Rogers_Jeff.jpg          Editor’s note:  The following entry was written by Jeffrey Rogers, a partner in the firm’s Chicago office.  

Late last month, Washington State Governor Christine Gregoire signed into law the state’s first Medicaid Fraud False Claims Act.  With the signing, Washington became the twentieth state to pass such legislation

The incentive for Washington was financial, as it was for the 27 predecessor states.  That financial incentive was established with passage of the Federal Deficit Reduction Act of 2005.  Specifically, the Act provided that states with False Claims Acts that mirror the federal False Claims Act qualify for a 10% increase in their share of any amounts recovered under those laws.

Like the federal False Claims Act, state False Claims Acts constitute powerful tools for fighting health care fraud.  Relying upon such acts as well as other means of recovery, state Medicaid Fraud Control Units recovered $1.75 billion from civil and criminal cases in fiscal 2011 (Report of Office of Inspector General, HHS, March 28, 2012).  During that same period, approximately $2.4 billion in total Federal False Claims Acts’ settlements were from the health care industry.

States that seek to take advantage of this incentive are required to submit their legislation to the U.S.  Health and Human Services Office of Inspector General, who in conjunction with the U.S. Attorney General’s Office, determines whether the state act qualifies.  The states’ False Claims Acts must:  (1) create liability to the state for the submission of false or fraudulent claims with respect to Medicaid spending; (2) provide effective rewards to facilitate the filing of qui tam actions as described in the federal False Claims Act; (3) require that such actions be filed under seal for 60 days to allow for review by the state attorney general; and (4) impose civil penalties not less than those imposed by the Federal False Claims Act, that is, treble damages and a penalty of $5,500 to $11,000 per false claim.

Following the institution of these incentives by the Federal Deficit Reduction Act, and also subsequent to the submission and approval of various state Medicaid Fraud False Claims Acts, the federal False Claims Act was amended in significant respects by the Fraud Enforcement and Recovery Act of 2009 (FERA), the Patient Protection and Affordable Care Act (ACA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).  Among the provisions that were amended are those relating to the public disclosure defense, the definition of “claim”, reverse false claims and whistleblower protections.

State acts that were submitted for review after passage of the amendments have been and will continue to be reviewed for their conformity with the new amendments.  State acts which were approved prior to the passage of the amendments are deemed to be compliant with the federal requirements until March 31, 2013.  After that date, state acts which had been previously approved, will no longer be considered compliant unless the states re-submit new legislation for consideration prior to that date.

As both the federal and state governments continue to dramatically increase their enforcement efforts, all providers of health care services which are reimbursed in any respect by a federal or state health care program, must remain vigilant and prepared to defend against allegations of health care fraud, whether they are brought by individuals under the qui tam provisions of the respective acts, or by state and federal agencies acting on their own.