State False Claims Acts with Qui Tam Provisions

The American Bar Association (“ABA”) has described the Civil False Claims Act as “the fastest growing area of federal litigation.” It should come as no surprise, therefore, that many states have passed their own robust false claims acts that cover all areas of their economies and contain a signature qui tam enforcement mechanism.

As of August 2014, twenty-nine states and the District of Columbia have passed false claims acts that contain a qui tam provision to allow whistleblowers to bring a lawsuit against an individual or business that has defrauded the state government and share in a potential settlement or judgment. These state acts are modeled after the federal FCA, although HHS and the DOJ have deemed only sixteen of these acts to be as strong as the federal act. Therefore, thirteen states and the District of Columbia are currently ineligible to receive the 10% bonus financial incentive provided by the federal government for federal Medicaid recoveries under the federal FCA. The thirteen ineligible states are: Florida, Indiana, Louisiana, Maryland, Michigan, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Virginia, and Wisconsin.

• California
• Colorado
• Connecticut
• Delaware
• District of Columbia
• Florida
• Georgia
• Hawaii
• Illinois
• Indiana
• Iowa
• Louisiana
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Montana
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• Oklahoma
• Rhode Island
• Tennessee
• Texas
• Virginia
• Washington
• Wisconsin
  

Of these twenty-nine states, eleven of them have enacted false claims acts that only cover medical assistance programs, most notably Medicaid. These states include: Colorado, Connecticut, Georgia, Louisiana, Maryland, Michigan, New Hampshire, Oklahoma, Texas, Washington, and Wisconsin.

While this limits these states’ ability to detect, deter, and pursue cases of fraud involving other industries, Medicaid by far accounts for the majority of fraudulent claims and provides the best return on investment. Therefore, lawmakers view a focus on Medicaid as the best bang for their buck, especially since many states have expanded Medicaid coverage in light of the passage of the Patient Protection and Affordable Care Act of 2010.

According to the Office of Inspector General (“OIG”), in 2011 alone, the states recovered $1.7 billion through Medicaid fraud. In 2013, this number increased to $2.5 billion out of a total of $453 billion spent on the program nationwide. The eleven states that focus exclusively on their healthcare programs all have Medicaid Fraud Control Units (“MFCUs”) which investigate and prosecute claims brought under state FCAs and work alongside the federal government in federal FCA cases.

In 2011, MFCUs investigated 10,685 Medicaid fraud claims, resulting in 824 convictions. In addition, they pursued 4,134 claims of patient abuse and neglect, including cases involving patient funds, which resulted in 406 convictions. Federal and state governments combined to spend $208.6 million on MFCUs in 2011, and the OIG determined that for every $1 spent, the feds and the states saw a return of $8.39.