Virginia Qui Tam Law

Taxpayers Against Fraud Education Fund files amicus brief in ACLU et al. v. Eric Holder, et al. in the Fourth Circuit Court of Appeals

zkitts@cookkitts.com (Zachary Kitts) — Wed, 03 Feb 2010 17:11:00 GMT

Today, TAFEF filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit in the case captioned ACLU et al. v. Eric Holder, et al., 09-2086. A copy of the amicus is available here.

My name is on the brief, but the credit for it belongs to Marc Vezina of Vezina & Gattuso, LLC, and to Cleveland Lawrence and Jeb White from TAFEF.

Missouri's Medicaid Fraud Control Unit Ranked Number One in FY 2008, Despite Not Having a State False Claims Act

zkitts@cookkitts.com (Zachary Kitts) — Wed, 27 Jan 2010 17:51:00 GMT

Missouri Attorney General Chris Koster said today that Missouri has earned the distinction of returning more money to the public fisc through Medicaid fraud prosecutions than any other state in the nation. This is, however, only when the federal Medicaid grant to Missouri is considered: according to national data from the federal Department of Health and Human Services (HHS), the Attorney General's Medicaid Fraud Control Unit obtained $18.81 for every federal dollar received in federal fiscal year 2008.

The Missouri Attorney General's Medicaid Fraud Control Unit received a grant of $1,582,000 from HHS in federal fiscal year 2008, and used that funding to recover $29,753,505, for the return rate of $18.81 per grant dollar and the number one ranking nationally.

As a lawyer practicing in the area of qui tam litigation under the federal False Claims Act and the various state false claims acts, I would not be doing my duty if I didn't point out some of the puffery in General Koster's statement.

First, although Missouri does not have a state false claims act, it still benefits from the national cases filed by qui tam whistleblowers. Missouri particularly benefited from the national drug settlements in 2008, several of which were in the billions of dollars, and all of which were initiated by qui tam whistleblowers with personal, first-hand knowledge of the fraud.

Second, Missouri's achievement must be put in perspective. The total amount recovered by Missouri in 2008 was $29.7 million--when compared to Virginia's $650 million in 2007 using the Virginia Fraud Against Taxpayers Act, we see that Missouri's achievements become a little more humble.

General Koster said: "Efficiency of government is critical, particularly during these challenging economic times," Koster said. "Missouri's Medicaid Fraud Unit has used all tools available to aggressively investigate and prosecute Medicaid fraud, and return those stolen health care dollars to Missouri."

They may well have used all of the tools available to them, but they did not push for the most important weapon--a state false claims act with qui tam whistleblower provisions.

I must say that I find it strange that Koster did not mention qui tam whistleblowers as part of his equation--and he also didn't use this press opportunity to push for passage of a state false claims act.

General Koster is no doubt a very capable AG, and he no doubt has a very fine staff, but they need the proper tools to really be able to make a difference.

Below is the ranking of recovery rates per federal grant dollar spent:

RANK, STATE, PER GRANT DOLLAR

1.        Missouri $18.81
2.        North Carolina $18.38
3.        Tennessee $17.13
4.        West Virginia $15.69
5.        Ohio $15.38
6.        Maine $14.73
7.        South Carolina $14.25
8.        Minnesota $13.67
9.        Nebraska $11.36
10.       Georgia $10.79
11.       Texas $10.77
12.       Kentucky $10.13
13.       Kansas $ 9.21
14.       Massachusetts $ 9.18
15.       Indiana $ 8.92
16.       Oklahoma $ 8.83
17.       Washington $ 8.61
18.       New Jersey $ 8.07
19.       Vermont $ 8.02
20.       New Hampshire $ 7.52
21.       Oregon $ 7.34
22.       Maryland $ 7.27
23.       Pennsylvania $ 7.12
24.       Louisiana $ 6.83
25.       Florida $ 6.76
26.       New York $ 6.65
27.       Alabama $ 6.54
28.       Virginia $ 6.04
29.       Michigan $ 5.75
30.       California $ 5.70
31.       Illinois $ 5.55
32.       South Dakota $ 5.51
33.       Mississippi $ 5.17
34.       Connecticut $ 4.80
35.       Utah $ 4.56
36.       Iowa $ 3.99
37.       Wisconsin $ 3.91
38.       District of Columbia $ 3.69
39.       Colorado $ 3.66
40.       Rhode Island $ 3.40
41.       Arkansas $ 2.65
42.       Nevada $ 2.15
43.       Arizona $ 2.07
44.       Wyoming $ 1.96
45.       Hawaii $ 1.15
46.       Alaska $ 1.02
47.       New Mexico $ 1.00
48.       Montana $ .92
49.       Delaware $ .78
50.       Idaho $ .06

State Sen. Jamie Raskin fires the opening salvo in this year's fight for a Maryland False Claims Act

zkitts@cookkitts.com (Zachary Kitts) — Mon, 11 Jan 2010 22:37:00 GMT

The Maryland legislature has failed to pass a Maryland False Claims Act in each of the last two legislative sessions. Each time, the bill failed by a single vote in the state Senate.

This year will be different. We have a bona fide champion in the Maryland state Senate for the first time--state Sen. Jamie Raskin, who fired the opening salvo yesterday.

Although Gov. O'Malley strongly supported the bill last time around, what we lacked was a true champion in the legislature. Raskin--who many see as a strong future candidate for Attorney General--is just the man for the job.

Stay tuned....

Attorney General-elect Ken Cuccinelli Staffs Up the Office of the Attorney General

zkitts@cookkitts.com (Zachary Kitts) — Fri, 08 Jan 2010 21:48:00 GMT

The WaPo political blog has important updates about the staffing of Attorney General-elect Ken Cuccinelli's office.

It appears Ken has made some good choices, picking people with significant legal experience. Perhaps most significant for the FCA/qui tam world is Cuccinelli's selection of Steve Buck--who spent the last three years as Section Chief of the Health Care Fraud Section of the OAG--to head up Public Safety and Enforcement.

Charles E. James will serve as Chief Deputy--James has been a partner at Williams Mullen, as well as a federal prosecutor, and has handled numerous appeals. Duncan Getchell will fill the Solicitor General's role--as the former chair of the appellate practice group at McGuireWoods, he is no doubt well-qualified.

This is by any measure a very qualified legal team--now let's see what happens.

Fraud on the Government--a true Equal Opportunity Employer

zkitts@cookkitts.com (Zachary Kitts) — Wed, 06 Jan 2010 21:18:00 GMT

The Washington Post today has this story about deaf entrepreneur John Yeh and a false claims act case filed against him by the U.S. Department of Justice.

Yeh is a graduate of Gallaudet University, and has been at the forefront of the deaf community for some years. His company, Viable Communications, provides services to the deaf, including services which allow deaf individuals to place calls.

DOJ alleges that Viable and Yeh defrauded the federal government for tens of millions of dollars by "ginning up bogus calls," among other things.

As an aside, we also see a typical response from a friend or associate of an individual accused of FCA violations. WaPo quoted:

Robert Mason, a deaf blogger who met Yeh through Gallaudet, is among those who said the charges seem out of character. Yeh has supported the university, Mason said, even inviting students to his home. "I personally found John Yeh to be a person of integrity and compassion and sincerity," he said. "Yeh always had been an ardent supporter of deaf people to be successful in their own right."

Well guess what? Just because someone is an "ardent supporter of deaf people" doesn't mean they won't rip off the government if they get the chance. The simple fact is that good people sometimes do bad things--and as anyone who has ever attended more than a few criminal sentencings can tell you, bad people even do good things sometimes.

The case was apparently filed in a U.S. District Court in New Jersey; no word on whether the case was initiated by a whistleblower.

GMU Law School Sponsors Lecture on the False Claims Act

zkitts@cookkitts.com (Zachary Kitts) — Thu, 12 Nov 2009 15:52:00 GMT

I am honored to be joining Alan S. Goldberg, Peter B. Hutt II, and Victor Kubli in presenting a lecture on the federal False Claims Act at the George Mason University School of Law today. The lecture is sponsored by GMU's Journal of Law, Economics, and Policy, and it may well be available soon as a podcast.

Extra special thanks to Angela Barnes and the rest of the Journal staff for all of their hard work putting this together.

Virginia's Award-Winning Medicaid Fraud Control Unit Issues its FY 2008-2009 Annual Report

zkitts@cookkitts.com (Zachary Kitts) — Sat, 07 Nov 2009 20:20:00 GMT

I have just finished reading the new Annual Report for Virginia's Medicaid Fraud Control Unit, and it makes an impressive read. Virginia has an award-winning MFCU, and the work and tenacity of the lawyers, investigators, and others in the Unit is just incredible.

I am also impressed because, to my knowledge, this is the first time the annual report has been made widely available without a FOIA request. I have always wondered why the folks in that office were so humble and didn't publicize their accomplishments.

News from the U.S. District Court for the Western District of Virginia: United States Intervenes in False Claims Act Suit Against Virginia Medicaid Providers

zkitts@cookkitts.com (Zachary Kitts) — Thu, 05 Nov 2009 19:23:00 GMT

WASHINGTON, Nov. 4 /PRNewswire-USNewswire/ — The United States and the Commonwealth of Virginia have intervened in a False Claims Act suit in the Western District of Virginia against the Medicaid providers Universal Health Services Inc., Keystone Marion LLC and Keystone Education and Youth Services LLC, the Justice Department announced today. They did business as the Keystone Marion Youth Center, a residential facility in Marion, Va., that receives Medicaid funds to provide psychiatric counseling and treatment for boys ages 11-17.

To read the full press release, click here.

California Files Suit Against State Street--Claims Bankers Engaged in Massive Fraud

zkitts@cookkitts.com (Zachary Kitts) — Tue, 20 Oct 2009 17:28:00 GMT

October 20, 2009--California Attorney General Jerry Brown announced his intervention in a California state qui tam lawsuit against State Street Bank today. The original complaint was filed under seal by a qui tam relator and his counsel roughly one year ago in the Superior Court for the City of Sacramento.

For those of you new to the qui tam litigation framework, a qui tam relator and his or her attorney file a complaint under seal, and serve it first only on the government. In federal qui tam cases, the Attorney General of the United States is served, along with the local U.S. Attorney. The government then has a period of time to investigate and decide to do one of three things: (1) whether to take control over the case entirely; (2) whether they want to allow the qui tam relator to handle the case herself with the government playing a more passive role; or (3) the government can move to dismiss if it thinks the complaint is not well-grounded.

"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Brown said. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."

You can read the full complaint in intervention below, and I have also embedded a link to a California newspaper.

Everyone seems to focus on the treble damages, civil penalties, and attorney's fees...

zkitts@cookkitts.com (Zachary Kitts) — Thu, 08 Oct 2009 14:59:00 GMT

For understandable reasons, people tend to focus on the treble damages, civil penalties, and attorney's fees provided for in the federal False Claims Act and in the 26 states with false claims acts. Today, I want to talk about one of the least emphasized--but most important--benefits that accrues to the public fisc as a result of increased false claims prosecutions.

I am talking about the increase in compliance with the law that follows well-publicized and effective false claims prosecutions, and I will demonstrate with a concrete example from my home state of Virginia.

In 2007 and 2008, I prosecuted the first non-intervened state qui tam action under the Virginia Fraud Against Taxpayers Act. The case involved a federal credit union's (alleged) failure to deliver unclaimed property to the Virginia Treasury. After the case's successful resolution in late 2008, there was a fair amount of publicity in Virginia's legal and banking communities.

While the Commonwealth recovered money as part of my FCA case, take a look at the chart below,which shows an increase of some $45 million in Virginia's unclaimed property collections in 2009--and this chart just covers the first three quarters of the fiscal year!

The chart clearly shows Virginia's unclaimed property recoveries holding pretty steady from 2003 through 2008; on average, between $65 and $80 million dollars in unclaimed property escheats to the Virginia Treasury each year during that time span.

Now look at the first three quarters of FY 2009--unclaimed property recoveries jumped to more than $120,000,000 in the wake of the publicity surrounding the Siddiqui case. To be fair, a sizable chunk of this arose from the Siddiqui case itself--as part of the settlement of the qui tam case, the Virginia Treasury obtained the right to conduct an audit and declare any property as unclaimed that it desired.

Still, there can be no doubt that increased compliance with the law is one of the most important goals of increased FCA enforcement. While increased compliance with the law does benefit the treasury, that is not the most important benefit--indeed, we could even live without that.

I firmly believe that the more important result of increased compliance is that indicates an increased respect for the law in general and for government institutions in particular--and that, ladies and gentlemen, is something we could not live without.