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TANSTAAFL: There Ain’t No Such Thing As A Free Lunch, Kentucky. No Kentucky False Claims Act Means No Intervention…


This week the State of Kentucky learned the oldest wisdom in the world — There Ain’t No Such Thing As A Free Lunch….

Kentucky has no state false claims act, and so they don’t get to reap the benefits that come to those states that pass a state false claims act.  That includes, of course, all of the health care savings that come to a state via the Deficit Reduction Act of 2005, but it also includes non-health care fraud benefits.   

For example, Kentucky can’t join a U.S. lawsuit claiming Education Management Corp., the nation’s second-largest for-profit college chain, used improper recruitment practices to secure more than $11 billion in student aid.

The United States Department of Justice and four states (each of which has a state false claims act of course!) filed a 16-count complaint alleging EMC violated rules for colleges that get U.S. student grants and loans.  The case was originally filed by a qui tam whistleblower in U.S. District Court in Pittsburgh. 

The Attorney General of Kentucky tried to get in on the action in August of this year, and an opinion issued this week by U.S. District Court Judge McVerry denied their attempt.  He stated point blank that “Kentucky has no state false claims act” as one of his chief reasons for not allowing the intervention. 

Apparently more than $6 million in Kentucky state money was thus lost…. but the good news is that the legislative session is just right around the corner Kentucky–now do what you have to do.