Yesterday, the Michigan False Claims Act was amended to add two important–but optional–elements of a state false claims act. Previously, this blog has not addressed elements of a state false claims act over and above compliance with Deficit Reduction Act of 2005, so this seems like as good a time as any.
You can read the Michigan changes /files/116785-109034/OIG_statepolicymakers.pdf”>similar enough to the Federal False Claims Act that it was approved by the Office of the Inspector General of the Department of Health and Human Services. After its approval, Michigan began to receive an additional 10% of all monies recovered by Medicaid fraud prosecutions.
However, just because a state false claims act complies with the wishes of the federal government does not mean it is doing all that such a statute can do for the state. One drastic error that some states make is passing a state false claims act that applies only to Medicaid fraud, which is exactly what Michigan had until yesterday.
In other words, Michigan’s previous statute was not a general false claims act that outlawed any false claim made to the state of Michigan for payment, or to avoid payment to the state of Michigan.
As a result, the state was leaving tens of millions or hundreds of millions of dollars on the table–or more accurately, in the pockets of fraudfeasors–every year by only penalizing Medicaid fraud. With the exception of Medicaid fraud, until yesterday it was open season on the Michigan treasury by unethical actors of all stripes. As just one example, banks and federal credit unions were free to not escheat unclaimed money to Michigan, without fear of substantial penalties.
No longer. Now, Michigan has a statute penalizing the same conduct as the Federal False Claims Act. Just to bring things full circle, our own Virginia Fraud Against Taxpayers Act has been, since it became law on January 1, 2003, a general false claims act that provided remedies for any false claim made to the Commonwealth.
The second major change made yesterday is one that our Virginia statute does not have. I am referring to a “retroactive clause” which would make false claims made prior to the enactment of the statute subject to suit. Now that our statute is almost six years old, retroactivity is not such a problem.
At any rate, I should mention that Michigan qui tam lawyer Dave Haron is largely responsible for moving the changes thought the Michigan legislature–congratulations Dave!