Now that we have reached mid-April, I think it is time for a legislative review of the state-level false claims action. The 2012 legislative session saw a renewal of the battles in Ohio, Kentucky, and Washington, together with the introduction of state false claims act legislation in Pennsylvania.
Of those four states, I am pleased to announce that Washington State actually got their legislation across the finish line and signed into law. The law will become previously, Jeff Sprung of Hagens Berman led the charge in WA state — good work Jeff.
And now for the biggest news of all — I am also pleased to report, our own Virginia Fraud Against Taxpayers Act was Mixx Delicious Digg Facebook Twitter
And Here It Is: The 2012 Legislative Wrap Up for State False Claims Act Legislation
Study by the Center for Public Integrity Finds State Governments at Risk for Corruption…Surprise Surprise
Study by the Center for Public Integrity Finds State Governments at Risk for Corruption
An excellent study just released by the Center for Public Integrity finds state governments to be at risk for corruption — you can check out a WaPo article on the topic here.
It is high time someone put a study like this together — while the findings of this study come as little surprise, I find its methodology to be quite convincing.
It goes without saying that any form of government is susceptible to corruption, and the best anyone can do is to try to control it. State governments, however, tend to rely more on bureaucrats and those bureaucrats have on average less supervision that in a more complex system. For example, in the federal system, Congress serves as a check on the power of agency bureaucrats — the idea of getting called before Congress for testimony is something most agency heads have nightmares about for sure.
So we have state governments relying on unsupervised bureaucrats — certainly a recipe for corruption if there ever was one.
Take the example of Virginia. Here, most of the real power rests in the hands of the General Assembly, both by design and by tradition.
The design part is of course the Virginia Constitution, which firmly places the General Assembly in the drivers seat. In many states the Governor serves as a powerful check, but not in Virginia. In fact, because he or she is limited to a single term, the Governor is from day one a lame duck.
Unlike the United States Congress, the General Assembly is in session only 60 or 90 days each year. That gives the GA a crushing amount of work to do in such a short time, and it gives no time for supervising the agencies.
And as readers of this blog are aware, we have the less-than-wonderful tradition of the single term Attorney General. In many states the Attorney General serves as a powerful force to control corruption in state government agencies, but not here in Virginia.
Based upon my quick read of the article, the authors of this study seem to have left state false claims acts from their study, and I can see why. Even an astute student of government might fail to see the connection between a state false claims act and government corruption. But there is a connection.
One of the things that contributes to state government corruption is that the corruption is what I call “a-typical corruption.” What I mean by that is when we think of the word “corruption” in the government context, it typically implies favors being done for money or for other consideration in the legal sense.
In layman’s terms, when we think of corruption we think of a person in government scratching the back of someone, and getting their back scratched in return. It is worth noting also that most dictionary definitions of the term corruption include a reference to bribes, kickbacks, and other forms of payment.
But in our state governments (and also in the federal government) my experience has been that there is not actually much of the typical type of corruption; and when it does occur it is, relatively speaking, easy to catch. Transparency and other things will catch that type of corruption.
That’s right ladies and gentlemen — money is only part of the reason why human beings do what they do. State government agencies are also susceptible to flattery, salesmanship, and other things that show no monetary return for the individual.
The other type of corruption is a-typical corruption, and that involves a state agency person doing a favor for an outside party with no form of compensation or consideration coming back the other way.
There can be no question that a-typical corruption far outweighs typical corruption, and it is next to impossible to catch unless you have a state false claims act.
More on this to follow, but congrats to the Center on an excellent, timely, and needed study….
K&G Law Group Announces the Fourth Anniversary of Virginia Qui Tam Law.com
Four years ago this month I started blogging here at Virginia Qui Tam Law.com — I’ll resist the urge to say something hackneyed and sentimental about the last four years, or maybe I will reserve that right for the end of the post.
When I started this blog, I set out some simple goals. However I neglected to mention my most important goal which was to create the sort of blog I was looking for, covering the kind of topics in which I was interested.
I couldn’t find what I was looking for so I went ahead and created it.
I was also hoping to provide education and helpful information about the Virginia Fraud Against Taxpayers Act (and the federal False Claims Act) with an eye towards generating interest in those topics among the Virginia Bar. I think I can definitely say that I have had some successes in that regard.
Let me also say that I am not fooling myself — it is highly probable that all of the VFATA developments that have taken place in the last four years would have taken place with or without this blog. For example, it was only a matter of time before someone like Attorney General Ken Cuccinelli stepped up to the plate and did what needed to be done to protect the taxpayers of the Commonwealth.
Whether or not it made a difference I can’t say for sure, but I would like to think it helped.
In February of 2008, there was little to no interest in the VFATA and few people outside the health care world even knew what it was. There were only two reasons why health care profession knew about VFATA, and those reasons were in no particular order (1) the award-winning Medicaid Fraud Control Unit in the Office of the Virginia Attorney General and (2) the ground-breaking work of then-United States Attorney John Brownlee in the Western District of Virginia.
That same month, I worked with the Fairfax County Bar Association to create and host the first every Continuing Legal Education seminar on the VFATA. A fair number of people showed up, but more importantly that seminar led to a second one in Richmond later that year in the Office of the Attorney General, and just under 100 people showed up.
I blogged endlessly trying to put the Virginia Fraud Against Taxpayers Act on the radar of every candidate for Virginia Attorney General in the 2009 Attorney General primary and then in the general election, and I think we can say that it worked.
More importantly we can say that Attorney General Ken Cuccinelli, who was elected to that office in November of 2009 (well, really he was elected in May of 2009 when he defeated two formidable candidates at the Republican Convention) has vigorously enforced VFATA cases and has garnered well-deserved accolades from many different corners of the Commonwealth.
In November of 2008, I settled the first non-healthcare non-intervened case under the VFATA, and it made the front page of Mixx Delicious Digg Facebook Twitter
Update from the Ohio Legislative Session — Ohio Attorney General Mike DeWine and Frederick Morgan Submit Testimony in Favor of the Ohio False Claims Act
Update from the Ohio Legislative Session — Ohio Attorney General Mike DeWine and Frederick Morgan Submit Testimony in Favor of the Ohio False Claims Act.
Ohio’s battle to pass a state false claims act continues, with the most recent developments being the addition of a Republican sponsor in the state Senate (i.e., state Sen. Jim Hughes, R-Columbus) and a sponsor in the state House (i.e., Rep. Ross McGregor of Springfield).
As regular readers know, Ohio Attorney General Mike DeWine is leading this battle, and you can find a copy of his testimony Frederick Morgan and Jennifer Verkamp (of the firm Morgan Verkamp, LLC in Cincinnati).
To read Rick’s testimony please click here.
As readers know, all of the most business-friendly states have state false claims acts. Ohio, by most measures, is at the other end of the business-friendly scale, in terms of tax and otherwise.
General DeWine was smart to make reference to Texas and Virginia in his comments, because I assure you, if false claims legislation encouraged frivolous suits, it would not have lasted in Virginia or Texas so long…..
Stay tuned, more to follow….
Virginia Qui Tam Law.com Author Zachary Kitts Launches K&G Law Group, PLLC
Virginia Qui Tam Law.com Author Zachary Kitts Launches K&G Law Group, PLLC.
I am pleased to announce that as of February 1, 2012 I formed a new firm known as K&G Law Group, PLLC.
I am joined in the new firm by Justin Gilbert, who also worked with me at Cook Kitts & Francuzenko, PLLC.
The hustle and bustle associated with the new firm has prevented me from posting as frequently as I normally do, but there have been many developments lately in the qui tam/False Claims Act world which I need to include.
Justin and I will continue to practice in the areas of qui tam and false claims act litigation (obviously), as well as employment law, business torts, and other complex civil litigation matters. For more info, you can check out the new firm’s webpage here.
Alex and John are continuing on with the firm formerly known as Cook Kitts & Francuzenko, which is now known as Cook Craig & Francuzenko, PLLC. Their new website can be found here.
All the best to Alex, John and Chris with their new endeavor!
And stay tuned readers for more posts on recent developments in the false claims act world, including the developments in Ohio, which seem to be headed in the right direction. I will also be launching a new web page in the near future devoted to qui tam practice.
Update from Washington State on the Washington State False Claims Act
Washington State False Claims Act
Things seemed remarkably silent on the state legislative front this year — until yesterday, that is, when fellow qui tam/FCA lawyer in Jeff Sprung was kind of enough to send me an update from Seattle (or rather from Spokane).
Jeff has been fighting the good fight out in Washington State for at least the past three years, but it seems like the legislation might have legs this year. The State Senate passed a Medicaid-only FCA bill out of committee this week, and the State House committee appears to be poised to do so soon.
Sources in WA also indicate that the legislators are interested in a Medicaid only FCA law — and only in a Medicaid only law.
Regular readers have heard this before — I am not sure why a state would want to pass a Medicaid- only statute. Washington state of all places should understand the need for a full false claims act — after all, in 2009, they settled a foreign exchange case for pocket change because they didn’t have a state false claims act….
But I’ll leave it to the legislators in WA to explain to the school teachers, police officers, fire fighters, and other public servants whose pension funds were defrauded why they have no recourse….
At any rate, all taxpayers of the great State of Washington owe Jeff for his hard work on this project over the past couple of years — and Jeff my hat is off to you. Keep up the good work.
The Taxpayers Against Fraud Education Fund Publishes a New Model State False Claims Act for 2012
The Taxpayers Against Fraud Education Fund Publishes a New Model State False Claims Act for 2012.
As state legislatures across the country begin their 2012 sessions they will without exception will be looking to stretch their tight budgets. This usually spurs a great amount of interest in the topic of state false claims act legislation, and with good reason.
First, the federal government created strong incentives for states to pass state false claims acts. This happened back in 2006 with passage of the Deficit Reduction Act of 2005 (“DRA”). Specifically, section 6031 of the DRA (Pub. L. 109–171), creates a financial incentive for States to enact legislation that establishes liability to the State for individuals or entities that submit false or fraudulent claims to the State Medicaid program.
The financial incentives are considerable. States with a false claims act that meets the OIG’s Arizona and hopefully now Kentucky) are starting to get word from those states who have passed false claims act legislation that qualifies under the DRA — and the news is good to say the least.
For example, Virginia’s Fraud Against Taxpayers Act (“VFATA”) has been an unparalleled success. No one can argue with Virginia’s results. In the three-year period from FY 2006-FY 2009, Virginia recovered on average more than $228 million per year. Virginia recovers more than $5 million per employee of the MFCU.
For those state legislators considering a state false claims act, TAFEF published a new business friendly states have state false claims acts….
Qui Tam Litigation and the Federal False Claims Act Become an Issue in the Presidential Primary
Interesting to note that qui tam litigation and the federal False Claims Act became an issue in the Republican presidential primary recently. 
Newt Gingrich’s mention of FCA enforcement is actually just one of several recent mentions by office-seekers and office-holders in both political parties of their bona fides on the false claims act.
Please note, friends, that I am all for politicians standing up to take a bow when they dedicate additional resources to fighting fraud — as President Obama has — and I am also all for politicians campaigning on the promise to increase resources to fight fraud — as Newt Gingrich apparently did.
Too bad he won’t be on the ballot in Virginia….
Specifically, in a debate, Newt Gingrich stated as follows:
“The duty of the president is to find a way to manage the federal government so the primary pain is on changing the bureaucracy. On theft alone, we could save $100 billion a year in Medicaid and Medicare if the federal government were competent. That’s a trillion dollars over 10 years. And the only people in pain would be crooks…”
Needless to say, I am all in favor of increased FCA enforcement (and of course this blog is totally dedicated to that). Even so, I am not quite as sanguine as Gingrich about the ability of the FCA to fix the Medicare and Medicaid budget….
But I will leave the fact checking to the folks at WaPo who have the scoop.
Additionally — and as reported here previously — a December 19, 2011 press release by DoJ gave detailed information on the record recent recoveries using the FCA, and in the process mentioned President Obama several times.
Now, let’s hope that increased resources for the Virginia Fraud Against Taxpayers Act will become an issue in the Attorney General race here in the Commonwealth….
Pat Burns from Taxpayers Against Fraud Predicts $9 billion in 2012
Pat Burns from Taxpayers Against Fraud predicts $9 billion in 2012.
Although a record $3 billion was recovered in 2011 using the false claims act, it appears that many people in-the-know are predicting an even bigger 2012…three times bigger to be exact.
Taxpayers Against Fraud Education Fund spokesman Pat Burns made this amazing prediction in the Corporate Crime Reporter recently, and while Pat is not exactly known for understating anything, there is reason to believe that he was being a little conservative.
Of course, many things will affect the total — for example, some of them might bleed over into 2013 through no fault of anyone….
Those 2009 bi-partisan changes to the FCA sure did help out…
The Year 2011 Review: A New Record False Claims Act Recoveries
WASHINGTON – The Justice Department secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2011, Tony West, Assistant Attorney General for the Civil Division, announced today. This is the second year in a row that the department has surpassed $3 billion in recoveries under the False Claims Act, bringing the total since January 2009 to $8.7 billion – the largest three-year total in the Justice Department’s history. The $3 billion total for fiscal year 2011 includes a record $2.8 billion in recoveries under the whistleblower provisions of the False Claims Act, which is the government’s primary civil remedy to redress false claims for federal money or property, such as Medicare benefits, payments on military contracts, and federal subsidies and loans. The department has recovered more than $30 billion under the False Claims Act since the act was substantially amended in 1986. The 1986 amendments strengthened the act and increased the incentives for whistle blowers to file lawsuits on behalf of the government. That in turn led to an unprecedented number of investigations and greater recoveries. “Twenty-eight percent of the recoveries in the last 25 years were obtained since President Obama took office,”Assistant Attorney General West said. “These record-setting results reflect the extraordinary determination and effort that this administration, and Attorney General Eric Holder in particular, have put into rooting out fraud, recovering taxpayer money and protecting the integrity of government programs.” Assistant Attorney General West noted that the $3 billion recovered this year included $2.4 billion in recoveries involving fraud committed against federal health care programs. Most of these recoveries are attributable to the Medicare and Medicaid programs administered by the Department of Health and Human Services (HHS). They also include the TRICARE program administered by Department of Defense (DoD), the Federal Employees Health Benefits program administered by the Office of Personnel Management and Veterans Administration health programs. Fighting health care fraud is a top priority for the Obama Administration. On May 20, 2009, the Attorney General and HHS Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement. Since January 2009 alone, the department has used the False Claims Act to recover more than $6.6 billion in federal health care dollars. This is more recovered under the act than in any other three-year period. The historic $2.8 billion recovered in whistle blower cases came from suits filed under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions allow private citizens, known as relators, to file lawsuits on behalf of the government. In the 25 years since the False Claims Act was substantially amended, whistle blowers have filed more than 7,800 actions under the qui tam provisions. Qui tam suits hit a peak of 638 this past year, after hovering in the 300s and low 400s for much of the decade. Assistant Attorney General West thanked the courageous citizens who have come forward to report fraud, often at great personal risk: “We are tremendously grateful to whistle blowers who have brought fraud allegations to the government’s attention and assisted us in this public-private partnership to fight fraud,” he said. In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act, including enhancements to the qui tam provisions to encourage whistle blowers to come forward with allegations of fraud. In this 25th anniversary year of the 1986 amendments, Assistant Attorney General West paid tribute to the bill’s sponsors, saying that “without their foresight, the breadth of the recoveries we announce here today would not have been possible.” He also expressed his gratitude to Senator Patrick J. Leahy, chairman of the Senate Judiciary Committee, and to Senator Grassley and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes. Assistant Attorney General West also applauded Congress’ passage of the Affordable Care Act (ACA) in 2010, which reenforced the government’s ability to redress fraud in the nation’s health care system. Among many other changes, the ACA amended the False Claims Act to provide additional incentives for whistle blowers to report fraud to the government and strengthened the provisions of the federal health care Anti-Kickback Statute. Enforcement actions involving the pharmaceutical industry were the source of the largest recoveries this year. In all, the department recovered nearly $2.2 billion in civil claims against the pharmaceutical industry in fiscal year 2011, including $1.76 billion in federal recoveries and $421 million in state Medicaid recoveries. These cases included $900 million from eight drug manufacturers to resolve allegations that they had engaged in unlawful pricing to increase their profits. Additionally, GlaxoSmithKline PLC paid $750 million to resolve criminal and civil allegations that the company knowingly submitted, or caused to be submitted, false claims to government health care programs for adulterated drugs and for drugs that failed to conform with the strength, purity or quality specified by the Food and Drug Administration. Adding to its successes under the False Claims Act, the department obtained 21 criminal convictions and $1.3 billion in criminal fines, forfeitures, restitution, and disgorgement under the Food, Drug and Cosmetic Act (FDCA). The FDCA’s criminal provisions are enforced by the Civil Division’s Consumer Protection Branch. In addition to health care, the department continued its aggressive pursuit of fraud in government procurement and other forms of financial fraud, including grant, housing and mortgage fraud that emerged in the wake of the financial crisis. In November 2009, President Obama established the Financial Fraud Enforcement Task Force to hold accountable the individuals and corporations who contributed to the crisis as well as those who would claim illegal advantage through false claims for funds intended to stimulate economic recovery. Of the $3 billion in fiscal year 2011 recoveries, these non-war related procurement and consumer-related financial fraud cases accounted for nearly $358 million. Overall, the department recovered $422 million in fiscal year 2011 in procurement fraud cases, including $89.3 million in recoveries in connection with the wars in Southwest Asia. This brings civil fraud recoveries in connection with the wars in Southwest Asia since January 2009 to $153.4 million, and the total amount recovered in procurement fraud cases during that time to $1.5 billion, again a greater amount than in any previous three-year period. Assistant Attorney General West expressed his deep appreciation for the dedicated public servants who contributed to the investigation and prosecution of these cases. These individuals include attorneys, investigators, auditors and other agency personnel throughout the Civil Division, the U.S. Attorneys’ Offices, HHS, DoD and the many other federal and state agencies.
Earlier this week, the United States Department of Justice announced that slightly more than $3 billion was recovered in 2011 using the federal False Claims Act — this amount represents a new record for False Claims Act recoveries in a single year. The complete text of the DoJ press release is included below the break or you can click here.
Perhaps most importantly, the DoJ acknowledged the vital role that qui tam whistleblowers play in the government’s efforts to fight fraud. Of the total $3 billion recovered, more than $2.8 billion was recovered in cases filed by qui tam whistleblowers! For those of you doing the math that’s a total of 94%.
I’ll repeat that — 94% of the money recovered by the government was the result of a whistleblower coming forward with first-hand information about fraud on the government.
If there is any mechanism anywhere else in the world that allows a single person to hire a lawyer and take on some of the biggest, wealthiest, most influential companies in the world in the name of the government I don’t know where it is.
Now here is the take-away message — many people think that in 2012 the record of $3 billion will not only be surpassed but will be doubled or trebled….
________________________________
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Monday, December 19, 2011
Justice Department Recovers $3 Billion in False Claims Act Cases in Fiscal Year 2011
Department Sets Records for Recoveries in Health Care and War-Related Fraud Annual Recoveries in Whistle Blower Cases Reach All Time High