As more states struggle to pass state-level false claims act legislation, I have mentioned recently that PhRMA and other health care lobbyists seem to have switched their tactics. Simply put, as more and more states come on board and reap fantastic rewards from having a state FCA, it has become impossible for the paid health care lobbyists to make states believe that the world will end if their state has an FCA.
The new strategy seems to be to suggest “helpful” changes to the state’s FCA that will make it “better” than the federal FCA. What the changes really do is to make the state FCA non-compliant with section 6031 of the Deficit Reduction Act of 2005. The result of that, of course, is to make the statute pretty much useless.
Several times in the last few months, the hazards of this strategy have become apparent. This past week, Sen, Grassley OIG Daniel Levinson, asking for help.
I think that everyone familiar with Senator Grassley is familiar with his straight and to the point style–he is not one to mix his words, and he never leaves a doubt in anyone’s mind about what he wants to say.
Grassley asked the Inspector General for the Department of Health and Human Services and the Attorney General to review existing state False Claims Acts for compliance with recent changes to the federal False Claims Act and to issue appropriate guidance for any state interested in the federal incentive, which allows states to increase their shares of Medicaid recoveries by 10 percent by allowing whistleblower lawsuits.
As of this writing, 27 states have some form of false claims-style statute, but only 20 of those have submitted their false claims act to the feds for approval under DRA. Of those 20 states, only 14 have qualified for the 10% incentive. In order to qualify, the state FCA must be at least as effective as the federal False Claims Act in establishing liability to the state for false claims, and must also be at least as effective as the federal FCA in rewarding qui tam whistleblowers.
Additionally, the state law must contain civil penalties that are not less than the amount of the civil penalty created by the federal FCA and must provide for filing an action under seal for 60 days.
Not all of these conditions are literal word-for-word requirements–for example, the Virginia Fraud Against Taxpayers Act contains a seal period of 120 days, but it was approved by the HHS-OIG in 2007.
Grassley was aiming at two things with this letter. First and foremost, I believe he is taking aim at those legislators who adopt the oh-so-helpful suggestions of the health care lobbyists, and making it clear to them that they need to get on the winning team. He mentions in particular the new development of the “first to file bar” that is being added in some states.
Second, in light of the recent changes to the federal False Claims Act (which has been amended twice in the last 12 months) Grassley is also sending a message to states like Virginia that qualified years ago.
The Virginia statute mirrors the old FCA word for word–but since May of 2009, there is no question that Virginia’s Fraud Against Taxpayers Act has not been as protective as the federal False Claims Act. So Grassley is also telling Virginia and her 13 sister states that they need to start looking at some legislative fixes, or they could find themselves in a whole bunch of pain.
In defense of the Commonwealth, I will say this: coming in to this legislative session, we all thought about suggesting that the VFATA be amended to match the new federal FCA, but decided to refrain because of the possibility of further amendments. As it turns out, those further amendments did come true this year, just a few weeks ago.
But in the 2011 legislative session, we are going to need some amendments….