Print Shortlink

Two Major–and Historic–Events in the Past Seven Days…

In the last seven days, two major historic events occurred.  Although very few Virginians paid attention or cared, we will all notice the benefit bestowed on our Commonwealth by these two events…

On Saturday, March 26th, Governor Bob McDonnell signed groundbreaking amendments to the Virginia Fraud Against Taxpayers Act (otherwise known as “SB1262” or “SB1262ER”) into law.  As discussed previously, when the new Virginia Fraud Against Taxpayers Act becomes law on July 1, 2011, Virginia will become the very first state in the Union to have a fully-updated state false claims act.  

It is important for a state’s FCA to match the federal FCA because states with a matching FCA obtain an extra 10% in federal Medicaid money.  This extra 10% is an incentive to the states to encourage the passage of state FCAs, and it was put into place via the federal Deficit Reduction Act of 2005, which amended section 1909 of the Social Security Act. 

That leads me to the second major event, which is important not only for Virginia but for all of her sister states as well.

In order for a State to qualify for the incentive under section 1909 of the Social Security Act, the State must have in effect a state false claims law that:

  • Establishes liability to the State for false or fraudulent claims described in the Federal False Claims Act (FCA) with respect to any expenditures related to the State Medicaid plan;
  • Contains provisions that are at least as effective in rewarding and facilitating qui tam actions for false or fraudulent claims as those described in the FCA;
  • Contains a requirement for filing an action under seal for 60 days with review by the State Attorney General;
  • Contains a civil penalty that is not less than the amount of the civil penalty authorized under the FCA.
States passing FCA legislation must submit their statutes to the Office of the Inspector General at HHS, and have those statutes reviewed and approved.  To date, 24 states have passed false claims statutes and have submitted those statutes to OIG for review. 

Of those 24 states, only 14 state statutes have been approved.  The Virginia Fraud Against Taxpayers Act was submitted in 2007 and was originally approved.  At that time, however, the federal FCA had not been amended, and the VFATA was approved because it matched the federal statute.   

Between March 2009 and July 2010, the federal False Claims Act was amended three times in very significant ways.   Among other things, the three amendments expanded liability under the Federal False Claims Act and expanded certain rights of qui tam relators.  As a result of the FERA, the ACA, and the Dodd-Frank Act, the Virginia Fraud Against Taxpayers Act is no longer in compliance with section 1909 of the Act.

As a result, a number of states with previously-approved FCA statutes now have non-compliant FCA statutes.  Indeed, the Virginia Fraud Against Taxpayers Act  was no longer as protective as the federal False Claims Act.  In case there were any doubts about this, a Mixx Delicious Digg Facebook Twitter