Posted by: Robert Markette
January 16, 2006

Proving yet again that the Government overestimates the amount of fraud in the Medicare and Medicaid system, Congress is working on legislation that will encourage states to pass their own False Claims acts.  Given how the Federal False Claims act has been abused over the years and given the scope of fraud and abuse protections already in place, this seems unnecessary.  Nevertheless, The Deficit Reduction act of 2005 is currently winding its way through Congress complete with a section titled “Encouraging the Enactment of State False Claims Acts.”  This provision actually provides the states with financial incentive to enact their own false claims regimes

While some states have false claims acts already, this act would decrease the amount Federal medical assistance percentage "with respect to any amounts recovered under a State action brought under" a qualifying state law.  The percentage decrease shall be ten percent.

The act defines a qualifying state law as a law establishing liability to the State for Medicaid false claims; the law contains provisions that are at least as effective in rewarding and facilitating qui tam actions for false claims as the federal False Claims Act; the law contains provisions for filing an action under seal for review for sixty days by the Attorney General; and the law provides for civil penalties not less than the amount called for under federal law. 

In effect, this act will provide a financial incentive to the states to pass state false claims acts. Given the breadth of litigation that has grown out of the federal false claims act, you can only fear that the state actions will lead to the same results.  This means the number of cases going forward may very well increase.  Yeah.  Just what America’s health care system needed, more litigation.  

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